Costco Connection - January 2007

A sampling of
Cramer’s
investment
philosophies

The Costco Connection Jim Cramer’s latest book, Mad Money: Watch T.V., Get Rich, is available at most Costco locations.

Follow Wall Street’s
lead. Most of the time it
works. “When you trade based
on momentum, buying a stock
that’s gone up in the expecta-
tion that the momentum will
take it higher, or when you
buy a stock that belongs to a
group that’s been favored or
anointed by the big institu-
tional investors, you’re trying
to make money by following
the Street’s lead. Unless you
believe that these hedge funds
and mutual funds are dead
wrong about a stock, you can
get rich just by looking at their
behavior and anticipating what
they’ll do in the future.”
Bears are too bullish
and bulls are too
bearish. “In general, the
analysts who cover stocks will
never be bullish enough when
they’re positive and they’ll
never be bearish enough when
they’re negative.”
Don’t be a snob.
“Because all of the people who
run money tend to be rich, or at
the very least tend to spend
money as if they were rich,
they often miss trends in mid-
grade or low-end products,
companies and stocks.”
Use tips as a contra-
indicator. “Whenever you
start getting tips about a stock,
that’s a good time for you to
stop buying, start doing some
homework and probably sell
the thing.”
Hype plus massive
short interest equals
sell. “Whenever you see a
stock that’s heavily hyped, you
should sell.”
Know how to spot
downturns in cycles
other than the busi-
ness cycle. “It goes
without saying that when
you catch a stock that’s
levered to a cycle that’s about
to start trending downward,
you should sell the thing.”

college campuses. Why is he attracting the much-desired young demographic? “Because I’m psycho and authentic,” he says. “They hate scripts, and everything is scripted on news. They like a guy who makes mistakes. They like a guy who is obviously troubled.”

“Nobody thought a stock program could be so big,” says Regina Gilgan, senior producer for Mad Money. “The people who watch Mad Money include the core CNBC audience, but the interesting thing is that people outside that core are watching, too: College students, women and families are watching the show together. We always hear from teachers who use Mad Money as a study guide, and construction workers watch this show. Jim can’t walk past a construction site without getting catcalls.”

“They’re always thinking there could be a train wreck, and if you were to come to the set you would see it is a completely out-of-control situation,” Cramer tells The Connection. “It is a runaway train.”

His critics might agree with the off-the-tracks analogy. Kiplinger’s Personal Finance magazine recently cited Cramer Watch.org as one of its must-read blogs. The Web site pits Cramer’s picks in his “Lightning Round” segment against those of the fictional Leonard the Wonder Monkey, who picks stocks by flipping a coin. (As of late October, Cramer had a slight lead.)

“They ought to go watch more ballgames or go out with women,”

Cramer says of his online critics. “If they are devoting their lives to writing about me, I am telling you right now that their sex lives are very bad.”

Critics exist in the mai n-stream media as well. New

York Times business columnist

Joseph Nocera has admired

Cramer for years, but he’s no fan of Mad Money, telling NPR that “it’s great theater and it’s great television, but it’s not great investing.”

Says Cramer, “I admit that it’s entertaining. I admit that it is fun.

But I am serious about making money for people. The people who really hate me are other people in the media who think I make a mockery of them.”

Is Cramer bullish on the future of Cramerica? Cue up the “buy” sound effect. “As long as I keep my blood pressure under control, I think it can continue,” he says. “I really think every other show is faddish and my show—picking stocks, helping people make money and entertaining—is the template for the future.” C