Thursday, January 31, 2008 at 05:02AM
Cramer Buying?
Love him or hate him, Jim Cramer has a national audience.
In a business where perceptions can be more important than reality, you wonder if a guy like Cramer could sway public sentiment enough to make a difference?
from cnbc.com:
Time to Buy a House?
The Fed gave Cramer -- and the rest of Wall Street -- what he wanted Wednesday afternoon when the central bank announced a 50 basis-point rate cut. In a split second, the news turned the Mad Money host from doomsayer to cheerleader.
Cramer was -- to put it mildly -- vocal about his displeasure with the Fed's lack of response to the credit and housing woes that have gripped the markets since last summer. But now he's so confident in the economy he's considering buying what might be "the most loathed and toxic investment around": a house. The additional cut, which came just a week after another 75 basis-point emergency cut, has made a turnaround in housing "inevitable," he said.
Jim the Realtor
in Thinking of Buying?
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Reader Comments (7)
I'm sorry, what's the difference between Cramer and that guy that sells Oxyclean in infomercials?
There is a BIG difference between "thinking of buying" and buying.
We'll see if he puts his money where is big mouth is.
Well said Jim.
I do think Cramer is good in the sense he raises interest in investing and he does stress hold and Homework for stocks.
I wonder (did not listen to the video) if he also stressed doing your homework before buying a house. Can you afford the fully indexed loan rate? Do you have stable enough income, enough reserves to cover costs if something bad happens and the market is such you cannot sell the house? Are you buying only as much house as you can really afford?
I suspect he only touched on those issues (of course that would be much more than 95% of RE agents do for their "clients").
My view is a) Cramer has a so so record in terms of returns on his picks made on TV and this will be no different and b) people still want to buy but simply cannot qualify under tighter standards so Cramer's view will likely not change things for his audience.
And I personally think his audience wants a fast buck -- not a 5 year investment plan. Even if houses do recover, it will definitely not be a fast buck.
Perhaps he has been asked to do this to help counter the 60 minute piece. I think that the banks are shocked and very worried about the now acceptable practice of defaulting because the value of your investment has declined. I didn't even expect such a brazen attitude and now that I do see it, if the I can put my home back to the bank takes hold, watch out below in regards to house prices.
And I have never seem in my life the same bubble created twice back to back.
We had those when I lived up north in the SF Bay area. They hit about one per decade since the '70's, pretty much in track with the Silicon Valley tech business cycles. Typically, houses would suddenly jump up 20-30% per year for 3-4 years, then fall back to about 15-20% above where they were before the upswing began as the tech economy slumped, go flat for 2-3 years and then rise at about the rate of inflation until they took off again.
I have personally watched Cramer "move the market" on one of my client's stocks just by chatting it up. He did an interview with the CEO, and their stock appreciably jumped over the next few days. It has since deflated back down, but the point is that nothing else had changed about the company, beyond the Cramer chat.
I'm not suggesting anyone start a pump-n-dump plan based on "what Cramer says," but that may make more sense than buying houses each time theNAR says it's a good time to buy ...
GeneK - I've lived in Saratoga/Los Gatos area since 1995. What you said is right on about the rise/fall/sit patterns of Silicon Valley. We are in some sort of fall-sit hybrid right now. Sort of like RSF.
It's very much like RSF. In fact, I'd say exactly like it. Unlike the Silicon Valley booms of the past that were fueled by real industrial growth (70's, IC's, 80's, microprocessors, 90's, networking and telecom) there has been no "tech boom" so far in this decade, so the SV housing boom of 2004-2007 was fueled by the same thing that fueled the SD boom - phoney construction "job growth" due to subprime mortgage lending. That was one reason why it didn't bother me that much to sell up there and buy down here; the latest price rise up there was just as phoney as the one down here.