Jim Cramer always says that a good investor must do homework all the time. He believes that new information constantly becomes available that can help inform which stocks to own and why.
And he believes important new information just became available in the form of a new book just released called "Stress Test" by former Treasury Secretary Tim Geithner.
Cramer says the tome takes such a poignant and honest look at the financial meltdown, he thinks it's an '"indispensable read" for individual investors, especially if you own bank stocks or are thinking about establishing a position in the sector.
"If you are as enthralled with the turmoil of that period as I am, seeking every nuance of what went wrong, who went wrong and what was done to stem the collapse and what could have been done better, then the aptly-named Stress Test will become your quick-turning bedside reader," Cramer said.
Although Geithner didn't write the book as a guide for investors, Cramer says the narrative as well as the subtext provides critical insights that should inform investment decisions for quite some time to come.
"For me, this book has helped me understand why are valued as low as they are these days," Cramer said.
That is, Geithner takes readers behind the scenes of the financial crisis, explaining the hard choices and politically unpalatable decisions he made to repair the broken financial system and prevent the collapse of the Main Street economy.
"Put simply, I know now that banks are far more enslaved and straightjacketed than I realized. The ability for them to earn a real return on anything other than fees and conservative lending may be gone for the foreseeable future, the only real punishment meted out from the era. And given the bonehead mistakes since the crisis, like the at JPMorgan or the just discovered in Bank of America's bond portfolio, I don't expect the rules to change any time soon," Cramer said.
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"Stress Test" seems to confirm concerns that Cramer has raised in the past. He worries that some big banks have gone from "too big to fail" to "too big to run." In turn, he thinks it may be a good time to reevaluate certain holdings.
"The whole group may be a terrible place for your investment dollars," Cramer said. "After you read "Stress Test" by former Treasury Secretary Tim Geithner I couldn't blame you, if you never wanted to buy a bank stock again."
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