CNBC and Michael Lewis' New Book on High Frequency Trading

Cramer and David Faber are off the mark just now in saying that Michael Lewis isn't "saying anything new."  It's the difference between eating a cake and making a cake.  Michael Lewis, interviewed at length on 60 Minutes last night, can make the cake.  He can get to the core thought that makes the complex understandable.  In this instance Cramer can only eat the cake: he has been talking about high frequency trading for years now, but he never grasped or communicated the core concept that made it understandable. Cramer said that it was closeness to wall street that won the day for the HFTers,  and that's true, but that's only a vague and a half of the story.  It's the HFTer seeing that huge order (to buy or sale), executing on part of it and then putting an order for the rest at the same or a higher price and reselling to the buyer at a higher price. 

Big Day for Interpreting Cramer and P&G Yesterday

When Cramer starts a position in P&G and then loads up twice in one day, this is a big call.  It is a warning about the general market -- the closest he comes without saying so.  It has been years, really, since P&G served as the safety market.  It looks like this is the year, hopefully decade, for Cincinnati.  Everything is coming up roses for this town.

Two Dualing Gurus Cramer and Jimmy Rogers

http://jimrogers-investments.blogspot.com/2013/10/artificial-sea-of-liquidity.html 

The eternal dilemma, whom to follow.  Cramer has been spectacularly successful with his model portfolio, which is not that easy to replicate, even with low or non-existent commissions/transaction costs.  

Renewing Cramer

Time for renewing Cramer's expensive service.  $399/yr.  Say $35 per month. There are four or five submissions every day.  Its value is in keeping abreast of his current thinking while I also think about his overall portfolio, which is very successful for him.  Normally I do not read the emailed submissions, but I save them.

Being the beginning of the year, and having 30 days to decide, I'm considering renewing it.

For the past few years I also listen or read the transcript of Mad Money (intorduction section) every day.

What do I mean by "current thinking?"  Just looking at his portfolio does not tell you what is happening at the margins, i.e. which he is shedding, which he is adding to.  The service's emails do this.

Whitney Tilson -- What a Guy

Jim Cramer has always been my guy.  He still is.  Add Whitney Tilson to the same airified level.  His interview on CNBC just now was awesome, not only did he virtually double his money after going long Barns & Noble last week, he gave five or more other tips and resources.

While we're discussing Whitneys, Meredith Whitney is no slouch either.

Exactly Who Has Captured the Savings on Low Natural Gas?

“Whatever gas has taken away, natural gas has returned to the consumer.” CNBC commentator just now.

I question this, since I believe the middlemen have captured the "return," unknown to the consumer.

Cramer is starting to slam Procter.  He did so this morning on CNBC, before he had heard the conference call, which occurred at 8:30 am.  You can be sure it will be mentioned on Mad Money tonight.  He praises Clorox and all other competitors of P&G.

...Yes he did continue to slam P&G on Mad Money, praising the competition Kimberly Clark for getting pretty much everything right that P&G was getting wrong.  Said not to buy Procter as there was more falling to come in the stock price.

Jim Cramer Hits an All-Time High

(c) 2011 F. Bruce Abel

This article on Jim Cramer is just "ok," providing a modicum of new information, such as that he divorced The Trading Goddess, which I had deduced by his repeated references of life of "Friday night drinking drinking cheap scotch on the dirty linoleum floor" and other comments about his weekends and life.

The article does not give Cramer the praise that his portfolio deserves, as its performance is sensational.  But there are "flaws" in his nightly presentation theory -- a little slippery about whether he called this correction or that one, etc.  Such problems are inherent in what he is doing.  I have never really made money "following" him, due to psychological factors that I think everybody feels.

Cramer says he is a Democrat but when he was on CNBC with Kudlow (pre Mad Money) he was pretty Wall Street/Republican-line, I thought.

http://www.nytimes.com/2011/05/15/magazine/jim-cramer-hits-an-all-time-high.html?hpw 

Cramer

(c) 2010 F. Bruce Abel

OK he did it.  Tonight he matched his "Bernanke Federal Reserve Rant."  13 minutes. I TIVO'd it for posterity. Will it work as the last one did?  I hope so. 

He started with Sunday's lead article in the New York Times, about the exodus of the individual investor from the stock market.  He attacked the entire Wall Street money managers and exchanges.  He also slipped in strong ideas for Obama including a second stimulus and reduction in taxes on capital gains for the small guy.  He said hire 50,000 people for the SEC to send some of the axxholes to jail.

