Cramer: Buffett's luck is about to change

Some people might think the Oracle has lost his touch, and that's exactly when his bets pay off, the 'Mad Money' host says.

By MSN Money Partner Apr 9, 2014 3:05PM
File photo of Warren Buffett on the NBC News' 'Today' show on November 27, 2012 (© Peter Kramer/NBC/NBC NewsWire via Getty Images)By Alex Crippen, CNBC

Jim Cramer is coming to Warren Buffett's defense.

This headline in The New York Times caught Cramer's eye: "The Oracle of Omaha, lately looking a bit ordinary."

The story cited a new statistical study by Salil Mehta that compared Berkshire Hathaway's (BRK.A) performance to the benchmark Standard & Poor's 500 Index ($INX).

While Buffett's (pictured) company has beaten the market in 38 of the past 48 years, it has underperformed the S&P in four of the past five years. Mehta calculates there's only a 3 percent chance Buffett is suffering through a period of bad luck.

On Tuesday night's "Mad Money," Cramer shot back. "Whenever I see an article that criticizes the stock holdings of Warren Buffett's Berkshire Hathaway, I know it's time to break out his portfolio and look it over for some terrific ideas."

Cramer believes that "just when it starts to seem like Buffett may have lost his touch, that's when his bets really start to pay off."

In addition, Cramer said the tide is turning on Wall Street. "This piece comes out right at a moment when momentum funds are falling by the wayside and what's hot has definitely become what's not."

Here's his take on Berkshire's top 10 publicly disclosed U.S. stock holdings:

Wells Fargo (WFC): The bank has a "truly fortress balance sheet." If the stock gets hit by Friday's earnings report, Cramer thinks Buffett might buy more and "maybe you should, too."

Coca-Cola (KO): "I'm not a fan" as carbonated drink sales drop in the U.S., but it's still growing oversees and has a "terrific" dividend "so it's holding up fine."

American Express (AXP): "Who among us doesn't wish that we own this juggernaut."

IBM (IBM): "I think 2015 is when IBM will produce both better margins and better revenues. Buffett's a very patient man."

Procter & Gamble (PG): "I know this company's trying to get back on its game," but it's buying back stock and increased its dividend, "keeping you enticed while management figures out how to right the ship, which they will."

Exxon Mobil (XOM): The stock's decline has reversed and "Exxon in the end is going to stay extremely lucrative even if it hasn't been able to grow production." It also has the best stock buyback "in the land."

Wal-Mart (WMT): The retailer, "while not a favorite, has at least stabilized its decline . . . You could do a lot worse."

US Bancorp (USB): "A personal favorite of mine. ... Ever notice how you never hear about these guys getting in trouble? That's because they don't."

DirecTV (DTV): "In a land of scarce media properties, here's one of the most coveted names around."

DaVita Healthcare (DVA): "This dialysis play is one of the best baby boomer stories out there."

(DIRECTV and DaVita were bought for Berkshire by the company's new portfolio managers, not by Buffett himself.)

Cramer's conclusion: "I think anyone looking for 10 non-momentum, total-value ideas would be hard-pressed to find many better than this portfolio." It's the "antidote to the madness infecting the market, or at least the Nasdaq right now."

He added this: "Warren Buffett: I'm a buyer, not a seller. I think this year his luck's about to change."

Times change, of course. In February 2009, just before the U.S. stock market hit its financial crisis low, Cramer told investors not to follow Buffett's lead because they will not profit "within the time frame they care about."

He also criticized Buffett's "Buy American" New York Times op-ed the previous October. Stocks continued to plunge in the following months, so Cramer said, "Those who bought America that day are feeling . . . well, downright un-American. Or at least they're feeling poorer."

Since then, Buffett has acknowledged his call to buy stocks was a bit early and Cramer has acknowledged that Buffett had the right idea.

Disclosure: Jim Cramer's charitable trust owns shares of IBM and Wells Fargo.

More from CNBC

Apr 9, 2014 4:34PM
I have to laugh because they were saying the same thing about Buffet in 1999 when he wouldn't buy into the dot com craze.  His portfolio was lagging and people said he was too old to understand the "new paradigm" of the internet (hold onto your wallet when someone uses the phrase "new paradigm").  They stopped mocking him in 2000 when the NASDAQ imploded.
Apr 9, 2014 4:17PM
Cramer............ I hope Rev. Rat finks you out.
Apr 10, 2014 1:27PM
I heard that Jim Cramer has put in a job application to be Buffet's new 'male nurse'.
Who can beat the market when the Fed has pumped over $4 trillion dollars into it???

Let's see total US stock market has a value of about $19.7 trillion

that is about $55,800 dollars per person in America. not much money if you ask me.

It will only keep the US going for one year.

