Fed isn't the only thing that matters

As an investor, I feel endless pain in hearing people say it's all about the central bank. If only I could forget the hard work of picking good stocks.

By Jim Cramer Feb 22, 2013 10:19AM

thestreet logoImage: Federal Reserve Building (© Hisham Ibrahim/Corbis)One thing is for certain: If you asked the hedge funds for the one reason this market goes higher, they're going to say "the Fed."


And therein lies the real problem. You either hate the Fed and think its bond-buying program is illegitimate and you're therefore betting against stocks all the time, or you fear the data will one day be so good that the Fed will stop its program.


Just as during the beginning of the era of the billion-dollar hedge fund, there seems to be no middle ground. So few people seem to say: "You know what? Corporations have a lot of money. Dividend boosts are rife. The merger games are on. The consumer's got a great balance sheet. The economy will be able to sustain itself. Stocks deserve to sell higher."


No. It's either this: "The Fed can't do this forever, and it's all a big phony and will never work. We're in a  permanently crippled economy hobbled even further by Washington's strife and a very liberal president." Or this: "The Fed can't do this forever, and it will stop well before it says it will. And we'll all be left sitting on the Titanic."


As a stock picker I feel endless pain from this one. How many times have I been faked out by this Fed-bad nonsense? How many times can you sell Heinz (HNZ) because of it, or NYSE Euronext (NYX) or Berry Petroleum (BRY) or Dell (DELL) or Google (GOOG) or Union Pacific (UP). The list goes on.


How many times can you hide in cash because of it?


I was furious Thursday every time the glib notion of "sell everything" was spoken. That's not a glib thing to say on air, believe me, because people actually do it.


The whole totally Fed-centric thing steams me. 


Sometimes I wish I could change my stripes and be a big macro thinker, sit back and castigate the Fed and say the market is a big joke.

Because I have to tell you, if I were to do that, I would be taken a heck of a lot more seriously than if I were up 16%, as Actions Alerts PLUS was last year.


That's right. Sometimes I feel we're in a world where it is better to be wrong and not making money than it is to be right and making money.

It's times like these when I truly do have contempt for the job. How much more fun would it be, for example, to decide I didn't have to read the Toll Bros. (TOL) conference call because I knew it was all phony because it's propped up by the Fed? How heavenly would it be to be able to ignore the Berry Pete deal or the Copano deal because they are only figments of Ben's imagination and there will be no more deals once people realize what a farce it all is or the economy gets stronger or he's fired or leaves or whatever.


The Fed-fraud-phony stuff makes a total mockery of what I do with my work, or at least the way I have done it. Yeah, it is that bad.


I don't know any other way to put it. As long as the vast majority of strategists, trigger pullers and behemoth funds subscribe to this uber Fed-is-all-that-matters theory, my whole attempt to explain why PepsiCo (PEP) is better than Coca-Cola (KO) or that the New York Times (NYT) should be bought or that we could be near the bottom in Millennial Media (MM) or Magnum Hunter (MHR) is a total fool's errand.


Tell me I am wrong.


Tell me.


I'd love to know, because I think the homework still matters and the over-Fed reliance for all decisions is a crutch, not a sign of wisdom.


A crutch that one day will disappear and we will realize that the individual homework on individual stocks is, indeed, the way to go.





Jim Cramer is a co-founder of TheStreet and contributes daily market commentary to the financial news network's sites. Follow his trades for Action Alerts PLUS, which Cramer co-manages as a charitable trust and has no positions in stocks mentioned.



More from TheStreet.com

Feb 22, 2013 11:26AM
Reinstate Glass Steagall and you will fix everything.
Feb 22, 2013 11:04AM
All the fed is doing is putting money in the hands of their buddies and the rich. Until the fed putts REAL money in the consumers hands our economy is going nowhere. To do that the fed must stop REAL inflation completely and forever. Even run a deflationary economy for a while. America can solve their economic problems and become a very great nation again. The economic Tec is there. However, we haven't got the leadership!!!
Feb 22, 2013 11:44AM
You´re being a cry baby just because of our current reality. And the reality is, the disastrous action from the Fed is overtaking any microeconomic consideration. The Fed balance-sheet should be limited or the gold standard should be brought back.
Feb 22, 2013 11:50AM
I note the CBO's report today that Obamacare has already cost 9% of those earning 36-90K their healthcare coverage as private employers have dropped their plans.  They are estimating that next year as many as 40% will lose their coverage as employers exit the business of providing it.  

We live in interesting times....
Feb 22, 2013 12:44PM
careful ..........this hack got you in gold at 1900 and apple at 700
Feb 22, 2013 2:28PM
So tired of Washington politicians playing games and trying to figure out how they can take/tax the middle class! They won't be satisfied until they figure out a way. Inheritance tax is one way they have divised!! God only knows how they will figure out how to track Americans and take the money they feel they are "entitled" to........as they have spent everything they have and need money for their debt!! All politicians need to live by the standards of middle class America. They all need to be on Obamacare and no insider trading OR entitlements!!! That should straighten things out fairly quickly!! 
Feb 22, 2013 12:48PM
It's not always an either/or situation like Cramer is trying to make it out to be.  You can be a "Fed-hater" and still play the market without being a hypocrite.  When Bernanke stops QE, there's no doubt we'll see a slump.  But he's not going to stop anytime soon.  Ride the wave up, adjust your stop-loss orders as needed and get as much as you can while the gettin' is good.  When the inevitable happens, you're fine.  Stock prices are completely bogus, but they are the only game in town for a lot of people.  You can't buy gold and bury it in the backyard, you can't make diddly from CDs or Money Markets, and you'd be better off giving all of your savings away and getting the tax write off instead of stuffing cash under your mattress.

