Here's what makes Jim Cramer nervous

'You can't have 2 stock markets at once,' the CNBC host says.

By MSN Money Partner Feb 26, 2014 1:18PM
By Jeff Morganteen, CNBC

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.Image: Stock market (© Corbis)


"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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47Comments
Feb 26, 2014 2:15PM
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I still remember the specific MAD MONEY show where a viewer called in when TESLA was at $39 a share. Cramer said NEVER EVER touch this stock because it is a boutique stock and too risky for your portfolio. Because of Cramer, I stayed away then lost big as the stock climbed from $39 to $70 then to $170 in very quick fashion. Cramer, you SUCK !!! The only thing I learned from your show is to go with my gut and believe in myself because you are an idiot. You missed the boat on Disney until after it hit $40/share and only got back in because a viewer pointed out to you it was going up steadily. Must be great to have your own show and be able to invest off the callers' tips since you have no skills picking stocks on your own. Blackstone is next big thing. Watch. Just don't want Cramer or listen to MSN MONEY.
Feb 26, 2014 2:22PM
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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? 

Feb 26, 2014 2:38PM
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More evidence of a bubble: Fireeye (FEYE) debuted with a price of $20 per share less than 6 months ago. Today it trades for $85!!  It hasn't  earned a single penny yet it's market cap exceeds $10 billion. The bag holders are going to be badly hurt next time down. 
Feb 26, 2014 2:47PM
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Both Banking and now these Markets are but arms of the corrupt political Institution presently residing in D.C.  They are and will continue to be used to wreak Havoc and Mayhem around the world. We now see an insidious political use of these Financial Vehicles to exploit their Political and Economic power and the ensuing terror around the globe.  Be not naive folks we have entered a new Era of elitist and Corporate control of the Global Financial System to further their own agenda, apart from any electoral control or influence by private citizens anywhere in the world. 
Feb 26, 2014 2:19PM
Feb 26, 2014 3:04PM
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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.

Feb 26, 2014 2:25PM
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The stock market is nothing more than a government backed food stamp equivalent welfare program for the super wealthy. Even the "fundamentals" are all bogus and based on government intervention. Sure, say a rich guy gets hungry. Well, instead of going down to the food stamp office, he cashes in some government propped stocks and then heads over to the grocery to buy some food. And that's how the government feeds the rich guys.
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Telsa is going to wind up just like the Delorean or Pinto deader than a door nail.

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.

Feb 26, 2014 2:59PM
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The fact the anyone listens to Cramer on the market amazes me.  Just weeks before the 2008 meltdown he was hawking financial stocks as buys.  Further the PE on the S&P for 12 month look forward earnings is 15.19, just barely ahead of 30 year average of 14.88.  They cite 3 stocks as being overvalued and say we're in a bubble.  
Feb 26, 2014 2:54PM
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I say again.......the proof of cramer's genius is the fact that he keeps his job while spewing nonsense
Feb 26, 2014 2:31PM
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“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.

Feb 26, 2014 2:49PM
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Let's face it...Cramer makes far more money from his books and TV than stocks.  Have someone look into it and I don't think people would still be listening to this man.  He was wrong two weeks ago and always comes out when his personal investments aren't paying off.  I'm tired of listening to him.  Just my personal opinion.  He could be a great guy, but I would much rather listen to Warren in a heart-beat.  Time for Cramer to calm down.
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Cramer is right to be nervous

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

Feb 26, 2014 3:47PM
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Take away the absurd Carbon Credits they get from the state of California and see where their balance sheet lies after that......
Feb 26, 2014 4:02PM
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What makes me nervous is when a few stocks or a sector is going gangbusters while the rest of the market (and the economy) is languishing or consolidating. Not sure if that's happening right now, at least in the US market. But if you're looking at world markets--because we're in a global economy--the US market might represent that narrow segment that keeps rising in the midst of overall gloom. So we might be having that pattern right now.
Feb 26, 2014 3:55PM
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"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."

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.
Feb 26, 2014 3:06PM
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"eyeballs & hype"? I thought that this was the under lying premise for Cramer's show?

(Sorry JIm !)

Feb 26, 2014 4:13PM
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Yes ... you can have two markets operating at the same time.  The first is the speculators ... the gamblers.  They are delighted as pigs in it to see shares double, triple, quadruple based upon nothing. They sit back and count their money.  Then there are the investors (the survivors who emerged intact after 2007) who watch in horror as "irrational exuberance" creates yet another massive bubble.  It's not a matter of if, it's a matter of when the market declares the winner.
Feb 26, 2014 3:09PM
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Cyber Bullying is now a very real concern around these blogs.  Fat Cat and his many aliases and phoney handles exemplifies this concern.  MSNBC should be aware of the financial costs and concern themselves with Cyber Bullying.  This individual offers very little in the way of justification for his being here but more importantly detracts from the solice and well being of most who come here to openly share their opinions free from the Cyber Bullying this person seems unable to control.  MSNBC this is all about money and liablitity and I for one feel your attention is very much required.
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