Sunday, October 28, 2007
Late Day Observation
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Great article by who else - Cramer on bubbleology & the art of making money off one.
China Bubble? So What?
By Jim Cramer
RealMoney.com Columnist
10/29/2007 8:44 AM EDT
URL: http://www.thestreet.com/p/rmoney/jimcramerblog/10386998.html
I don't care if China's a bubble. I care about making money. And that's one of the reasons why I am so disliked by so many "professionals" on Wall Street.
A couple of weeks ago when Baidu (BIDU) was at $209, I went on CNBC and talked about a conversation I had with Patrick Schultz, one of the fine researchers who work with me at TheStreet.com. Patrick had just completed a video with me in which he said Baidu could double and it would not be outrageous. He didn't say it would be cheap, he simply said it would not be outrageous. He even hinted that it could trade much higher than that.
No sooner did I finish the appearance on CNBC with my good friend Erin Burnett then I was bombarded by angry hedge fund managers who were short Baidu.
One went so far as -- holy cow! -- accusing me of doing "no homework." That, by the way, is always code: code for "you disagree with me and you are a nitwit because you do."
(In a line of total arrogance, albeit parenthetical, might I just say that I am always amazed at how stupid I am and how little homework I did and how many tens of millions I made in the market. I guess it shows that the more stupid you are and the less homework you do the more money you make.)
I initially tried to debate these poor, angry souls, but that is never worth it, because they are really just jealous that they are not on TV driving home their points and that my statements have just caused them to lose even more money.
That's OK, too. Being wrong costs money.
What amazed me, oddly, was that any of the critics really thought I believed that Baidu "deserved" to be at $500. I could care less what Baidu's worth. I care about what it could trade to. I couldn't care less if it is "overvalued." Of course it is overvalued. It was overvalued at $100, $200 and now $300. Oh, and stop trading, it will be overvalued at $400.
What I care about, as I said at the top of this piece, is making money, and sometimes you have to suspend the rules to make money if that's what you really want to do.
Some people want to be "right" and make money, and I am telling you that being right is not always the same as making money. Sometimes the really rigorous thing to do is to "suspend" your judgment temporarily and play the bubble because the money can be made so fast and it is so lucrative that it is worth playing.
"Aha, the intellectuals say, "how do you know when it will stop? How do you know you won't get caught in the bubble's bursting?" To which I say, "I don't know, who cares?" I think what is more important is that you choose the right instrument to play the bubble and play it whole-hog.
For example, if I really wanted to play Baidu I would have used stock replacement, I would have bought deep-in-the-money calls out a couple of months and then rolled them up each time it took out a new milestone. That way, in the end I am playing with house money and cutting my risk by accepting a 25-point loss -- typically the depth of the strike I pick -- in order to play the bubble. Again, I don't care that it is a bubble, I acknowledge that it is a bubble. I just want to be able to capitalize off the bubble rather than simply say "Nope, it is a bubble, I know better."
In the end, this is a fundamental difference between me and most others who have been at this game for a long time. It is why I was and will always be glad that I caught the last 2000 points in the Nazz in the 1999-2000 period even though I am reviled for not giving everyone the sell call or for staying bullish right up to the top and still recommending stocks. I don't know how else to do it. If you think I am going to sit on the sidelines and pass up 2000 Nazz points out of principle, you are nuts!
So, I say, criticize me all you want about recommending Baidu, or Focus Media (FMCN) , or China Mobile (CHL) or PetroChina (PTR) -- the four horsemen of China -- I will ride them to the bank, and then I will give some back when the bubble bursts. But not before I have taken enough off while the critics sniffed.
Or, to put it more succinctly, they don't ask you at the bank whether you made it in Baidu.
They just take your money like any other deposit.
China Bubble? So What?
By Jim Cramer
RealMoney.com Columnist
10/29/2007 8:44 AM EDT
URL: http://www.thestreet.com/p/rmoney/jimcramerblog/10386998.html
I don't care if China's a bubble. I care about making money. And that's one of the reasons why I am so disliked by so many "professionals" on Wall Street.
A couple of weeks ago when Baidu (BIDU) was at $209, I went on CNBC and talked about a conversation I had with Patrick Schultz, one of the fine researchers who work with me at TheStreet.com. Patrick had just completed a video with me in which he said Baidu could double and it would not be outrageous. He didn't say it would be cheap, he simply said it would not be outrageous. He even hinted that it could trade much higher than that.
No sooner did I finish the appearance on CNBC with my good friend Erin Burnett then I was bombarded by angry hedge fund managers who were short Baidu.
One went so far as -- holy cow! -- accusing me of doing "no homework." That, by the way, is always code: code for "you disagree with me and you are a nitwit because you do."
(In a line of total arrogance, albeit parenthetical, might I just say that I am always amazed at how stupid I am and how little homework I did and how many tens of millions I made in the market. I guess it shows that the more stupid you are and the less homework you do the more money you make.)
I initially tried to debate these poor, angry souls, but that is never worth it, because they are really just jealous that they are not on TV driving home their points and that my statements have just caused them to lose even more money.
