No one ever said, "Good job," for those who got in and got out.Įver since then I have been loath to recommend any stock for which I can't get create a metric or valuation that justifies the move. So even though I said those stocks were red hot, and even though their prices doubled and in many cases doubled again, all that mattered was that the people who got in last hated me to death. Still, those who do not read this journal never got the sell call, and I was reviled for years, even as I made fortunes for those who followed me closely. But when these companies started doing massive secondary offerings in order alleviating the tightness, I decided to blow out all of them, and I said it here many times. I pushed the stocks hard everywhere, and we had amazing success with them. I said this momentum could continue for much longer than people think it will, but that there would come a time when the stocks would have to be sold and even shorted - and that, when that time came, I would make it clear here that they are to go. I said these stocks would just keep flying because, while they had no valuation basis, they had tremendous momentum. In 1999 I identified a group of stocks called the Red Hots. You should understand that, when someone pushes a cult hard and it suddenly goes down, no one remembers you pushed it hard for very long - they only remember you pushed it hard at the top. I am simply saying you should know what you are playing with. I have never said to avoid a cult stock, and I like Amazon very much. Therefore it is a cult, and a cult can go higher than anyone thinks it will. I said that I no longer had any traditional method of analyzing it, no benchmark to put it in context and nothing comparable to explain the pricing. They want to know why I kept them out of it.įirst of all, when Twitter stock went past the price at which it opened, I identified it as a cult stock - much like Solar City, Tesla and Amazon. My Twitter feed is filling up with angry people who wanted to know why I didn't recommend Twitter. It is the quickest way to make money, as I write in "Get Rich Carefully," which is finally out on the last day of December.Īt the time of original publication, Action Alerts PLUS, which Cramer co-manages as a charitable trust, was long PG and VALE. Random Musings: Just like every other acquirer, Textron goes nuts on another consolidation. That's the trade I think will occur right into earnings season, as hope always springs eternal for the heavy metals and their like into the beginning of almost every year. They always seem to pull rabbits out of hats with restructurings and dividend boosts and increased buybacks.īut I think they will be a source of funds for the minerals and the miners and the deepest of cyclicals. Now, let me just say that these stocks are by no means dangerous. Nevertheless, when you see stocks of companies that have repeatedly disappointed - Cliffs Natural, Joy, Alcoa, Peabody and Vale - rally, that means the money has to come from somewhere. Many have been taken over and others have consolidated their sectors to the point where even an underweighted portfolio manager can make a difference in terms of sopping up stock from some of these. There is a shortage of quality defensives. Plus, they have helped themselves because if you look at the share count you will see that they have taken a lot of money that might have otherwise gone to R&D and bought back stock instead. I think the fact that it is a creeping decline has helped these stocks. So far the untold story about these stocks is how they have held up through repeated analyst downgrades and the relentless decline in bonds. Is 3.25% on the 10-year the magic number? Is that the number that makes it clear that all of the defensives which yield roughly 3% and change - Clorox, Kimberley-Clark, Procter, Bristol-Myers and Merck - lose their luster? Is that were Glaxo and Lilly get threatened? Click here for information on RealMoney, where you can see all the blogs, including Jim Cramer's - and reader comments - in real time.
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