The Consensus Is Right
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."
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