Mad Money

Cramer Exposes the Market's 'Scare Tactics'

Fear & Loathing on Wall St?

As stocks closed higher for a third-consecutive session Wednesday, Cramer said it's time to expose the "scare tactics"that have kept many investors out of the rally.

First, Cramer addressed the notion that Greece had to "blow up" due to the demonstrations or because the International Monetary Fund and Europeans weren't going to advance it money. In actuality, Cramer said the demonstrations were non-confrontational, even anemic. He added that France, Germany and the IMF always had the Greece debt crisis under control.

Second, Cramer attacked the idea that the U.S. housing situation may never improve. There were month-to-month gains in housing along with blow-away existing home sales, he said.

Third, Cramer dismissed the "risk-on, risk-off" speak. He called it "gibberish" because it's hard to tell what's "risk-on." Instead, investors should know what goes up when.

"The determination of what to buy has to do with whether the central banks of growth countries are tightening aggressively—in which case buy the stocks of diaper, soda and soup manufacturers—or not tightening, which means buy the heavy machinery stocks, mining plays and companies that spew smoke out of a towering orifice," he explained.

Fourth, Cramer discussed the idea that nothing can help the consumer until he or she gets a job. That idea is untrue, however, because most people have a job, he said. The real problem is that when gasoline prices go up, people have less money to spend elsewhere. When gas prices go down, consumers can spend more freely.

Fifth, while quantitative easing, the debt ceiling and politics matter, Cramer said it's not the only factor in picking stocks. Instead, the stock-picking game has more to do with a company's earnings, he said. To him, the performance of individual companies and their outlook going forward is far more important.

Finally, Cramer said stocks do not always trade in lockstep with geopolitical events or economic woes of faraway lands, like Europe. He recommends focusing instead on stock tangibles versus macro figures that don't translate into earnings per share. Instead of always looking at big picture data, he recommends examining machinery orders, same-store sales or other types of data that gauge a company's performance.

Call Cramer: 1-800-743-CNBC

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