GO
Loading...

The Consensus Is Right

Thursday, 13 Oct 2011 | 6:39 PM ET
Mad Money Markets
Mad Money host Jim Cramer say the goal on the Street is simple: make money. It's not about who sounds the smartest, or being a contrarian. The consensus, at times, is very right and Thursday was one of those times..

It doesn't always pay to be a contrarian, Cramer said Thursday, because sometimes the consensus is right.

The "Mad Money" host noted that for days, he's heard it's time to start buying the bank stocks because they are hated and nobody wants to own them. But the bank stocks were crushed Thursday, so that contrarian call would have killed you. Meanwhile, conventional wisdom says to buy technology stocks during the fourth quarter because that's when they have outperformed in nine of the last 10 years. Yet there is snickering that the techs should be sold.

"But crazy as it may seem, sometimes the consensus is actually right," Cramer said. "Today's one of those days where the consensus made you money, while needless over-intellectualized contrarianism made you feel like a rope-a dope."

For months, Cramer has heard that the banks will soon turnaround. But he only cares about earnings and that's what made Thursday's market especially disappointing to Cramer. To him, JPMorgan Chase is best of breed, but he couldn’t tell if the financial institution has earnings power when it reported Thursday. In other words, it was able to handily beat earnings, but he couldn't tell if it can make a lot of money. To make matters worse, JPMorgan is the best of the big banks and if it's being cautious, how are the others doing?

As far as the technology space goes, Cramer said those he speaks with say seasonality, the usual lift that tech gets this time of year, isn't going to pan out. But while the banks were hammered Thursday, tech stocks advanced. The tech move was so powerful, it was almost able to trump the weakness in the financials.

So what does all this mean?

"I've been at this investing business for 31 years and one of the most important concepts I've learned is just because many people think something is going to happen doesn't mean it isn't going to happen," Cramer said. "The goal in this business is simple. Make money.

"The consensus, at times, is very right. This is one of them."

Call Cramer: 1-800-743-CNBC

Questions for Cramer? madmoney@cnbc.com

Questions, comments, suggestions for the Mad Money website? madcap@cnbc.com

  Price   Change %Change
JPM MLP ETN
---

Contact Mad Money

  • Showtimes

    Monday - Friday 6p ET
  • Jim Cramer is host of CNBC's "Mad Money" and co-anchor of the 9 a.m. ET hour of CNBC's "Squawk on the Street."

Mad Money Features

  • Grab the latest CNBC gear from the NBCUniversal Store!

  • Get a behind-the-scenes look at how Cramer formulates his investment advice. "Inside the Madness" is a column, which features e-mails and more with Cramer and his researcher Nicole Urken.

  • You’ve always wanted to hit the “Hallelujah!” button. Here’s your chance.