Jun 22, 2023
Jim Cramer, host of CNBC's "Mad Money," is no stranger to bold claims. In fact, his energetic and boisterous style is a key part of his long-running TV show.
Now, the notorious stock picker has made another bold and controversial claim.
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"An economic wave is about to hit that will be fantastic for investors," Cramer wrote in a recent column for CNBC's Investing Club.
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Given his track record, investors are rightfully wondering if this is a good or bad sign for what lies ahead. Here’s a closer look.
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Cramer’s optimism
Inflation is the focal point of Jim Cramer’s latest prediction. He believes the April Consumer Price Index, which came in at 4.9%, could be misleading.
“Almost every calculation is incorrect,” he wrote “The data is wrong.”
Instead, he believes the numbers should be lower and are “actually very positive for the Fed.”
If inflation is slowing down faster than anticipated, the U.S. Federal Resere may no longer need to raise interest rates. That could be the underlying thesis for bullish investors.
However, Cramer’s track record with bold predictions should probably give the bulls some pause.
Inverse Cramer
One of the boldest predictions of Cramer’s career was also his worst one.
“Bear Stearns is fine,” he said in March 2008, just a week before the banking giant collapsed.
That hasn’t discouraged the television star. Since the Bear Stearns foul up, Jim Cramer has made so many wrong predictions that it has inspired several forms of mockery, including the “Inverse Cramer” account on Twitter and “Cramer Curse” posts on Reddit. There’s also an Inverse Cramer Tracker ETF under the ticker SJIM.
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This is why investors may want to take his latest prediction with a grain of salt.
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From Mad Money to smart money
Instead of Mad Money, retail investors might want to consider looking to the “smart” money for economic forecasts.
Warren Buffett, arguably the most famous investor in the world, wasn’t as optimistic as Cramer in a recent public appearance. Berkshire Hathaway’s fourth-quarter report revealed that its chairman and CEO was a net seller of equities and was shoring up cash.
“The majority of our businesses will report lower earnings this year than last year,” Buffett told investors. The “incredible period” for the U.S. economy has been coming to an end, according to him.
Buffett isn’t the only one who’s worried.
Billionaire Stanley Druckenmiller previously stated he’s worried about a “hard landing” and Canadian economist David Rosenberg sees a rapid decline in earnings in the second half of the year.
The smart money seems to be collectively pessimistic about earnings, government debt, and growth. That should make some investors cautious but not discouraged.
Regardless of the economic outlook, having a unique perspective on investment opportunities is good to have in investing. There are opportunities to make money even in the harshest economic conditions. Some famous hedge fund managers like Michael Burry and David Tepper, for example, have been loading up on stocks in specific niche sectors, despite the gloomy outlook.
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Vishesh Raisinghani is a financial journalist covering personal finance, investing and the global economy. He's also the founder of Sharpe Ascension Inc., a content marketing agency focused on investment firms. His work has appeared in Moneywise, Yahoo Finance!, Motley Fool, Seeking Alpha, Mergers & Acquisitions Magazine and Piggybank.
