Two themes will dominate the last couple weeks of 2009, Cramer said Friday, defense of performance and research restraint. That sets up an unusual situation, one that contradicts one of Mad Money’s most fundamental principles: Instead of locking in gains, investors can let their profits ride.
When the S&P 500 is up double digits for the year, Cramer explained during Mad Money, fund managers tend to defend, even prop up, their holdings in order to boost performance. Need proof? The S&P has generated annual gains of over 20% seven times over two decades, and only one of those years saw negative returns for December. And the last two weeks are often the best, with the average gain at about 4%.
Research restraint, meanwhile, has to do with some of Wall Street’s unwritten rules, namely that analysts rarely issue year-end downgrades. With no earnings reports left for 2009 – and the final few from Nike , Oracle , General Mills , Research in Motion , Darden and CarMax all praiseworthy – there’s little reason to expect any. Especially because analysts fear offending their clients, the aforementioned fund managers, who are hard at work defending their performance.
Speaking of those few earnings reports, Cramer said General Mills’ numbers cast a positive light on the food and beverage group. CarMax showed robust sales and a need to replenish inventory, making the autos group attractive. Cramer recommended the Ford Motor preferred shares. He also likes Salesforce.com off Oracle’s quarter. Investors should use Nike’s good news to take some profits in Under Armour . And Darden’s conference call spoke to signs of strength in the consumer.
Analysts have been known to spread holiday cheer in another way as well, Cramer said. Often times they’ll issue positive research reports. Citigroup just released “Playbook 2010: The Biggest Cycle in Over 10 Years,” which is about the strength in semiconductors, including Cramer favorite NVIDIA . And Morgan Stanley’s Mary Meeker issued a 424-page tome that confirms everything Cramer has been saying about the mobile Internet.
Not to be left out, companies do their part, too. We most likely won’t see any pre-announcements to the downside or new equity offerings, Cramer said, both of which could hurt investors’ portfolios.
The only spoilers to watch for would come from the media. There’s a good chance we’ll hear about a disappointing holiday shopping season or home foreclosures. But, of course, bad news sells more than good, Cramer said. So maybe it’s to be expected.
But after all this, what’s the game plan? Cramer told investors to do “absolutely nothing.”
“If history’s any judge,” the Mad Money host said, “you can have a happy and profitable holiday season simply by letting others make money for you.”
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