OK, so while I love Jim Cramer’s mad enthusiasm for the stock market, he’s often part of the noise he’s talking about in this video. In the video, Cramer says don’t listen to the noise, by which he means all the negative and fear driven headlines you hear and read. But I’m saying this “noise” is often Jim Cramer himself on his Mad Money TV show.
The noise you shouldn’t listen to happens to be those TV pundits who tend to tell rookie traders to buy when they should sell and sell when they should buy. And this includes Cramer.
Cramer said not to buy the banks just when they were bottoming out a few months ago. He made a clear call to sell the banks on November 28 of 2011.
“Sidestepping this toxic group has helped immensely to boost your performance this year and I think it will continue to do so,” Cramer said, “Sell the banks.”
This was part of his DEFCON 3 alarm call saying don’t buy the banks due to the European debt crisis. That was the exact bottom for the bank stocks and they’ve done nothing but go higher since his “sell the banks” call. Bank of America was trading for around $5 a share when he made the call not to buy them. Since then, Bank of America has nearly doubled, trading at $9.68 as I write this.
And this wasn’t just about the bank stocks, Cramer also called Apple just another stock a few months ago after Steve Jobs passed away. And while he might be right a few years from now, he’s been nothing but wrong since he made the statement. On his Mad Money show on November 11th of 2011, Cramer said:
“I want to be able to say that the plans put in place by Steve Jobs, perhaps America’s greatest industrialist, are so amazing that you can back up the truck in every hiccup for years to come,” Cramer said. “But I can’t dismiss these minute Apple data-points as irrelevant anymore. These days, it would just be too glib.”
“Therefore, Apple is no longer a given. And right now he’s waiting to buy because he thinks better prices are coming.”
When he made this statement Apple was trading for $395 a share. What’s it trading for right now? Well, nearly $600 a share. Yes, here again, if you listened to Cramer you missed another double in a stock. No “better prices” came for Apple, it only shot higher and higher. The time to buy was when he said to wait for a pull back.
So, as Cramer says, filter out the noise, which may include Jim Cramer himself, and trade your own plan. Get those noise cancelling headphones so you’re not trading off what TV pundits have to say.