Mad Money Machine

Best way to buy Cramer stocks.

I would like to thank Jim Cramer for stressing recently and repeatedly to us viewers not to pay premium prices for the stocks he recommends. He made it clear in no uncertain terms on Monday that viewers should not pay up for stocks he recommends. It really helps reconfirm that he is on our side.

Now I’m in a quandry about how to measure the performance of his stocks. From our perspective the performance should be measured from the first price at which we can buy it. From his perspective the performance should be measured from the closing price of the day he mentions it. I’m starting to wonder if measuring performance even makes sense at all. He said Monday that “the timing isn’t set in stone, in fact it’s flexible.”

Perhaps a greater service I can provide to you, dear reader and listener, than measuring performance would be for me to add additional information about the companies he is educating us about. For example, when he mentions a company like The Andersons, Inc., I could do a little additional homework and summarize for you some of the key statics about the stock’s valuation. Here’s what it might look like:

And if you’ve read Rule #1, you’d know what the numbers mean. I’ll explain them in my own way at another time.

But the bottom line here is that The Andersons, Inc. doesn’t look particularly cheap at $71.60 if we assume a growth rate of its earnings at 15% every year for 10 years and an average PE ratio of 20 then. (Its historical PE average is 10.) The sticker price works out to be $67.80 and Rule #1 says we should buy $1 stock for $0.50.

Or I could point you to other sites that have a different rating on the stock.

So that may be a better service that I can perform instead of just talking about the “Cramer Crackle.” Whaddya think?

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So what about buying Jim’s recommended stocks?

I think the best way to buy Jim’s recommended stocks is to watch his show then completely forget you watched it. I’ll explain. When we watch his show, he is so energetic and evangelistic that we’re ready to fall on our knees and ask for the shares at any price. But by the next week, do you remember what stock he was high on? For example, do you remember last Monday’s stock MSPD? Probably not.

So the way to watch Mad Money is to be entertained by it and to be educated by it, just like Jim says at the beginning. Don’t try to make money off of it hastily.

But here’s the follow-through: Find a stock on your own through some other venue. THEN, go back through the archives at thestreet.com and see what he said about it on his show. If he liked it, then that’s another arrow in your quiver.

And here’s a tip (and the way I keep track of what he says about companies): Download a copy of Evernote from evernote.com (it’s free!). Install it. Then every night at about 9 or 10PM Eastern time they post the show notes. Go to thestreet.com and click “Mad Money Recap.” When that page comes up, click on “PRINT THIS STORY” (but don’t print it) Then right-click the browser page and choose “Add to Evernote” This will copy the text of the recap into Evernote and you’ll have it in your own personal archive.

At the top right of Evernote then you can type in your favorite ticker symbol and get instantly Cramer-icized!