The Press as Profit Killer?
Be careful about which investing cues you take from the media, Cramer said Wednesday. Too often the press plays it safe, hedging good news with overconcern for the bad. The end result? You miss the party, while others drink all the punch.
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Here’s an example: the widespread caveats used to “balance” any positive housing report, such as declining inventory, cancellations and bad loans. Most news coverage refuses to accept what looks like stabilization in the sector, focusing instead on the fact that home prices are still down year-over-year, the first-time homebuyer tax credit will inevitably end, mortgages are artificially low because of the Federal Reserve and so on.
The same thing happened this morning, with the press panning the drop in new-home sales. While they took it as a dire sign for housing, Cramer saw it as still more confirmation that a recovery is at hand. Prices are too low for homebuilders to make money, he said, and as a result they’re building less. That, in turn, meant that fewer new homes would be sold. This is something the market understood – notice the early increase in housing-related stocks on Wednesday before the market pulled back in the afternoon – even though the press did not.
Caution is prudent, Cramer said, but too much of it can cost you. The search for profits is a game of anticipation, making informed guesses about where a stock or sector will go next. Therefore there’s always going to be a touch of risk involved. But consider the alternative: missing a big move entirely.
That’s why Cramer wants viewers to buy certain housing-related stocks now, despite the constant drum of negativity. If they wait for the all-clear signal – maybe a headline like “Reduced Inventory Sends Home Prices Soaring” – the money already will have been made in Home Depot , Whirlpool , Lowe’s , Bank of America , Wells Fargo and others.
“You can bet they’ll be a whole lot higher than they are now,” Cramer said.
The press’ unwillingness to take a stand on an issue, or even offer some kind of analysis, was the subject of Cramer’s “outrage of the year.” Watch the video for more on that.
Cramer's charitable trust owns Bank of America and Home Depot.
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