More on this later.

Mad Money Recap | Nightly Recap for: Thursday, July 15, 2010

(c) 2010 F. Bruce Abel

Cramer said on Stop Trading today that he told people to get out yesterday.  I didn't hear it.  Here's his opening segment last night.


Mad Money Recap Nightly Recap for: Thursday, July 15, 2010: "Here is the list of 'CRAMER'S RALLY REQUIREMENTS' on the board that he is checking off:

√ - Fine Print on Financial Regulations - completed
√ - Spanish Bank Stabilization
√ - Lower Unemployment
√ - Oil Spill Resolution
√ - Confirmation of China's Soft Landing
√ - European Stabilization"

Cramer

(c) 2010 F. Bruce Abel

$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$

These six things (was four things last Wednesday, see my earlier blog) must occur before we should buy common stocks again:

1. fine print on financial regulation
2. Spanish bank stabilization
3. lower unemployment
4. Oil Spill resolution
5. confirmation of China's soft landing
6. Euro holds


8260 = where systemic risk is priced in

Cramer Not Doing Well on CNBC This Afternoon

(c) 2010 F. Bruce Abel

Readers of my blog know that I admire Cramer. Today, because I cheer the SEC filing against GS, I see Cramer in another light. Everybody has blind spots and on politics and GS Cramer has blind spots. He cannot be trusted on this item.

The commentator on the right, possibly with a German accent, was spot-on and CNBC was shameful in taking a break and kicking him off the dialogue.


By the way Morgenson nailed this story December 24, 2009, when I was boarding a plane for Italy and missed it until recently. Click on my label "Morgenson," below, and go to her lengthy story. Clearly this story was from a leak from the SEC.

Cramer Tonight

(c) 2009 F. Bruce Abel

Pretty good. He makes an excellent case, for once, on natural gas. APC. Anandarko.

By the way, when I say "for once," I'm not knocking Cramer for his recent calls on stocks. He has been brilliant. Just a little off on natural gas.

More on APC later.

The bigger news is that Cramer is knocking down C and BAC as "frothy." He's calling a top! For a few days.

And if TJX isn't a short after tonight I don't know what is! He nailed FDO last week along the same lines and was very right on that one.

And now, the transcript for APC, at least the beginning:


[Beginning of Cramer's verbatim comments for this segment...]Jim: Natural gas prices have dropped below $3 per thousand cubic feet… that is the lowest level since the summer of 2002... not only that, inventories are up 19% above their 5 year average… with that kind of setup… you would expect the natural gas stocks to be at multi year lows… hey, at least 52 week lows… but what have they been doing… they have been roaring… I think this move is all about Washington… all about the possibility that natural gas could be used as a cleaner, cheaper replacement fuel for oil and dirty coal… which they are masquerading as clean coal in Washington… as it will take decades for wind and solar, President Obama’s solutions, to really start to matter… not to mention batteries.This whole move is predicated upon the idea that Washington has at last embraced natural gas… that this cleaner, greener fossil fuel… I know that it is fossil which puts it in the dog house… will be a part of our energy future… take Anadarko… Anadarko Petroleum is one of the strongest derivative natural gas plays… it is one that I have been recommending since the show began… most recent I have been recommending January 12th, when it was at $38.33... the stock is now up to $54.40... a 40% increase… even if the price of the commodity has just been crushed… if natural gas is going to be part of our energy future… than Anadarko is a fantastic stock to own.In its second quarter, Anadarko reported record sales volumes, selling 56 million barrels of oil equivalent… about 4 million more than the mid point of Anadarko’s guidance… as well as record drilling efficiencies… meaning the company was able to run fewer rigs but still drill more wells… and the cost of wells coming down.Anadarko is a great growth energy play… with new discoveries in the Gulf of Mexico and Mississippi… a major new project in Ghana, that was approved by their government in July… and another project in Algeria that is expected to start producing oil in 2011... the company has also done a great job of hedging its natural gas… 80% of anticipated natural gas volumes hedged to $4.18 in the summer months… hey, who would have ever thought that was going to be good right… and more than 75% of its 2010 natural gas volume is protected with a middle floor of $5.60 and an upper ceiling of $8.25... so even if natural gas prices do not bounce back hard… Anadarko is still in good shape… and it is not starving for cash either… remember, it raised $1.3b with that secondary offering in May… that was at $45.50... made a lot of people money… you are up 20%… if you got that offering price even.Again, natural gas collapsed… and they erased another $900m in debt in early June… that leaves the company with $3.5b in cash at the end of the quarter… and no debt coming due until 2011... the big question I have with Anadarko is the same question that I have with this whole industry… and I am focused on this laser like, and you know that, I bring it up constantly… what will the future of natural gas be in this country… and do we understand the importance of energy independence… I do not have the answers to those questions… but I know someone who might… Jim Hackett, he is Anadarko’s fabulous CEO…

