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Top 10 Market Myths of 2011

It seems the conventional wisdom on Wall Street is often bearish, but as Cramer noted Tuesday, many of the assertions the bears made last year proved not to be true. The “Mad Money” host outlined the top ten market myths of 2011:

First, the bears often said the United States would be one of the worst performing markets of the year. The Dow Jones industrial average , however, was up 5.5 percent. McDonald’s was the best performer, posting a 30 percent gain for the year.

Second, the bears argued the U.S. dollar had to go down, citing U.S. budget woes and political wrangling as the U.S. Federal Reserve printed more and more money. But the DXY, the dollar index, started the year at 79 and finished at 80. Not really a decline at all, is it, Cramer asked.

Third, the bears said interest rates would have to go higher. After all, the U.S. faced a debt ceiling fight while S&P downgraded U.S. sovereign debt, not to mention policymakers continue to spend too much. Of course, Fed Chairman Ben Bernanke did keep interest rates down.

Fourth, the bears thought the oil trades and other commodities would get hit by a worldwide slowdown. Just the opposite occurred, though, as the price of oil climbed throughout the year. Cramer thinks it could continue to climb, too.

The fifth myth, propagated by an errant "New York Times" reporter, is that the U.S.’s natural gas reserves are understated. Natural gas finished at a 28-month low and shows no sign of rising, Cramer said, because of a seeming endless glut brought on by signed contracts that require drilling. Reserves are dramatically understated because of arcane SEC rules designed to catch hype artists, he added.

Sixth, the bears claimed the price of gold had peaked and would be heading down big. But gold actually rallied and Cramer thinks it could be up nicely again this year because the circumstances that plagued the markets in 2011 remain.

Seventh, the euro must be falling a part because of the region’s sovereign debt crisis. But the currency, as measured by the FXE, finished 2011 at around the same levels it started.

Eighth, pharma is dead, the bears proclaimed. Cramer said he actually succumbed to this one until he realized it was the year of the high yield. Pfizer , for example, finished the year as a top performer of the Dow while Merck and Johnson & Johnson also finished in the black.

Ninth, the bears thought the U.S. consumer would run out of gas. But Cramer noted the consumer gained steam all year.

Tenth, the “dogs of the Dow” are the place to be, the bears said. These stocks actually stayed put, though. Names like Bank of America , Alcoa and Hewlett-Packard were all underperformers.

Bottom line: Cramer recommends staying cautious in 2012, but remember that the bearish conventional wisdom of 2011 was hardly a way to make money in the stock market.

Call Cramer: 1-800-743-CNBC

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