Monday, November 23, 2009

Cramer: “People Like Overpaying!”

(CCN ­ Englewood Cliffs NJ)

With The Dow at new highs of 10440, CNBC¹s resident revisionist historian Jim Cramer encouraged what remains of his audience To “Buy! Buy! Buy!” recommending the purchase of Williams Sonoma (WSM $22) who sells over-priced culinary gadgets that few actually need. “People LOVE over­paying for things!” he exclaimed.

The Carnival Barker host of CNBC’s “Mad Money,” Mr. Cramer’s assertion has a solid basis in truth for those who listened to him. His most notable “Buy” recommendations have been Sears Holdings (SHLD) at $197 ­down 60%, Google (GOOG) at $700 ­ down 20% and the almost daily reiteration to “Buy” natural gas stocks like Chesapeake Energy (CHK) at $43, which currently
trades for half that at $21. “Hey!” he told a befuddled caller “If you liked the stock at $43, you’ve got to be just nuts about it at $21!

Coincidentally, Nielsen reports that his viewership has moved in lock-step with his recommendations, and is also down 50%.

Cramer remains his own biggest fan despite studies which show his picks have actually underperformed the markets and are no better than those chosen randomly by a chimpanzee.

Cramer’s most notable calls have been the “Buy!” recommendation of Bear Stearns at $65 which fell to $30 and then $2 the following week, before rebounding to $10. His call of the “market bottom,” which records show he made at 13,000, 12,500, 11,800, 10,000, and 9,000 before advising viewers to get out of the markets at 7900. His revisionist claim that he called the actual bottom at 6500 cannot be verified in print or on tape, and a $15,000 reward posted by a former follower for just such evidence remains unclaimed.

Apparently feeling better than a few weeks ago when he advised viewers to exit the market at 9100, Cramer extolled “I feel really good about the market here” as the Dow peaked for the day.

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Five years ago this week, an obscure little ETF called StreetTracks Gold Shares was born. As the first American ETF enabling stock traders to gain direct price exposure to a physical commodity, GLD was truly revolutionary. Now known as SPDR Gold Shares, this ETF has proven to be a smashing success.

Today GLD is the second largest ETF on the planet, behind only SPY which tracks the flagship S&P 500 stock index. GLD now holds a staggering 1117 metric tons of physical gold bullion in trust for its shareholders, which was worth $41.3b this week! This "people's central bank" fueled by stock-trader gold demand has amassed so much bullion it now boasts the world's sixth-largest holdings. (more)

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New home sales may begin to pick up by the start of the so-called spring selling season, said Toll Brothers Inc., the largest U.S. luxury homebuilder. Existing house sales may take longer. Residential construction and property sales led the way out of the previous seven recessions going back to 1960, said David Berson, chief economist of PMI Group, the mortgage insurer in Walnut Creek, California. (more)

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The agency insured lenders against mortgage defaults on 20 percent of homes bought in the last year.

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