That's OK, too. Being wrong costs money.
What amazed me, oddly, was that any of the critics really thought I believed that Baidu "deserved" to be at $500. I could care less what Baidu's worth. I care about what it could trade to. I couldn't care less if it is "overvalued." Of course it is overvalued. It was overvalued at $100, $200 and now $300. Oh, and stop trading, it will be overvalued at $400.
What I care about, as I said at the top of this piece, is making money, and sometimes you have to suspend the rules to make money if that's what you really want to do.
Some people want to be "right" and make money, and I am telling you that being right is not always the same as making money. Sometimes the really rigorous thing to do is to "suspend" your judgment temporarily and play the bubble because the money can be made so fast and it is so lucrative that it is worth playing.
"Aha, the intellectuals say, "how do you know when it will stop? How do you know you won't get caught in the bubble's bursting?" To which I say, "I don't know, who cares?" I think what is more important is that you choose the right instrument to play the bubble and play it whole-hog.
For example, if I really wanted to play Baidu I would have used stock replacement, I would have bought deep-in-the-money calls out a couple of months and then rolled them up each time it took out a new milestone. That way, in the end I am playing with house money and cutting my risk by accepting a 25-point loss -- typically the depth of the strike I pick -- in order to play the bubble. Again, I don't care that it is a bubble, I acknowledge that it is a bubble. I just want to be able to capitalize off the bubble rather than simply say "Nope, it is a bubble, I know better."
In the end, this is a fundamental difference between me and most others who have been at this game for a long time. It is why I was and will always be glad that I caught the last 2000 points in the Nazz in the 1999-2000 period even though I am reviled for not giving everyone the sell call or for staying bullish right up to the top and still recommending stocks. I don't know how else to do it. If you think I am going to sit on the sidelines and pass up 2000 Nazz points out of principle, you are nuts!
So, I say, criticize me all you want about recommending Baidu, or Focus Media (FMCN) , or China Mobile (CHL) or PetroChina (PTR) -- the four horsemen of China -- I will ride them to the bank, and then I will give some back when the bubble bursts. But not before I have taken enough off while the critics sniffed.
Or, to put it more succinctly, they don't ask you at the bank whether you made it in Baidu.
They just take your money like any other deposit.
SSRX taking a rearry rarge shit on the shorts this morning. This is a great way to play the coming Chinese bio-tech boom.
My brokerage site is down during the market opening on Monday morning. Can anybody think of a reason why I shouldn't kick their CIO down a major flight of stairs?
# posted by 
: 9:37 AM
: 9:37 AM
kmorph,
Extract six months of commission free trades from them first, then kick.
Extract six months of commission free trades from them first, then kick.
# posted by : 9:42 AM
: 9:42 AM
Had a few drinks this am & decided to buy this one, WTF ?! I think its a china name - pour me another
Chinacast Education Moves to Nasdaq
Hal Uy
10/29/07 8:51 AM EDT
I recently mentioned Chinacast Education (CAST:Nasdaq) which moves today to the Nasdaq from the OTCBB. It has big insider ownership with management owning 24% of the shares. Hughes Network Systems and Intel Capital own a combined 22%. It is profitable and has a strong balance sheet with $3.33 /share in cash and zero debt. There have been several instances of Chinese OTCBBs companies successfully moving to the Nasdaq or Amex such as RCH, GSI, CPSL and etc. I think that CAST has a good story that could soon get discovered with its new Nasdaq listing.
Chinacast Education Moves to Nasdaq
Hal Uy
10/29/07 8:51 AM EDT
I recently mentioned Chinacast Education (CAST:Nasdaq) which moves today to the Nasdaq from the OTCBB. It has big insider ownership with management owning 24% of the shares. Hughes Network Systems and Intel Capital own a combined 22%. It is profitable and has a strong balance sheet with $3.33 /share in cash and zero debt. There have been several instances of Chinese OTCBBs companies successfully moving to the Nasdaq or Amex such as RCH, GSI, CPSL and etc. I think that CAST has a good story that could soon get discovered with its new Nasdaq listing.
My favorite gold play right now is WGDFF (Western Goldfields). Hat tip to Bill Cara for blogging this one when it was a helluva lot cheaper than it is now.
Is MVIS green today, or has my color blindness progressed to the red-green spectrum?
# posted by : 10:20 AM
: 10:20 AM
I know not many like home builders but I'm liking them. Jumped in BZH for a nice short squeeze today, KBH's squeeze will come soon. Check them out.
My market technician says MVIS is near the end of a technical pattern called a "falling wedge".
He says to buy MVIS, balls to the wall, if and when she breaks above $4.55, which is the current breakout point above the downtrend line of the wedge.
This is the same guy that called the head and shoulders bottom in the S&P, back in late August. Take that for what its worth.
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He says to buy MVIS, balls to the wall, if and when she breaks above $4.55, which is the current breakout point above the downtrend line of the wedge.
This is the same guy that called the head and shoulders bottom in the S&P, back in late August. Take that for what its worth.
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