Mad Money

Cramer’s hedge fund check list for intrepid investors

Profits are what matter: Cramer

(Click for video linked to a searchable transcript of this Mad Money segment)

If you're looking to make money in the market, Jim Cramer says you have to think like a hedge fund manager.

Or at least understand how a hedge fund manager thinks.

And given world events, Cramer believes a lot of the big hedge funds have a somewhat negative bias.

"You have to understand that these guys (hedgies) are paid to be right all of the time, which means making money on both up days and down days. That involves predicting events and profiting from them.

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And lately there have been a number of good reasons for hedge funds to go short. That is, there have been plenty of catalysts in the market that could take down stocks.

Following is a checklist:
__ Events in Russia.
__ Weakness in Europe
__ Japan headwinds
__ Argentina bond woes
__ Insurrection in Venezuela
__ Unrest in Turkey
__ Total reasons to bet against market

The interesting thing, Cramer says, is that recently hedge funds have exhausted every last category listed above and their reasons to bet against the market now total zero.

When that happens, negative bias hedge funds are flat out of luck.

coming out of U.S. companies is emerging as the only dynamic catalyst in the market, Cramer explained. And earnings have been relatively good.

As a result short sellers are forced to cover.

"You put all of these factors together and what do you get. How about a rally," said Cramer.

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"In the absence of any genuinely bad news from overseas, I suspect the market will focus on what's going on in the world of profits."

And until hedge funds can again tick off a couple of those boxes listed above, Cramer thinks bearish investors are, at best, facing a tough slog.

Call Cramer: 1-800-743-CNBC

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