Wednesday, August 31, 2005

Mad Over Mad Money: Or, the Key to Cramer's Strategy

A lot of talk is going on right now about how investors can make a quick profit off Jim Cramer's wildly popular new show, Mad Money.

I've been asked twice already how you can "secretly" find out about what stocks Cramer will recommend on his daily program.

Get real.

The ONLY way to know what stocks Cramer will mention is to speak to the man himself.

And Cramer tells no one what he'll mention on the show -- not even his wife.

An in depth interview with Cramer (assuming he was being honest) revealed that Cramer wakes up at 5 AM, reads close to 10 different newspapers, then plans the days show.

He is so fastidious, Cramer edits and reworks ideas up to the last second before he is due to go on air.

Here is what is important: The show is taped daily from 4:30 to 5:30 pm.

It airs at 6 pm.

After six, it is hard to get post market fills.

The only way to proft off the show is to simultaneously call in, hope you hear what is going on through your telephone receiver, and, with your left hand, buy stock -- as some individuals have allegedly been doing.

If you do that, however, you are violating CNBC's terms of use, which you can hear if you call their 800 number.

The long message explicity tells you that if you buy stock before 6 PM, you will be permanently banned from calling Mad Money.

The bottom line is you will never know what Cramer is going to talk about, but if you do some homework you can at least guess what Cramer "might" throw our way.

Some of the stocks Cramer recommends are stocks that have showed strong volume change on that SAME trading day.

If not dramatic volume and percentage swings, Cramer likes stocks with "sexy" stories.

Think about it, if he just spoke about P/Es and ROA on his show, for one hour straight, viewers would change the channel.

The thing with MAD MONEY is you NEVER change the channel.

In fact, TIME magazine had a great feature in which they talked about how skeptical NBC execs were about Cramer's conceptual, ad lib program.

Finally, Cramer got the go ahead based on the fact that he "promised" Jeff Zucker (top NBC exec) that the show would be a hit.

Bottom line: If there is a story, there is a stock.

When the NYC MTA gave Northrup Grubman the contract for its surveillance plans, it was clear the stock would be on the show.

However, you notice that he went with a lesser known player.

So one way to "prep" for the show's picks is to study the market from 9:30 to 4 PM, isolate big stories, and then go one further and focus on lesser known players that may subsequently reap some of the good fortune the BIG players think they can horde for themsleves.

For example, buy SYNA when news on Apple (APPL) is good (Synaptics makes the touchpad wheels for the iPods).

2 years ago, everyone wanted a flat panel -- did I buy Samsung?

No, I bought Corning (GLW) -- which sells liquid crystal glass to top TV manufacturers -- and made 5 easy points.

The market is not about home runs -- it is about hitting singles and doing so consistently.

That's the key behind Cramer's approach.

Hit singles.

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