Cramer's Mad Money - Ignore the Analysts (7/28/09)

Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Tuesday July 28.

Ignore Analysts: Goldman Sachs (GS), Home Depot (HD), Lowe's (LOW)

Cramer urged investors not to pay attention to analysts' calls on stocks; “If you want to be a good investor, you have to recognize that you’re not playing the same game as the analysts.” Institutional investors are behind most analysts' calls, and these funds buy and sell stock in huge volumes, unlike the individual investor. Analysts often tend to focus on specifics and can miss the big picture.

Cramer gave the example of Goldman Sachs' downgrade of Lowe's. The call was not a reason to be bearish on housing. Goldman Sachs has expressed a bullish position on housing long-term, but removed Lowe's from its conviction buy list merely because it trades at a lower multiple than Home Depot. While Cramer agrees that Home Depot is better, he wouldn't have sold Lowe's only because of Goldman's downgrade.

Cypress Semiconductor (CY) CEO T.J Rodgers

Continuing on his theme of the mobile internet revolution, Cramer discussed Cypress Semiconductors which he thinks is headed higher from its 164% gain since September. The secret to making money off these kinds of stocks is to find winners and ride them higher, said Cramer. Rodgers discussed Cypress' programmable chips that are produced once and can be used for a variety of applications. Concerning the macro situation, Rodgers said the employment situation will improve when the government comprises a lower percentage of the GDP (under Obama, the government comprises 50% of the GDP, up from 30%) and thinks high taxes are keeping businesses from hiring. Because of California's 9.75% tax rate, Cypress was forced to move factories abroad.

Much Ado about Golden Cross

Cramer usually prefers looking at the fundamentals of stocks rather than charts, and is underwhelmed by technical banter about an incipient bull market. The huge moves in the Dow and the S&P 500 are enough of a confirmation of an upturn without looking for a golden cross, which technicians define as a shorter-term average crossing a longer-term one from below to above (for instance, when a 10-day moving average crosses a 20-day). “This is the kind of thinking,” Cramer said, “that can only hurt you and make you a worse investor.” Why? Because golden crosses occur only after the bullish move has been made. Investors should be anticipating moves, not confirming them; 'If you wait for confirmation that the move is real,” Cramer said, “then you're going to end up missing all the big dollars.”

Mad Mail: More on Naked Shorts

One caller was disappointed with the SEC's apparently soft position on naked short selling, but Cramer still has hope that the uptick rule may be reinstated at some point. People who say it doesn't matter "Have never really traded before."

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