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Investment

Cramer on how stock-picking in this market is like good fishing

In many ways, CNBC’s Jim Cramer finds each trading day in the stock market to be very similar to a good fishing trip.

“This is like fishing, catching a 40-inch edible fish every day, each different from the day before,” the “Mad Money” host said about the bounty of high-quality stocks.

Wednesday’s catch was the stock of McDonald’s. Shares of the fast-food chain broke out to all-time highs on practically no news, closing above $163 a share. Despite its lack of obvious upward drivers, Cramer said the inevitable analyst recommendations would likely help, not hurt.

Also swimming higher were shares of PayPal, which was upgraded to “buy” from “hold” by a major firm that argued worries about PayPal’s negotiations with eBay were overblown.

“This was a gift. I’m calling it a 40-pound striper caught surf casting,” Cramer joked.

But Cramer couldn’t help but wonder why such different situations are all working for these stocks, so he compiled a list of reasons for why the market is brimming with winners.

The final months of the year are usually when big funds start thinking about their performance and turn to the stock market to solidify their gains so they don’t lose clients, Cramer said.

“You can’t show performance in this market without buying stocks,” he added. “It’s that simple: for money managers, you know what this period is? This is the buy or die period.”

President Donald Trump’s pro-stock market standing has also made a difference, Cramer said. While his health care and tax reform initiatives have been obstacle-ridden, his pro-business position has resonated with companies that feel less worried about strict regulations.

“You can tell from his tweets that he grades himself by the performance of the S&P 500 the same way he graded himself with the Nielsen ratings when he started ‘The Apprentice,'” Cramer said. “I know he disbanded the economic councils, but he still has those contacts and he knows what sends the stock market higher.”

As the market outlook grows more positive, analysts are scrambling to present their clients with new stocks that seem to have promising stories, the “Mad Money” host said.

“If you work at one of these larger brokerage houses, your research director is in your face begging you to put out some new names knowing they’ll pop,” he explained.

Bad news from Greece, Italy and France used to dominate headlines, but these days, Cramer sees the global playing field rapidly improving.

Japanese stocks are soaring, European economies are gaining momentum, Brexit worries have subsided and the conflict between Spain and Catalonia hasn’t been as market-rattling as feared.

A slower news cycle has had little to no effect on stocks save for the potential for a December interest rate hike by the Federal Reserve to taper the strength of the economy.

That would cause the bank stocks, which report earnings on Thursday and Friday, to surge higher and flaunt larger price-to-earnings multiples, Cramer said.

Investors’ exuberance can’t last forever, but what has surprised Cramer most has been the lack of “over-fishing” in any one stock.

“Some are game fish like Nvidia, hitting an all-time high on autonomous driving chips. Some are the bottom fishers: Intel, AMD, Kroger. Some are brick-and-mortar retailers that typically rally for a few days, then you’ve got to toss them back. Those are strictly catch and release. And some are just delicious dinners like McDonald’s, Visa, MasterCard, Wal-Mart, visible from the surface — branzino — capable of being lured in with some chum and a couple of dumb minnows,” Cramer said.

Bad, “inedible” stocks do persist: the oil cohort has been very volatile of late, and consumer packaged goods companies that aren’t prime for takeovers have been pummeled.

“As the legendary Ella Fitzgerald sang in ‘Summertime,’ the fish are jumping [and the] cotton is high,” Cramer said. “If you don’t grab a pole, though, and buy some bait, it’s all going to be lost on you as it is on so many Americans who don’t know a rod from a reel.”

Disclosure: Cramer’s charitable trust owns shares of Nvidia. Also, “The Apprentice” airs on NBC, which, like CNBC, is owned by Comcast’s NBCUniversal unit.

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Cramer on how stock-picking in this market is like good fishing

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