Here's what makes Jim Cramer nervous
'You can't have 2 stock markets at once,' the CNBC host says.
The stock market has split into two camps right now, CNBC's Jim Cramer said Tuesday. One based on eyeballs and hype, he said, and the other based on basic investing fundamentals and traditional metrics.
"You can't have two stock markets at once," he said on "Squawk on the Street." "It doesn't work."
Cramer highlighted that Morgan Stanley doubled its price target on electric carmaker Tesla Motors (TSLA) to $320 a share Monday, setting up the stock for huge gains. He lauded both the Morgan Stanley (MS) analyst who made the call and Tesla CEO Elon Musk, comparing the forward-thinking entrepreneur to Henry Ford and Thomas Edison.
Still, that kind of exuberance makes Cramer uneasy.
"I get nervous when I see price targets double," he said. "I get nervous because we've been around when price targets double and stocks don't double along with the price target."
Nobel laureate Robert Shiller, a professor of economics at Yale University, also expressed concern about the current trajectory of the stock market, telling CNBC that it draws parallels with the dot-com bust of the early 2000s.
"We do have a little bit of bubble thinking," Shiller said on "Squawk on the Street." "I'm thinking also of bitcoin. That one has burst in a way. People are very impressed by high tech. Probably too impressed."
Shiller, who developed his own price-to-earnings ratio based on longer-term data, said companies such as WhatsApp belong in a "different market." An instant messaging service with more than 450 million users, WhatsApp agreed to an acquisition by Facebook (FB) last week for $16 billion.
"It's for adventurers," he said of the tech and social media sector. "I'm more of a stable investor who looks at long history and wants to invest for the long term. So maybe ask someone else about these upstart companies."
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Tesla is interesting, but there are not many people interested in paying that much for a car. And I think for that reason electric cars are a fad and will be for some time.
Note: Tesla sells for a PE of 100. Dot Com days? Remember?
What I notice is the poor earnings on the low-end retail stocks. It is the Targets and Dollar Stores that are getting hit. There is an ocean of people out there that are going broke in the low pay brackets. When that ocean hits the streets no one will be able to ignore it any longer.
Afterall any serious crash like the Pinto will cause it's battery made of lithium to burn as lithium burns in air at room temperatures. What people are not understanding is if the battery case is punctured it will catch fire. And in a car crash there are millions of ways the battery case can be punctured.
Add in fire departments not knowing that lithium burns even faster under water will try to fight the fire with water and cause the fire to grow even more.
Yep if the data on the safety of the lithium battery had been explained to the EPA correctly then the car never would have gotten EPA approval.
“You can't have 2 stock markets at once, the CNBC host says.”
But, you also can’t have everyone in the stock market thinking exactly the same way. If they do, then everyone wants to take the same side of every possible trade, there are no sellers for ready buyers and visa versa, nothing ever does trade, and the market can’t exist at all.
This is fundamental philosophy at the foundation every market. I would think a market expert like Jim Cramer already knew that.
The US economy is still tanking as we are still trapped in a Death Spiral of Lost Jobs and an ever weaker and weaker economy.
Sure the government can add $4 trillion dollars to GDP for you renting your house and living somewhere else for free, they can add $2 trillion dollars to the imagined impact on the economy due to Gone with the Wind having been made in what 1939 and it's impact as intellectual property carries forward to today. I understand there is a $500 billion add for the discovery of fire in that number. And they can add about another $2 trillion for other adds over the years.
However those are just numbers thought up to make it appear that our economy is doing great when in reality we have 50 million Americans on food stamps and the republicans cutting food stamps (can you say Weapons of Mass Destruction). The military is reducing the army to only 490,000 soldiers which at their current rate of pay is only 2.5 percent of the Defense Budget I wonder where the other 97.5 percent of the money is going???
Anyway the US economy is going to collapse Sept 15, 2015
What High Tech? Other than things like the advances in 3D printing, gene sequencing, and the potential of Tesla, it's mostly Fluff. Electric cars can have a massive Impact if all the rumors we hear surrounding the Giga Factory are actual true. Ditto for IBM's Mr. Watson and Google's investments in Robotics and AI, that has real potential also.
When so-called Analyst keep selling excessive valuations on things such as Whatsapp and others, clearly commonsense has left the room. Being so close to the Great Recession and really not that far removed for the Dot-Com implosion, one would hope folks had learned their less, clearly that has not been the CASE.
"eyeballs & hype"? I thought that this was the under lying premise for Cramer's show?
(Sorry JIm !)
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