There are plenty of other ways to make money - FOREX, commodities, real estate, venture capital, etc...  But none of this is offered in any 401k plan, and most people will never take the time to explore these options for their IRAs.  So, dollar-cost average your way into the easiest and most convenient inflation-proof investment there is right now - stocks.  Keep a close eye on your holdings and adjust those stop-loss orders early and often.

Feb 22, 2013 11:03AM
If you buy into the proposition that Corporatism consists of electeds engaged in doing the legal work for the establishment of the New World Order then you should have a confident level that they must protect the wealth class but only until their support is no longer needed. So I would say throw away any logical market calculations and agree the market will be protected and supported until the present Guberment decides they no longer want to. Now tell me what might cause that? And if you know that answer, and when they will stop goosing it, then you should short this thing silly? Correct? Let me know the answer if you hear it. :)  So for many Jim the bottom line is do you or don't you believe there is a long term plan to dissolve economic borders to allow manufacturing and trade to be absorbed into one giant world economy?  And if you believe there is a plan in place; which to me seems very clear, then it would only be rational to support those who could disrupt this plan until it is irrevocable. Now where am I wrong?
Feb 22, 2013 1:23PM
The only investors that like Bobo are heavy pot smokers and alzheimer victims.... because if you remember what he said the day before and read his article you write him off as a clown.
Feb 22, 2013 12:48PM

I am more than happy to take my profits, but you also have got to know when the party is over. At the macro level, think about it... have you ever seen a time in your life when the developed economies of the world are in recession (or close to it) and seen stocks near all-time highs. Fed or not, this eventually catches up with you. For those who believe that party will continue, what is the driver to take the market to the next level? Housing? Autos?  These are not what they use to be...most of this stuff is made overseas.

Feb 22, 2013 2:34PM

Not change the subject but.....


The Feds are suing Lance Armstrong over doping charges.

Their door into  the issue is our Postal Service's sponsorship of his career to the tune of $30 million.


This is the same Postal Service might not deliver on Saturday any longer?  Might there  not be  a disconnect  in there somewhere?.





Feb 22, 2013 1:52PM

Our Fed creates the platform for speculation.  Speculators create the platform that is nonsensical market pricing.  Nonsense pricing puts us back to where we were in 2007 & 2008.

Is the Fed's "policy" to fan out the bad assets and use smoke and mirrors to fool the investor?  Can't they see that they are just recycling our national finances so that we never get above water?  5 years later...and we've only sunk deeper in a lake of faceless pennies.

Feb 22, 2013 9:52PM
Sweet close, mainly because we had volume...Next week will be interesting....Have a great weekend all.
Feb 22, 2013 1:47PM
This is golden.  At least a pig doesn't complain when he's being Fed.
Feb 22, 2013 1:43PM
Stock market... a caterpillar that instead of turning into a butterfly turned into a moth
Feb 22, 2013 1:16PM

Making the suggestion that the Fed is not being used as an instrument to "aid" a selected segment of our economy  is one HUGELY outrageous statement.  What the he!! is its function then?

Feb 22, 2013 12:12PM

Cutting spending, would be the last thing I would be against..

Yes we have to cut where there is way too much Fat...And Washington and the DoD should be first.


Beat our swords into plow shares....And use some of the savings on jump starting real jobs...

The Fat Generals need to retire and the Military Industrial Machine needs some trimming...

If we only got the "fraud" out of other programs, we would be gaining enough to fund job producing projects and not "pie in the sky" bullshidt...

Everyone is going to have to give up a little or pay a little more to "Right the Ship."

Our Infrastructure and Power/Communication grids are a mess and on a verge of a nervous breakdown and we are concerned about "what the hell is on Mars"...Priorities are screwed..

Feb 22, 2013 4:08PM
Since Europe closed we've had new money coming in these markets....HP and IBM doing very good among others.>..A long hour to go though...Like we always say, never ever underestimate these cheating crooks...So far so good...More after the close.
Feb 23, 2013 1:44PM


It is now impossible to look at stocks fundamentals because we are now a world of cheats and liiers.

How can an individual ever hope to pick a stock by listening to a conference call

or worse an analyst.


Feb 22, 2013 4:11PM
LMAO;  For the folks who were suckered into picking up Comcast on their NBC aquisition.  And now two weeks later you are being laughed at. Comcast is a huge bloated pig that can't even turn around on its own anymore.  Customer service is no better than India.  And their pricing will put them out of business. Their pricing policy has about as much rationality as politics.  If their pricing won't kill them then the hate their customers have for them will.  It is now a $25 stock.
Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
100 character limit
Are you sure you want to delete this comment?


Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.


StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7.

125 rated 1
264 rated 2
485 rated 3
679 rated 4
640 rated 5
617 rated 6
632 rated 7
493 rated 8
276 rated 9
153 rated 10

Top Picks

TAT&T Inc9



Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.

Contributors include professional investors and journalists affiliated with MSN Money.

Follow us on Twitter @topstocksmsn.