Fundamentals vs Technical

Do you watch Jim Cramer on Mad Money? Do you follow his recommendations on what to buy and sell? If so, how are those recommended stocks are doing?

Gurus like Jim Cramer and Suz Orman are often seen on TV offering their advices to audiences on where to invest their money or how to handle their personal finance, but often times what they offered are only proven to be wrong later. In the February 2009 issue of  Kiplinger’s Personal Finance magazine, there’s an article on what the gurus said then and what really happened later. The paragraph about Jim Cramer is like this:

HE SAID “The market will no revisit the panicked lows it hit on July 15 … Bye-bye, bear market. Say hello to the bull, and don’t let the door hit you on the way out.” - July 30, CNBC’s Mad Money

BUT THEN didn’t the Dow fall another 3,400 points from July 15 to its low on November 20?

Some times you just have to wonder whether the gurus really know what they are talking about. And many times, you may be better off following your own gut feeling and let the gurus, who make a living by telling people what to do, do the talking.

In early January Jim Cramer recommended five recession-proof stocks: Caterpillar (CAT), Home Depot (HD), Johnson & Johnson (JNJ ), Hewlett – Packard (HPQ), and Verizon Communications (VZ). These are solid companies with solid business, but what about the timing of the recommendation from a trader’s point of view?

Fundamental vs Technical

By now we all know what happened to CAT when the company lowered 2009 earning forcast and announced another 20,000 job cuts. But if you followed Cramer’s advice and bought the stock when he recommended it, you are probably already in a hole. Check out this INO video, Fundamentals vs Technical, which examines Cramer’s picks. It’s just another example to show that we shouldn’t follow the advice blindly.

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