Apr 9, 2014 4:25PM
So investing is now all about luck? Reminds me of poker players. When they are winning it is all skill. When they are losing it is all bad luck....and the game is rigged. It is always the man in the mirror, give him credit and give him the blame. In other words grow a set.
Apr 9, 2014 7:40PM
cramer coming to buffet's defense is like me defending mike tyson from a thug
Apr 10, 2014 5:54AM

Why is it that when the DOW looks like a "Ticking Time Bomb"

ready to explode.

Warren Buffett pulls open his shirt and a "Big Red S" appears,

The Bear is our of hibernation, and not even Warren can save it..

Apr 9, 2014 11:05PM
Still one of the best,sucess speaks for it self Good days
Apr 9, 2014 7:01PM

Looks like this turning into A National Enquire rag..?

3 articles on old Warren, and Icahn and the Sanberg chick...

Do we get back to anything important or is this it...??

Apr 10, 2014 1:36PM
FStugis, That's kind of funny...But that avatar/pic is even funnier....LOL.
Apr 10, 2014 7:29AM

How come you didn't mention his purchase of all those useless Newspapers?

The man is no "Oracle" he's old and not as good as he once was.

Apr 10, 2014 10:26AM
Buffett jumped the shark when he was on an episode of "The Office". He is all Hollywood now.
Apr 10, 2014 10:38AM
Apr 10, 2014 9:15AM
I'm puzzled...?  Does or is that "Big Red S" represent Superman or something else..??
Apr 9, 2014 3:56PM
All the same is not reality.  For those moneyed folks who continue to look into the rear view mirror and wait for the good old days will all find one thing in common.  The good old days are gone for good. Supply side economics has choked to death the goose that laid the proverbial egg. Much like the absent minded professor they have used free trade to hopefully unknowingly but probably not strangle and now kill the American consumer.  Foriegn emerging markets are making out well with the American jobs our dumb self serving electerds sold off for the rich in this country.  But this in terms of history will not last long.  Now time to pay the fiddler.  Folks, demand requires folks with incomes and disposable income.  Can no one see these free trade policies are putting many many Americans in the non consumers or at least very restricted consumers category?  With lost jobs leading to diminishing incomes and unsupportable lifestyles the result the rich and elites have now needed to resort to such gimmicks as manipulative banking and national debting to maintain their fiat growth.  Hello America, this is Earth calling.  This fake economy can not go on forever.
Apr 10, 2014 9:29AM

Puzzled again....I don't think a lot of people realize, that Buffet's investments or everything held by BERK, pretty much is the Markets...

Although they recovered fairly well from the downturn in 2007-2009...The BERK stocks are just humming along in recent times, and are pretty much marking time; Similar to what the S&P is doing.

Even with the S&P approaching and setting new records, the past few months...

Many of the stocks or companies owned by Buffet/BERK have been priced out or overbought and are at or near 52 week highs...That leaves BERK to only "harvest dividends" of 3-6% and growth is barely a factor. 

Although he has recently upped the ante in Energy lately, my guess is he is sensing a stronger recovery and he will take advantage of it as energy cost rise on demand.

Apr 9, 2014 4:14PM

Buffet should really add some Bitcoin to his portfolio. 

Apr 9, 2014 6:00PM
What does buffet still have? The crabs.
Apr 10, 2014 4:19AM
"While Buffett's (pictured) company has beaten the market in 38 of the past 48 years, it has underperformed the S&P in four of the past five years."

No entity has benefited more from the Welfare Bailout from the Government more then Buffett other than the Big Banks. That's why Buffett entities are Considered Too Big to Fail, Too Big to Jail. Buffett doesn't do high Flyers so of course he's not going to surpass the Market, especially this Bull Run. His Track Record would be far worse without the Global Feds printing to infinity. His track record would be far worse without the Special Deals he's able to get as compared to 99% of everyone else.

Yet he is only barely able to keep up with the Markets. Certainly, since his holdings aren't high flyers, his portfolio won't show the same decline as someone that holds to infinity in high beta stocks during a Bear Run. But that just it, the person would have to hold to infinity and not take profits. What has served Buffett well in the past won't be so beneficial in the future. Buffett's luck is about the Change, Gravity will catch up to anyone holding to infinity. It always does. However Buffett is Wealthy beyond belief, he will barely notice. Everyone else, totally different story.
Federal Reserve will not have a choice but to raise interest rates above 10 percent soon.

Things are going south in the Ukraine fast -- Russian ethnic protesters have less than 48 hours to quit before Kiev send in troops to kill them. Once that happens Russia will invaded the Ukraine and things will go down hill fast. Probably some cities in Europe will get bombed after NATO attacks the Russians. The Syrians will probably quick strike Israel while this is happening and the US not able to defend Europe and Israel at same time. The US F-22 and F-35 fighter jets are not able to dominate the air and Russia wins air superiority ensuring victory for them.

On the Economic front Russia and China and possible Brazil and India will dump US treasuries causing the Federal Reserve to raise interest rates above 10 percent to get people to buy the now worthless US notes.

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