Another Idiotic Advice From Jim Cramer

IBB2 The chart of (IBB) is from March 20th. One can easily argue that Biotech is the most overpriced and highly speculative sector within the overall stock market structure today. That doesn’t bother Jim Cramer — If You’re Not in Biotech for the Long Haul, Hit the Road I’ll give him one thing, Mr. Cramer has perfect timing for identifying the worst investments out there.

Here is what I said about Biotech on March 20th, the day it arguable topped out. Did Biotech (IBB) Top Out TODAY?

The Nasdaq hit an Intraday high of 5,132 on March 10th, 2000, then promptly turned around and proceeded to collapse 80%. Is it possible that the Biotech Index (IBB) did the same thing exactly 15 years later?

Not only is it possible, it is highly probable. Back in 2000 it was Pets.com and NortelNetworks. Today, it is hundreds of impressive sounding “Genome” Biotech names that have

A few Ph.D’s on their payroll.
An impressive idea.
A white paper on how their new generation drug will change the world and make Trillions….a paper that maybe 10 people on this Earth can fully understand.
No way in hell of making a cent or getting their drug to the market.
A whole bunch of stupid investors that believe they will get rich.

Make no mistake, Biotech is an a giant bubble that will pop. And it’s not only Biotech. We are witnessing the same thing in the Silicon Valley’s “Mark Cuban” illiquidity bubble and even on the Nasdaq. Alibaba deal values Snapchat at $15 billion Do I really need to say anything when an app with no revenue is valued at $15 Billion by a company that is in its own spectacular overvaluation bubble? I hope note.

Anyway, why do I believe we might have hit the top in Biotech (IBB) today? Today’s blow off (gap) open and some of my other work within the sector. That is to say, don’t be surprised if we get a massive sell-off in Biotech over the next few months.

Another Idiotic Advice From Jim Cramer Google

April 16, 2014April 16, 2014

What Does Cramer Fear? It Should Shock The Fear Out Of You

Just as his latest blown up call to buy Tesla around at $240 about a month ago, Cramer is worried about the wrong things. Japan, Ukraine, China and Bonds. To be hones…..who cares? While these things are not necessarily wrong from the fundamental perspective, they will have very little impact on the overall stock market and/or the US Economy going forward.

The fact that fundamental factors have very little impact on the overall stock market is our claim to fame. Again, it is not the fundamentals that drive the stock market, it is the stock market that drives the fundamentals. Trying to figure out what the stock market will do based on fundamental data is like looking up a horses ass to try and see it’s teeth. Once again, the stock market has a beautiful mathematical/cyclical structure within it. Once that structure is understood the stock market can be predicted with the precision of a surgeon. If you would be interested in seeing what this works predicts for 2014-2017, please Click Here.

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What Does Cramer Fear? It Should Shock The Fear Out Of You Google

Cramer: Amid fits and starts, what do pros fear?

With volatility returning to the market, it’s become apparent that Wall Street pros have grown fearful. But what exactly do they fear?

Jim Cramer has an ear to the ground. Here are the concerns that he’s hearing about:

Worry #1—Japan: “Frankly, it is downright scary what’s happening in Japan,” Cramer said. “This country’s pretty much left the grid with what now looks like a failed strategy to get some sort of boom going. The Japanese stock market’s down 14 percent this year, by far the worst major market in the world, and the country’s retail sales have plummeted since a recent hike in taxes.”

Impact: Considering Japan is among the world’s largest economies, pros worry that an unexpected ripple could catch them off-guard, so they sell first and ask questions later.

Mario Tama | Getty Images News

Worry #2—China: “No matter how low the estimates go for the purchasing managers’ reports or import or export data or money supply data, the news still disappoints,” Cramer said. “I think China’s growth, at one time double digits, right now is falling from 7 percent to 5 percent. I know, I know, most countries would kill for that kind of growth, but for China that’s not good.”

Impact: Not only is China the world’s second largest economy, but, as an emerging nation, there are real concerns on Wall Street that insufficient growth could trigger serious political upheaval. And that sends buyers to the sidelines, the “Mad Money” host says.

Worry #3—Ukraine: “I think this issue is at the fulcrum of much that goes wrong these days. Every time there is a provocation by Russia, we sell off; every time,” said Cramer. “Some of that is our knee-jerk following of the selloff in Europe. Some of it is we worry about sanctions put on Russia that could end up slowing world growth.”

Impact: If there was ever a wildcard in the market, it’s Russian President Vladimir Putin. Cramer says he presents significant uncertainty to the market, which in turn prevents money from going into some higher risk assets.

Worry #4—U.S. bonds: “Bond prices are going higher and interest rates are going lower. Professionals fear this move because in a thriving economy, the opposite happens, money goes out of bonds and rates go higher.”

Impact: Cramer says the Street fears the decline in interest rates more than anything, with pros wondering if rates signal something seriously wrong in the world. “As a result, nervous money managers dump stock furiously at a moment’s notice,” he said.

March 20, 2014March 20, 2014

Jim Cramer: Buy Tesla. Time To Short?

