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December 8, 2005

Cramer's emotion is weakness, not strength, Thur., Dec. 8, 2005, 8:12 AM

To say that CNBC's Jim Cramer is emotional is to say to a Catholic the Pope is German. But emotion in capital markets is weakness, not strength.

In my years in capital markets, I have come across a couple people who scream, smash telephones, throw chairs, and a few other things that children do when they cannot control their emotions. My cat, for instance, loves a sisal rope scratching post to work out frustrations.

But I will say this; I never met a successful trader in capital markets who acted child like.

I compare Cramer to entertainers Peewee Herman, Jerry Lewis, Jerry Springer and Howard Stern. Among the five, however, I don't think I could pick the one who might be a success at trading. Stern possibly or maybe Springer.

In any event Cramer's histrionics are probably mostly like the others, just entertainment, because that's the fashion in capital markets these days. Sadly.

Cramer's former partner at theStreet.com, where he made most of his money, Herb Greenberg, who I think has a genius for financial communication, says he got the hook Wednesday from Cramer's CNBC show, Mad Money.

I too have knocked Sears Holdings (NDQ: SHLD) more than once in this blog. It happens to be one of Cramer's favorites. But Sears Holdings is nothing if its not a dog, as Greenberg has also pointed out.

Eddie Lampert is a private equity guy who gained control of K-Mart, and then used that stock as his currency to take over Sears, once a blue chipper in the Dow 30. I told you early on about my concerns about Fast Eddie, and his friend Cramer " the one with the vaudeville act. I warned about SHLD in June.


"Some of you, I know, were too busy being entertained by some guy shouting and screaming, and waving his arms, and honking his horns, like some vaudeville act, all the time going pump, pump, pump on the SHLD balloon."


Oh how Wall Street and Big Media can destroy some great companies. But when retail management is thrown out and replaced, apparently, by a chicken and pizza fast food operator as CEO, you really have to empathize with the workers, and public shareholders.

Sales revenues have really come up short, which is a fact. Top line growth, not significant decline, is crucial to department store retailers.

At this point I have nothing more to say about SHLD. It has been forming a long base, which is technically bullish. I opted out at the top in June when I saw some clown on TV pumping SHLD as fast as the arteries could get blood to his heart. Fortunately, for me, I could see from the bulging temples, it wasn't reaching his brain.


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At the end of the day, whatever Cramer says or doesn't say is unimportant. Traders, however, need to isolate those companies that have proven management and a successful business model. Then you need to use mathematical analysis of the share trading in order to buy in at low points and (possibly) sell out at high points.

It might not be entertaining, but it is fun to be a winner. And you will get there by learning to control your emotions.

Posted by Posted by Bill Cara on December 8, 2005 08:12:00 AM | Category: 25 Cons Discretionary