Smart money pros are making a big mistake as they put money to work. Are you about to make the same mistake, too?
Do you know what's been a real sucker's trade, asked Jim Cramer on Thursday's broadcast, being gloomy about retail!
"Every time you bet the consumer is on the rocks, whether it's because there's a hiccup at Coach, or a downbeat number from Nike, or a disappointment from Deckers, or a skipped beat at VF Corp, you draw the wrong conclusion," said the Mad Money host.
Ironically, the suckers who have fallen prey to this trade are the so-called smart money.
Hedge funds have been betting more aggressively against consumers – they see isolated weakness and immediately extrapolate that weakness to the entire sector.
However, that trade has been the wrong trade.
"The vast majority of sellers and short-sellers just can't get their arms around the idea that the consumer is alive and well, especially not with slow employment growth," said Cramer.
In other words, weak results are simply single stock stories – that is, companies may have landed on the wrong side of a fashion trend or maybe they're priced their products too high.
But – what matters most – is what the weak results were not.
- Cramer's Top Dividend Stocks 2012
- Cramer's Ultimate Growth Stocks for 2012
- Cramer's Plays on a Potential Housing Rebound
And according to Jim Cramer they were not a broad referendum on the state of the consumer.
But don't try to tell that to hedge funds. "They are constantly fearing and betting on the worst happening when the smarter wager is to bet on the consumer not against the American shopper, " said Cramer
What's the bottom line?
"Sometimes the big money's made with optimism not pessimism, especially when it comes to American retail spending," Cramer said.
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