Jim: Mr. Hackett, welcome back to Mad Money...Hackett: Thank you Jim.Jim: Alright, let’s get right to it… there is an oddity here.. .natural gas under $3, your stock doing well.. is that because that there is a believe that somewhere… somewhere within the owners of your stock that the fortunes for natural gas are about to change in Washington?Hackett: I do, I think that there are a couple of combined reasons. One is that we are about 40% of oil still. And that does drive a far amount of the profitability of the company as well. But two, there is a real hope that natural gas plays a very foundational role in the future of energy for this country. Which it needs too. And you have been a big prominent of that. We are finally reaching Congress, finally reaching some of the decision makers about how important this fuel is. For all of us. For a greener environment. For a substitution for foreign oil, to make it more domestically secure for us as a nation. And it is also the only thing that can back up wind and solar.Jim: Now, one of the things that was shocking to me… now I have understood, I have understood that the case that the President is deeply committed to non fossil… but in this House bill, the American Clean Energy and Security Act, they focus on something that you and I know is a fantasy… it is a Disneyland story… it is called clean coal… how the heck did clean coal get precedent over natural gas?Hackett: Well, it has temporarily at least. I think that it is a very good point to make, which is its own proven technology which it is a hope that one day we might be able to do that because we have such large coal resources. But in fact there is a cheaper way to approach. Making ourselves more environmentally free if you will of greenhouse gas emissions and other toxic substances. And that is to actually use this tremendous natural gas resource that we discovered in this country. Which is a very new phenomena in the last three years. We have got the kind of long dated reserves domestically that coal has. The difference is that we can actually grow the deliverability and serve an expanding capability. Which I think that other fuel sources will have a tough time doing, outside of nuclear.Jim: Now, one of the things that drives me crazy is that every journalist in the country… I did not get the memo… maybe because I am not a true journalist… the memo says that as soon as you mention natural gas, you have to say that it is erratic and that the pricing is crazy, and so therefore it is not a legitimate fuel… where is that memo that says that every single article has to have that except for the stuff that we talk about?Hackett: That is a good point. But even with that being said, if that is the claim that is being made, there is a very good way to fight that, which is that we have done modeling independently of the industry that actually speaks to this issue of price. And if you look at a median to longer term kind of price forecast right now, it is somewhere between $5 to $7 per BTU, that we think the price will trade at with growing demand. And what that means to all of us in America, is that you are buying natural gas for equivalent to about anywhere from $30 to $40 a barrel of oil. I think that any of us tomorrow would take any substance that could promise us less than $45 a barrel. And use it as broadly as we could. Both in electric generation and in our cars. I am driving a compressed natural gas vehicle. I have done that for over a decade. I know the supply is their. I love the price. I love the environmental impacts.Jim: Jim, one of the things that I have read, and I found it actually hard to believe, but maybe you can confirm it… we are going to be a net exporter of natural gas?Hackett: Possibly, in fact as you know some of the big shale plays up in Canada, they are looking at actually engaging in a liquefied natural gas project to export out of the Alaskan Peninsula or on the west coast of Canada. Others have talked about turning around the re-gasification facilities that we have for LNG coming into this country, and actually exporting out of the facilities into ships.Jim: Remember me saying that that is just totally nuts… we have an opportunity to being independent of energy… and what we are doing it is we are blowing it… we are importing it from some really great people over there in the Middle East… and we are sending our clean stuff overseas?Hackett: Yea, that really does not… I do not think that it will happen in any kind of mass scale. We don’t plan on that happening. We actually want the domestic demand to increase. We think that that is the appeal. Is you not sending this fuel overseas. It is a wonderful, abundant resource for all of us. And we can then use that foreign liquefied natural gas, if we even need it, as a peaking fuel to keep the price down. Manage that volatility and put it into storage in the summer when other parts of the world are not demanding it.Jim: Back in the 1930’s when our country was in the Great Depression, one of the few industries that was able to put people to work was the pipeline industry… because pipelines take a lot of people…it takes a huge amount of infrastructure to be able to get this… how many people could be put to work if we actually endorsed natural gas as our fuel?Hackett: Well, literally hundreds of thousands, and it may be more than that. Depending on where we allow the drilling to occur. There is no natural gas resources exist in most states in the Union. They are high paying jobs. It is drilling being done by smaller oil and gas companies. These are not the Exxon Mobiles, the world that are generally producing natural gas. In fact, 80% of it is done by independents. So you have these very high paying jobs in a sector that can grow very quickly. It is not bureaucratic. It responds to the market demand. So it is a wonderful economic answer. It is a wonderful energy answer for domestic security. And it is a wonderful environmental answer.Jim: Alright, something bothered me… here is a Wall Street Journal article, August 21st…there is a guy who says… we were not prepared for the pace at which the House legislation proceeded… you are that guy.. .how did you guys miss this? I have been trying to get everyone to focus on it.Hackett: Well, you are right… you have been talking about it longer. We just thought that the inherited advantages of the fuel would sell itself. So shame on us.Jim: Come on… did you really believe… this is Washington we are talking about… who are you, Mr. Smith?Hackett: Well, who would have thought that they would have actually violated a lot of the rules of subcommittee procedure to get this rushed thru the House. Before the American public could commit properly. That they would give oil all of these allowances to dirtier fuels, to get the legislation passed quickly in horse trade votes. In the middle of one of the great recessions we have had in this country. Who would have thought that all of that would have occurred? But it did.Jim: Do any of these Congressman, the Senators from Pennsylvania and New York understand that they are sitting on a spindle top?Hackett: Well, they are starting too. And I think that that is the important thing. We have spent a lot more time and effort now that we have gotten a wake up call. To make sure that we are educating people. And we have a lot of sponsors in the Senate, and we think this thing is going to work out to be the right answer at the end of the day.Jim: In the meantime, Anadarko just continues to pump… continues to find… things are just right on skad, if not better?Hackett: Yes, we are. And we like the fact that we are an exploration company. We are finding new resources for the world with oil and gas. But this natural gas future is a real one, and America has to get with it.Jim: Alright, Jim Hackett, I know that you will never again not be prepared for the pace of House Legislation… thank you so much, Jim Hackett, CEO of Anadarko Petroleum (APC)… great to talk to you.Hackett: Same here.
▼ ▼ ▼ ▼ ▼
Jim's comments AFTER the interview: Alright, you heard it… it is going to be the fuel… it is just a matter of time… the stocks are already reflecting that… I think that if natural gas actually one time in our life… you are going to get a doubles on some of these stocks.

