| Word On The Street - Wall Street |
| Going A Few Rounds With "Jim Cramer's Mad Money" |
| by Philip D. Gibbons |
| With the stock market at a critical juncture, threatening to break positively out of a narrow trading range that has stalled it for months, I’m in the mood for ideas. I’m also in the mood for some entertainment late in the afternoon. That can mean only one thing: “Jim Cramer’s Mad Money”. |
Cramer, the long time CNBC commentator has generated a cult following with this program, especially the frenetically bombastic and unrehearsed “Lightning Round”, a free for all of rapid fire responses to callers’ investment questions punctuated by Cramer’s manic antics and sound effects set to a background of heavy metal music.
Jim starts out calmly enough with a reasoned recommendation of Laureate Systems (LAUR, formerly Sylvan Learning Systems), a company that has gotten aggressively involved in international “for profit” universities. Unfortunately, I wouldn’t touch this stock with a ten foot pole. Cramer’s rationale is that in countries like Brazil, the government doesn’t have the ability or the inclination to regulate this type of business to the extent that it gets regulated in the US. Sorry, I’m not interested in a third world operation that will hope to generate profit by exploiting regulatory weakness. But, be forewarned, “Mad Money” will never be confused with an investment strategy governed by a strong moral compass.
Cramer’s next analysis is a little more like it. He tabs Seagate Technology (STX) as a company unfairly punished, despite positive recent performance. With a price-earnings ratio in the low teens and good numbers, the stock has sold off in the last few sessions. Cramer pins that on a general boredom over older technology hard drive manufacturers like Seagate as opposed to the sexier “flash” memory manufacturers that are perceived as more cutting edge. Cramer mentions that these hard drives are still necessary in HDTV’s and other appliances that are still generating high demand. An interesting play that I will certainly research.
Then the “Lightning Round”. I’ve always found this aspect of the program to be more sizzle than steak. I mean, how much can you really say about a stock in ten seconds, especially some of the very obscure firms that get served up. Still, Cramer’s antics and energy level is nothing if not uproariously funny. Biting the heads off of a miniature toy bear, waving his arms to punctuate an opinion, pounding away at the various levers that initiate graphics and sound effects make Cramer seem like a Wall Street version of the Wizard of Oz.
Twenty odd stocks later, I’m impressed that Cramer hasn’t had a coronary but not exactly knocked out by his analysis. I’m not going to buy any of the half dozen small cap high tech firms mentioned based on such limited info. Cramer tells a caller to forget Nissan and “buy the best of breed”, Toyota. He says Amgen is in a good spot and raves about Boeing as a stock with some upside. Best Buy gets the thumbs up, AFLAC gets the thumbs down and a recommendation to buy two other insurance companies, Met Life or Prudential. Oracle gets slammed, a stock that Cramer always disdains. I jot down a few ideas for further examination.
Cramer’s ratings have been relatively high for the cable market and he has generated a great deal of buzz. But his performance hasn’t been all that great. Viewers need to understand that he has a trader’s mentality governed by years working as a hedge fund wheeler dealer. Many of his picks benefit from a short term pop followed by a long term decline. He has also had a few high profile disasters like recommending Dick’s Sporting Goods before an earning stumble killed the stock and repeated urging to sell Apple despite the stock’s continued meteoric ascent.
Cramer’s last segment pick seems like a real reach. He talks about the potential of a Conservative government in Canada and a recommendation to buy Royal Bank of Canada (RY) in anticipation. That election is still months away. Anything could happen. Sorry, I’ll pass.
Unfortunately, “Cramer’s Mad Money” is like an ongoing soap opera that requires constant monitoring to glean a consistent perspective. So many stocks get mentioned and Cramer’s viewpoint can be so erratic, that it’s hard to take away anything substantive. But, you keep watching, because Cramer is a true original and like that old saying says, “He may be wrong, but he’s never in doubt.”
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