Love him or hate him, Jim Cramer has a knack for getting behind momentum stocks and he’s often right. When he realises he is wrong on a particular growth stock or speculation, he usually gives a mea culpa before these crash or at least admits when he is wrong as he recently did regarding Netflix (NFLX). To his credit, he did tell people to sell NFLX at around $180 or so when the stock began its rapid decent toward a more realistic valuation at today’s quote in the $120′s. Cramer, like anyone in the investment business, has gotten it wrong many times in the past (an example was his recommendation to buy NFLX at $300), but his general strategy of “buy and homework” works when combined with a growth investment strategy that sets stop orders along the way in strong bull markets. The real trick to any trend following, high beta growth investment approach is to know when to get out and move to cash.
Cramer’s enthusiasm for the markets is undeniable but he is also a student of the moves of “Dr. Copper.” The price of copper has forecasted many recessions and stock market/economic booms in the past. Cramer must be getting cautious on stocks, because copper is down some 25% from recent levels over the past two weeks. Clearly, investors who look to copper to forecast the price of equities must be getting extremely bearish right now.
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