Cramer Last Night -- Tonight Actually

Tonight Cramer recommended 20% of one's stock portfolio be invested in foreign stocks because of what he sees as the impending falling dollar. If so, that puts him in the Swensen camp which now limits American stocks and bonds to 15% of ones portfolio, I believe.

Monday's night's show highlights: Cramer's New Foreign Legion Picks... Buy CPL and CIG!

Monday, August 3, 2009


Jim:
If you think that our nation is going down the wrong course… or you are just sick of hearing about how bad things are here… and tired of watching America get pants-ed by none other than the ChiComms… it is time for you to take an investing vacation over seas… tonight I am creating "the Mad Money foreign legion"… That is right, we are going traveling… and every night this week we will be enlisting new stocks… because right now I think that it is just irresponsible not to have some international exposure in your portfolio… why… we need to add some foreign stocks to the mix as insurance against the dollar getting weaker… something that I believe will happen… or at least inflation coming our way… something that I am less scared of because of Cramer fave Ben Bernanke...
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But just because I think that is less scary… that does not mean that you should not have some protection from it… where can we find more security… not just foreign stocks, but foreign dividend payers… only the best companies can be admitted to Cramer’s foreign legion… and just like at Fort Zimmerton, in Cramer fave “Beau Geste”… every stock dead or alive must do its part to make you money… you know how much we love high yielders on this show… and that goes just as much for companies overseas as home grown ones.We ran a screen to start… that means that we looked at all of the stocks that we could… what was our criteria… we were looking for ADR’s, American Depository Receipts, stocks that trade here on the New York Stock Exchange and the Nasdaq… and we wanted them with market capitalization over a billion dollars… and yields over 3%… then I whittled down the list further… keeping only companies where I liked the fundamentals… the results… we will unveil them throughout the week as we create a foreign diversified dividend portfolio… I would count putting 20% of your portfolio in foreign stocks as protection against weakness in the United States… and a recognition that we are simply no longer in control of our destiny… as much as we once were… because of our massive budget deficit, our low growth, and yes our potentially higher tax regime. The first area that I like…Brazil… Brazilian utilities… where I found not just one, but two stocks that I believe are worth owning for some high yielding international exposure right now… regardless of what happens with the Brazilian economy… this quickly developing nation is going to need a lot of power… that makes Brazilian utilities a stable source of revenue and cash… allowing them to pay solid dividends… that is what we want… and at the same time having more growth than any American utility that I could find… including Dominion Resources Inc. (D), Consolidated Edison Inc. (ED), including Exelon Corp. (EXC)… plus they are linked to Brazilian fundamentals… a weaker dollar means a stronger Brazilian real… which leads to higher prices for Brazilian ADR’s, just because the currency translation… hey, how about some layman terms… it means that the business is only so-so for these Brazilian things that I am going to highlight… as long as the dollar keeps getting weaker, these companies could go higher...
Read more from this segment
Read all of Monday night's complete recap




