Posted on 01/18/2008 5:26:06 PM PST by khnyny
Cramer started Friday's show with his "Game Plan", but this segment focused on a Game Plan for the Fed and government instead of the stock market. Cramer doesn't like the stimulus packages being discussed in the White House and Congress, so he offered his own plan. He says that the reason stocks are dropping is that there is a fear that bond insurers will go out of business in the next few days or weeks because they are out of cash. They have $500 billion in potential claims, and they don't have enough money to pay out the claims. If the companies can't pay, Cramer thinks the market could drop a couple thousand points, no one will be able to borrow any money, and banks could be taken down with the insurers. Cramer's plan is to have the government buy the toxic mortgage insurance, sell off the good parts, and pay off the remainder at a discount like 50 cents on the dollar. This will give everyone certainty so that banks and other people can go about their business, and will cost at most $250 billion, which is about the same amount of money Congress is talking about passing ou to individuals.
Cramer then took some phone calls. The first caller asked if we are anywhere near the bottom, and Cramer said that he thinks we are near a bottom, as long as the insurance issues are taken care of. The next caller asked if it's time to look at blue chip financial stocks, and Cramer said that it's better to look at beaten down tech and healthcare stocks because of the mortgage insurance issues he outlined above.
(Excerpt) Read more at thecramerreport.com ...
So I guess it’s time to buy the Dow now?
Exactly. If Jim Cramer says sell, then start buying. If he says buy, then start selling.
Who can forget his constant pumping of those dotcom stocks right up until the minute before they collapsed.
I couldn’t find the “2,000 point drop” prediction in the transcript.
What am I missing?
And the economic stimulus plan will cost more like $150 billion, not $250 billion.
No, thanks. Whatever Cramer says, the opposite often happens.
People might say - but he made a fortune in the market, why not listen to him?
Well, the real truth is he ran a hedge fund, and he had people much smarter than him doing the stock picking. He was just good at doing the song and dance routine needed to convince potential clients to sign on the dotted line.
All Cramer needs is a big ball of sweatsocks hammered down his throat. He’s a caricature of a joke. Oh, and toss a coin, heads is up, tails is down, then compare with Cramer’s predictions. Stuff the socks in deeper...
For your enjoyment, Cramer speaking on February 29, 2000:
http://www.thestreet.com/_tscs/funds/smarter/891820.html
Barron’s had an article a year or so ago rating the various fund managers and pundits, such as Cramer....
The Barron’s article had Cramer rated as one of the worst fund managers with the worst track record.
He’s entertainment, a very smart guy, but mostly entertainment.
Case in point, on yesterday’s show he declared the market was going to go straight down, including today...today’s market opened up and went up over 160 points, before it’s modest decline.
Good luck all.
I am a poor long horizon dollar cost averager, who welcomes the 2000 point drop, lowers my average, and I just hate buying at record levels all the time.
Let’s see, the Dow hit a high of 14,198.10, on October 11th, and closed at 12,099.30, today. I think I could “predict” a 2,000 point market drop too.
That’s the only sure way to make money any more in this crazy, manipulated trader’s market.
Long term horizon, dollar cost averaging. Make sure you buy only good companies with solid balance sheets, preferably with a history of increasing dividends. There are going to be bargains galore pretty soon in many sectors.
“Exactly. If Jim Cramer says sell, then start buying. “
Bingo. I shorted in 2000 and did well when he was still high on the fumes of the 5000 Nasdaq.
Sure bet: There is fear in the market. Once the fear is wrung out and/or is at its worse, the market will bottom.
The real risk is the risk of long-term structural damage from bad govt policy. not sure it is a good idea to buy when such bad stimulus ideas are out there.
Cramer is a tout. His job is to put the play over the finish line in terms of return for his firm’s clients. The firm has a staked out position on a good stock. It’s Cramer’s job to tell the public to buy so his guys can sell right into that strength after a few day’s run up. This is tantamount to criminal behavior in my book and men of his ilk were often tarred and feathered in another time.
He said it on Chris Matthews show. A 2000 point drop if the insurance isn’t fixed.
“He said it on Chris Matthews show.”
.....Cramer on Chris Matthews!...it must have been a hoot to see which one could talk the fastest.
Would you settle for "a couple thousand points" about halfway through the recap?
Been dollar cost averaging into Vanguard index funds for years. I use the Total Stock Market index, the GNMA, and the Intermediate Term Treasury index. I keep it about 50-50 between stocks and fixed income.
“Well, the real truth is he ran a hedge fund, and he had people much smarter than him doing the stock picking. He was just good at doing the song and dance routine needed to convince potential clients to sign on the dotted line.”
exactly. Then he got thestreet.com public and I believe the bulk of his net worth came from that. Now, of course, he is a public personality and can interview his neighbors who are CEO’s and his ‘very good friends’ on his show lol.
That said, he is right that there is a very serious problem with the mortgage insurers and the domino effect that can happen.
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