E.M.Smith

G-20 Summit: A New World Order?

France was in the G4 because they were part of the winners of WWII and historically part of the class of European colonialists (i.e. they could 'stand in' for all the francophone colonies... in a colonial mindset sort of way...)

No inflation related to gold found in California? Might I remind you of eggs selling for $1 each when that was a day's wages nationally? Localized, yes, but so was the gold...

THE major problem with a gold currency is Keynes. You must accept that monetary policy can not be used to dampen business cycles. If money velocity drops, nothing can be done.

Aggregat Prices=Money Supply x Velocity of money.

Individual spenders control V. If you make M.S. static, there is nothing you can do to control panics, recessions, and inflation.

Wether this is a good thing or not depends on how much you think wobbly MS, thanks to government actions, causes panics, recessions, and inflation in the first place...

(The minor problem with a gold standard is that it makes money supply dependent on who has the gold mines. Russia and South Africa are large players. Part of why Nixon dumped the gold standard was that the Soviet Union was jerking the gold supply around (to annoy us or due to central planners being bogus, but why doesn't matter) and he did not like having U.S. money supply controlled by the Soviets.)

Why Cramer Should Be Suspended

Cramer has his faults, but deception is not one of them. He has a self imposed rule that he can not buy/sell a stock within some fixed number of days of mentioning it on the air. I'm sure some times he's bought stock before the mention (otherwise he could never buy a stock). I've also seen him mention a stock, say folks ought to sell it and point out that he can't 'cause he mentioned it, and stick with the stock as is falls.

His major fault is just that he's a trader trying to think like an investor for the small 'home gamer'. Because of this he recommends stocks with sound fundamentals per the financial reports and in longer term up trends (or downtrends with deep valuation). This leaves him prone to three major faults:

1) The "fundamentals" can lie. WB can have great numbers and yet be loaded up with illiquid paper that leads to a crash or a regulator forces a shotgun wedding.

2) Momentum "vacuum crashes". POT was recommended for many points of upside, then no one was left to buy. He called an exit a bit too long after the rollover due to being fixated on the "fundamentals" in #1 and trying to be a longer term investor rather than a trader.

3) Deep valuation can get much deeper (the dreaded value trap). TMA was such a value trap. Can't really blame him, since Thornburg had a very sound set of "fundamentals" and solid dividend coverage - until the market for mortgages froze as all hell broke loose.

Have you never stepped in a value trap? Had fundamentals not match market momentum? Bought into an established trend just in time to have it roll over? These are classic faults we all have experienced.

My take on it is that while Cramer would like to day trade his way around these things, and use options to protect positions, his "show" is based on the notion of longer term investing for the average person. This prevents him from doing (or recommending) what he would actually do.

Once you get this in mind, his show is useful. Watch it for ideas on how to evaluate a stock, for ideas on what might be moving or a merger target or see a chart in a nice up trend. Take his stock picks as beauty pageant winners, then do your own charts and "homework".

When the RSI is high and prices are going parabolic, hey, maybe it's a blow off top and not good to enter right now. When the deep value play has a DMI with red over blue and a MACD below zero headed steep down, maybe it isn't time to jump in just yet. And when the financial fundamentals are great but the stock and the SMA 50 day are weaving together (dead money) or price is below SMA consistently then the market has not recognized it yet and you ought to put it on a watch list but not buy it just yet...

In other words, don't sheepishly buy what he likes but learn from what he says and learn to use charts to spot when he's falling into one of his 3 pattern errors. BTW, he also puts too much store in what the Chief Mumble Officer of a company says when it matches the reports. He lets the Cxx reinforce the #1 error type. Oh well, it lets me see the Cxx on TV and get to form an opinion of them.

His non-pattern error was to be incredulous at how perfectly good companies could be blown up by a broken set of rules and SEC laxity. I can't blame him for that, either, since many folks were caught off guard with the failure of: FNM FRE AIG LEH BSC ... et.al.

As many other folks have pointed out, if we were not bound to "Mark to Market" with SEC doing nothing to stop naked short sales, no uptick rule, and CDS's written by anyone based on smoke and rating agencies giving AAA for a pulse; these companies would not have blown up. I think most of us actually thought that S&P, Moodys, Fitch et.al. had a clue. The number of professional investors killed by this cascade failure is very very large.

How many of us know the ditty "The market can remain irrational longer than you can remain solvent." as a warning against value traps? The accountants and regulators are now learning that in the context of killing the financial companies with "mark to market" when the market is broken. They are just learning it with your money.

Yes, I watch his show. No, I don't blindly buy what he likes. Yes, I think he (mostly) has clue. No, I don't think he is perfect... who is?