Jim Cramer – The Special Asset Class

For the latest Jim Cramer, go to JimCramerPicks.com – The most painful buys are also the most rewarding ones. The stocks that have had huge runs just kept going. These are companies like AAPL and NFLX. Stocks just keep going and going. Are they beyond reason? Yes, if you are looking at them on the basis of P ratios. Let’s look at NFLX. It went up another 16 points. CMG is still doing great. AAPL might be releasing an iPhone Nano. CMG received 4 downgrades after earnings. Don’t you think it should have gone down? We got to stop thinking of NFLX, AAPL, and CMG as businesses, but rather as a special asset class that is attracting all of the incoming capital. They are looking for anything that has growing earnings. Growth managers don’t worry about fundamentals. They just look for anything that is growing and then they jump in. New money always drives up stocks. AAPL is actually cheap right now. It is trading for 15 times next years earnings, only 12 times if you subtract out the cash. In the end, these stocks are American Idols, and their valuations can go to levels that you don’t understand. They are going higher, and you can count on it. Motricity (MOTR) isn’t growing enough for most people. It is a good company, but you should look for something with a bit more growth. Ion Geophysical (IO) is an interesting spec play. It’s making a little money. But it’s not as good as Core Labs. You want to be diversified in international stocks, and gold is also terrific if you want to

2 Responses to “Jim Cramer – The Special Asset Class”

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