Jim Cramer's Mad Money Review

Thursday's show was a recap of Cramer's show on Christmas of last year. He told viewers that faith did not cut it when being an investor, but that you have to be skeptical. Always consider the source making an announcement about a stock. He explained how and why he was qualified to be on a show giving his opinion. He said it is not just because he successfully ran a hedge fund for 14 years, because that is much different than investing on your own time. He said that it is not only because of his experience and because he works like a "dog" on the show, but because he played for the bad guys.
He said hedge funds are very predatory, especially with people like him. Hedge funds do nothing for society but help the rich get richer, said Cramer. He said if anything it takes away from the individual investor. He said now he works for the good guys and gives them the tips that hedge funds use to be successful.
Cramer said that when he graduated from college he wanted to be a journalist, not a money manager. He said his first investment was a huge failure, but he did not quit and kept getting better. He got his break when The New Republic's editor-in-chief Marty Peretz, after hearing numerous stock tips over Cramer's answering machine, gave him a check for half a million bucks and told him to invest it. Cramer said. This luck led to his hedge fund in 1987. He said he was working 18-24 hours a day and his blood pressure was very high. His family intervened in 2000 and he decided to leave the hedge fund, but kept writing for The Street, which he co-founded.
This led to Cramer starting Mad Money. He said it is not a scam. He said he is not even allowed to profit from his recommendations, only the viewers can. The show is not a get rich quick scheme, and it applies to a very diverse audience. He also said people should not expect to become market experts by watching the show, but that they have to put their homework and time in. You must be willing to commit an hour of research a week for each stock you own. He said that individual investors should own no more than 5 to 10 stocks. He said it is ok to put money in a mutual fund if you do not have enough time, but do your homework on the mutual fund and only be in one at most. If you have the time, forget about mutual funds, because they make their money of the fees they charge you. If you have the time, invest yourself.

Labels: CNBC, hedge funds, Investors, Jim Cramer, Mad Money, Mad Money Lightning Round, Mad MOney Recap, mutual funds, thanksgiving

The New York Mercantile Exchange's IPO is one of the hottest Wall Street has seen in six years, with investors already reaping big returns as the stock's price doubled. Too bad rank-and-file retail investors didn't see much of it. Shares in the 134-year-old exchange vaulted some 125 percent on their first day of trading on the New York Stock Exchange, but hedge funds and other major institutions were expected to be among the initial public offering's biggest winners. Retail investors essentially were boxed out of owning shares of Nymex Holdings Inc., although they still have a chance to buy in the coming days as the stock price stabilizes. They can also look toward a secondary offering since the Nymex only floated 7 percent of its total shares. Still, "almost by definition the little guy gets cut out of these deals," said David Menlow of IPOfinancial.com. "They're not supposed to work that way, the playing field hasn't been leveled, and anytime you have situations of limited supply and unlimited demand somebody is going to get shut out." With an unusually hot IPO, the first wave of buying typically goes to major banks, brokerages, mutual funds, money managers, and hedge funds. Nymex rivals' CBOT Holdings Inc., Chicago Mercantile Exchange Holdings Inc., and InterContinental Exchange Inc. all have massive holdings by this class of investors. However, shares of publicly traded stock and futures exchanges are even more attractive to hedge funds. Recent consolidation among financial markets - such as the Chicago Merc's $8 billion offer to buy rival CBOT - has hedge fund managers looking to cash in if the Nymex merges with another player. Also, futures contracts like those offered on the Nymex are a popular tool used by hedge funds to diversify, betting on the price of oil, metals and other commodities. So, owning a stake in the Nymex also helps hedge funds collect back some of the fees charged them to complete these transactions. "Hedge funds are really coming after the Nymex early," said Stephen Carl, principal and head of equity trading at The Williams Capital Group. "With all this consolidation among exchanges, this kind of investment looks good to them." Nymex won't have to disclose to regulators who took large ownership stakes in their company for some weeks to come. However, funds such as Scout Capital Management, Sands Capital Management, and Marisco Capital Management are all major investors in the other futures exchanges. And, without taking advantage of the first day of trading's surge, is it even worth it for retail investors to come in this late in the game? While publicly traded stock and commodities exchanges are all the rage right now, some on Wall Street are questioning what kind of value they'd bring to a portfolio. The nation's six publicly traded exchanges currently have high price to earnings ratios, a metric that evaluates the attractiveness of a company's stock price. The high p/e ratios suggest that profit at these exchanges must remain lofty to carry the kind of stock prices they command. Shares of the company rose $73.67, or 124.9 percent, to $132.67 from their initial offering price of $59. At this price, the Nymex is trading at 73 times its annualized earnings. That's more than the Chicago Merc, which trades about 47 times its annual earnings, and the 43 times carried by IntercontinentalExchange. Further, most of the exchanges only recently went public, and lack earnings records. There's little consensus among analysts on ratings or price targets, and all the stocks are trading at or near their highs. Ed Keon, chief investment strategist with Prudential Equity Group, said investors who want to hang on to the stocks need to be prudent. "Individual investors should be cautious about buying any individual stock, and think it through carefully whether it a new IPO or a company that has traded for 100 years," he said. "You especially have to be wary of a company that's had such a big one day pop, which might make it more difficult for individual investors to assess."
Source: Mercurynews.com

Labels: Investors, IPO, NYMEX, Stocks