It was a stellar day on Wall Street, as U.S. stocks ended near session highs and all three major averages logged their best rally in a month. The day’s action stumped many of the commentators on TV, though, said Jim Cramer on CNBC’s “Mad Money.”
Cramer chided the so-called experts, who are quick to attribute stock market action to the U.S. Federal Reserve. Some attribute stock market losses to the Fed’s plans to raise interest rates, for example. Others will claim stock market gains are due to indications that the Fed will allow rates to remain low, he said.
“No one from the Fed said anything today, yet the market roared, so I imagine these people are stumped beyond belief,” Cramer said. “It must be so troubling for them to rationalize this rally.”
Cramer was also annoyed by those who explained Tuesday’s gains on the apparent “risk on” mentality in the market, meaning investors have a greater appetite for risk.
To Cramer, relying on the Fed or “risk on” as a means of explaining the stock market is just plain lazy. These explanations don’t really account for anything, he said. The experts should really be listening to earnings conference calls and reading the transcripts. Doing research isn’t fun, but that’s what he says you have to do if you want to be good at reading the market.
Bottom line: Stocks trade on growth, not comments from Fed Chief Ben Bernanke or whether the market is “risk on.” Look for undervalued stocks that have potential to go higher.
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