Jim Cramer is notoriously known for having bad timing. That’s what happens when one claims to know what every stock in the Universe will do. According to Mr. Cramer Tesla is the next Apple and the time to buy is NOW.

Is It?

Tesla is overvalued and highly speculative. If we take Jim Cramers analogy and Tesla is the next Apple, it should be selling at 2.7X revenue (AAPL valuation) or at about $44 a share. Not 15X Revenue or $237 a share. I know this analysis is too simplified and doesn’t take Tesla’s potential into consideration, but it does show you how out of sinc the valuation is.

Futher, TSLA is testing its lows. If it breaks down, watch out below. There is a large gap around $140 that the stock must close. Finally, highly speculative and overvalued stocks like Tesla do very poorly in bear markets. As our mathematical and timing work indicates, the bear market of 2014-2017 is just around the corner. If you would like to know the exact date of its start and its internal composition, please Click Here.

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Jim Cramer: Buy Tesla. Time To Short? Google

Elon Musk is maybe the next Steve Jobs. Elon Musk is maybe the next Henry Ford. Elon Musk is maybe the next… Maytag Repairman?

That’s how Goldman Sachs analyst Patrick Archambault is looking at the founder of Tesla. That isn’t to say he thinks Musk will be as lonely as the Maytag Repairman. Rather, Goldman believes Tesla may be viewed in the future as disruptive technology, revolutionary mass-produced vehicle, or transformative consumer product.

But, those are only three possibilities out of five, according to Goldman. The other two is the company will continue as they previously expected or else fail. Assigning weights to all five possibilities and projecting results for the next ten years in each scenario gets Goldman to value Tesla’s automotive business at $180 per share

In a March 18 note, Goldman’s Archambault writes:

“If Tesla’s auto business were to be truly disruptive (to the whole auto industry, not just luxury vehicles), then there would be considerable upside. Keying off the history of the iPhone, (adjusting for the replacement cycle) would imply 3.1mn units by 2025 and a PV [present value] of $442 per share. The Model-T trajectory implies 3.3mn units and $478 per share; and the volume implied by a basket of transformative durable goods (laundry appliances/dishwashers/refrigerators) gets us 1.8mn units and $329 per share. However, this is offset by our base case (broadly unchanged from our previous forecast) and a downside case where Tesla’s present value is lower and hence we arrive at probability weighted share price of $180 for the auto business alone.”

On top of that $180, Goldman also values the company’s battery business – future “gigafactory” and all – at $20. That leaves a price target for Tesla at $200 for the next six months.

Sure, $200 is up from the $170 target Goldman had before. But, that’s still $37 lower than where it traded. Goldman rates the stock as a neutral.

Jim Cramer calls Goldman’s report “hilarious” and believes only one scenario is most likely. “Tesla’s the newApple,” says Cramer on CNBC’s Squawk on The Street

While CNBC contributor Andrew Busch, editor and publisher of The Busch Update, thinks Tesla is an innovative company, he’s not quite sure it can be compared with Apple.

“I don’t know if they’re quite the Apple of the next generation,” says Busch. “Clearly, they don’t have the same platform and broad distribution.”

Tesla makes a very high-end automobile while Apple makes an assortment of consumer technology products. Instead, Busch is enthusiastic about Tesla’s ability to consistently beat earnings estimates. Last month, the company reported 2013 fourth-quarter earnings of $0.33 per share versus and Wall Street’s anticipated $0.21.

“That’s what you look for in a stock,” says Busch. “As long as they keep doing that – keep increasing their sales, keep making technological improvements and advances –keep buying them. And, until they stop that cycle – until they miss – then I wouldn’t sell the stock just yet.”

Talking Numbers contributor Richard Ross, Global Technical Strategist at Auerbach Grayson, believes the stock’s volatile technicals match the fundamentals for Tesla.

“The chart is very similar to the fundamental story, which is that it’s quite controversial at these levels,” says Ross. “It’s very easy to call the stock the next Apple or to call it a disrupter. But this is a stock that trades on potential and that potential can be your best friend or your worst enemy.”

After building a base of support since last autumn, the stock broke above resistance, according to Ross’ charts. Sure enough, that level was around the $200 per share. At the beginning of this month, Ross’ Tesla’s chart shows the stock in a flag formation, which is generally the prelude to bullish move. Yet Ross urges some caution.

“Flags have failed before,” says Ross “Given that phenomenal rise over the past few months, you have to [take] it with a grain of salt. I could see a test of that breakpoint around $200 a share. A break below $200 would be a clear sell signal.”

Ross thinks those who are inclined to buy can do so at current levels provided they do so in moderation.

“If you like the story, if you like the potential, if you think it’s the next Apple like Mr. Cramer,” says Ross, “you can buy the stock here. But, just adjust your position size accordingly. There’s a lot of risk but also a lot of reward. Keep the position small and just keep your expectations in check. This is about the future.”

As well, Busch thinks the Tesla’s stock will trade in range of 15% above and below the $200 per share level. With such large swings, Busch also doesn’t believe investors should invest a huge portion of their portfolio on the company.