Lightning Round Picks:

Carnival (CCL)Jim: You know... it is okay… I cannot rave about it… why can’t I rave about it, because it is up a lot… it is certainly doing better than the other one... Royal Caribbean… I am not going to get behind Carnival when I can recommend a much more stable situation… one that I recommend in Stay Mad For Life where you buy one share for a kid… Disney (DIS)… Disney, what a great franchise… that stock holds up well.







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Cramer Last Night

Oil futures market is a farce:

Cramer Last Night

More good stuff in Friday's show than I've ever read:

http://www.madmoneyrecap.com/madmoney_nightlyrecap_062509_1.htm

A Man in Full -- James Cramer

(c) 2009 F. Bruce Abel

Readers of this blog know that I am an advocate of Jim Cramer and what he does for the individual investor. Up here in Canada I have taken the time to glean from one of his chapters ten rules he came up with coming out of his mistakes.

Think about that -- from his mistakes. What other Wall Streeter would do this.


Ten Lessons From Cramer’s Bad Calls, from "Mad Money, Watch TV, Get Rich"




1. Resisting the Business Cycle is Futile.
2. There’s a Market for Everything; Pay Attention to it.
3. It’s Not Enough to do the Homework; Do the Right Homework.
4. Latin America is Always a Trade.
5. Don’t be Afraid to Say It’s Too Hard: Some Things Like Restaurant Same-Store Sales Are Just Too Difficult to Game.
6. Not All Companies That Produce Commodities Are as Interchangeable as Their Products.
7. Past Performance is Not an Indicator of Future Success.
8. Never Invest Based on Borrowed Convictions.
9. When You’re Playing a Big Rally, Make Sure Your Stocks Actually Fill the Bill.
10. Don’t Try to Smash Iconic Truths; Try to Make Money.

Very Interesting Analysis of Cramer and His Picks

http://www.cba.neu.edu/documents/Investing_in_Mad_Money.pdf

David Swensen -- Listen-Up

David Swensen, Yale's in-house Warren Buffet, answers questions posed by Marc Gunther.


I will be posting a lot on this article by Marc Gunther. So far it is not on the web. So I will "Nuance" it from time to time and post the verbatims. Correction, here it is!

http://www.yalealumnimagazine.com/issues/2009_03/swensen.html


Note that Swensen does not say "bond funds."


The article was written by Marc Gunther '73, a contributing writer to Fortune magazine, who blogs at marcgunther.com

Battle for the Soul of Capitalism

Let's start with one of my few remaining heroes in the investing world, Cramer and that Pimco guy being the other(s) that comes readily (and not so readily) to mind -- oh, yeah, Bill Gross, and Jim Grant, Marty Zweig having retired long ago and Bernie Schaeffer having gone commercial a couple of years ago:

Bogle:

http://books.google.com/books?id=jjPX-wB8KTcC&dq=bogle+vanguard&pg=PP1&ots=PChVNMPdPX&source=in&sig=Qm8UOn0me8g-FRVtjQCb2LOFxos&hl=en&sa=X&oi=book_result&resnum=14&ct=result#PPP1,M1

Cramer Was Wrong

Passaing reference was made on the Lehman closing yesterday, where the world of Credit Default Swaps did not produce the horrendous World-ending losses predicted by Jim Cramer. Only $5 billion was AIG's tab, not the $350 billion plus loss. What gives????