"Jim Cramer's Getting Back to Even"
By James J. Cramer, with Cliff Mason, 352 pages, $26
My most vivid memory of the dawn of the "Great Recession" was watching Jim Cramer on television on Sept. 26, 2008.
On his show, "Mad Money," the controversial buzzer-banging investment guru was warning America: Take out of the stock market whatever you need to live on for the next two years.
That was the day after Treasury Secretary Henry Paulson knelt before House Speaker Nancy Pelosi, begging a flummoxed Congress for a bank bailout. The Dow that afternoon would close at 11,143. By March 6, 2009, it had sunk to 6,627, devastating many who hadn't listened to Cramer.
For this reason alone, I was interested in his latest book, "Getting Back to Even."
There's a delicious silence in reading Cramer, rather than watching him on his frenzied show.
And time to digest his advice — and his warnings.
For this is not a general advice book on how to invest your money.
To get back to even, Cramer offers up his edgiest ideas for recouping everything that you've lost — something he says will never happen simply by buying a potpourri of low-cost index funds, which will only mirror the markets.
His is an aggressive formula that requires work to beat the indices.
"It's not buy and hold," Cramer says, "it's buy and homework." Indeed, he says, you must put in an hour of homework each week on each stock you own. That means reading news stories, conference-call transcripts, SEC filings.
Too much work? Then forget this book. (And, he says, forget recouping all your losses. Even with last year's steamy market, the Dow is still well below its 2007 high of over 12,700.)
As a member of a small women's investment group, which does its homework and is up a happy 20 percent over the decade, I found Cramer's advice worth considering.
Like "Mad Money," Cramer's latest book is filled with ideas. Some will pan out. Others likely will fail.
After all, this is gambling.
— Tribune Media Services
Companies with big dividends, especially those that routinely increase them. (Dividends, he writes, are pretty much the only way people made money over the decade when the Dow began and ended around 10,000.)
Cyclical stocks that will likely take off as the world's economies steam up, especially China's.
Conservative regional banks, which came through the banking crisis unscathed. (Among others, he names First Niagara Financial Group, a small New York bank that picked up some Western Pennsylvania banks from PNC for a song.)
I also liked his rationale for buying these stocks. Our club has become pretty skilled at understanding the P/E of a stock (price relative to earnings), or how much debt weighs on a balance sheet. But the company's "story" — what will drive the stock to greater profit — is sometimes harder to discern.
Cramer talks about Caterpillar as a large, high-quality manufacturer of construction equipment, poised to benefit from a worldwide recovery, particularly in Asia, where it does a lot of business.
VF Corp., he says, which owns Wrangler, Lee, North Face, Nautica and Lucy, stands to benefit when consumers start shopping again.
And he likes JPMorgan Chase for its "fantastic" franchise and "terrific" leadership. (Though Cramer critics would likely point to the firm's disappointing earnings in January.)
Buyer, beware: Critics have found that Cramer is often wrong. He himself claims a .550 batting average.
And there's particular "buyer, beware" in this book. In two chapters, Cramer plows into the dangerous turf of options, where a little money can make a lot — or lose even more.
Like "Mad Money," Cramer's latest book is filled with ideas. Some will pan out. Others likely will fail.
After all, this is gambling.
