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Market Combat: Cramer vs. CAPS

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There's no denying that "Mad Money" host Jim Cramer is entertaining, popular, and passionate. On many occasions, he's even right. For example, in August 2007, in an ardent, emotional rant forever memorialized on YouTube, he said that the Fed was asleep and the market was facing "Armageddon." The subsequent meltdown has proven him more than correct.

So he's smart, funny, and the closest thing to a stock market rock star -- but is he smarter than you?

The Fool's free investing community, Motley Fool CAPS, aggregates the opinion of more than 120,000 members to assign ratings for each stock's likelihood of outperforming or underperforming the market. For the first 20 months since we began tracking the CAPS community's collective intelligence in late 2006, the data shows that five-star stocks as a whole offer the best opportunities for investors, while lowest-rated companies fared the worst.

Cramming for Cramer
Below, we look at some top stocks that Cramer picked and panned during last week's "lightning rounds," and compare them to how the CAPS community sees their future:


Lightning Round Show Date

Cramer's Rating

CAPS Rating





Wells Fargo (NYSE: WFC  )




JPMorgan Chase (NYSE: JPM  )








Duke Energy




Qualcomm (Nasdaq: QCOM  )




General Motors (NYSE: GM  )




Ambac Financial (NYSE: ABK  )



* (Nasdaq: AMZN  )




Altria (NYSE: MO  )




Cramer Says
Insuring people and property is one thing; taking on outsized risk to insure arcane exotica like collateralized debt obligations is another and it's the primary reason Cramer says Ambac Financial is a "sell, sell, sell!" He points out that Ambac should have stayed with what it knew best.

They should have stuck to their knitting. I like people that insure property, who insure lives... We understand what they're all about... Even people who do annuities we're not crazy about, because I think that a lot of them aren't hedged properly.

Ambac Financial is one company on which Jim Cramer and the CAPS community can agree wholeheartedly. More than 70% of the All-Star members of the investor intelligence community think the bond insurer will underperform the market, and this stock has been flat-line rated for over a year. Still, Ambac surprised many of these investors with a short-term rally as it met with the government's regulators to discuss unloading some of its distressed assets under the $700 billion bailout program. 

That would hardly change the opinion of top-rated member Alexhorntoad: "I guess the market forgot that these sub-prime insurers were in trouble. It seems their "safe" market (muni's) are in trouble now too."

Cramer and CAPS agreed on a lot of companies last week. For example, the Mad Money star called Motley Fool Income Investor recommendation JPMorgan Chase one of his "Fortress Banks." As CAPS member BenGriffin71 notes, the bank has been a prime beneficiary of all the government's actions: "This one is too big to fail and has picked up some assets on the cheap. Everything being done to stimulate benefits [JPMorgan]."

Your say
While CAPS members may stand with or against Jim Cramer, the investor intelligence community is more than what some All-Stars think, even if they are TV personalities. But what do you think? Is Cramer right or off his rocker? Is CAPS? Why not head off right now to CAPS and sound off with your thoughts on Ambac or JPMorgan?

Motley Fool CAPS is a great place to start your own research on these stocks. Read a company's financial reports, scrutinize key data and charts, and examine the comments your fellow investors have made all from a stock's CAPS page. Best of all, it's free!

JPMorgan Chase and Duke Energy are Motley Fool Income Investor recommendations. Apple and Amazon are Stock Advisor selections. Try any of our Foolish newsletters today, free for 30 days.

Fool contributor Rich Duprey does not have a financial position in any of the stocks mentioned in this article. You can see his holdings here. The Motley Fool has a disclosure policy.

Read/Post Comments (6) | Recommend This Article (10)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On October 27, 2008, at 5:12 PM, markanthony36 wrote:

    I would love to agree with Jim Cramer being right on his picks as his TV show is quite entertaining!! But unfortunately I have been tracking his picks for some time now and all of them are down between 20 %to 90 %. Therefore, Jim Cramer along with the rest of these supposed market GURU's are a joke. I like to back my information with some TRUE examples.Like for example; RAME is one of his picks that he recommended at $ 5.75 and today that pick is at $ 1.05!! Another one of his awesome picks... DWT which he recommended at around $9 and change , today that pick is at $ 1.90!!!! If you don't believe those, then all you have to do is look into the archives of Mad Money!! Therefore, if he's bearish on AMBAC, then I would suggest that you BUY!!

    I actually made money on AMBAC a while ago and intend on buying some more. This is the only stock that I have made money on this year!!! If I would have listened to Cramer I would be broke right now!!!

  • Report this Comment On October 27, 2008, at 6:48 PM, GeneralwStars wrote:

    Creamer gives us more unbiased information than any commentator I have seen. He readily admits his mistakes. He explains his thinking. I find this a pleasant change from the shows that bring on many commentators, then only invite back the random few who had the luck of being with history. They just give the false impression that they have only clairvoyants on their show.

  • Report this Comment On October 27, 2008, at 9:14 PM, dingding777 wrote:

    Cramer strongly recommended to buy WB. See what happened to WB now. I didn't lose money until I bought WB by listening to his advice. CRAMER is a JOKER!!!

  • Report this Comment On October 28, 2008, at 8:29 AM, bizcardnut64 wrote:

    Cramer or CAPS? This is a comedic article right? Both suck. Cramer is a showman and CRAPS members don't back up their picks with their own cash. The question should be which is the bigger joke.

  • Report this Comment On October 28, 2008, at 11:11 AM, markanthony36 wrote:


    Like I said Cramer is a HACK as all the rest are!!! None of these ANALyst are right and even though he apologizes for his mistakes and bad picks does not compensate that he actually makes a lot of bad picks!! That's like saying I just ran over your kid and then say "like sorry man.., let me sit on my linoleum floor and drink some whisky with my viewers!!!


    You might say well it's not as drastic as that but when you consider all the innocent people who have lost their life savings and homes, it's pretty close to being so!!

  • Report this Comment On October 28, 2008, at 11:19 AM, markanthony36 wrote:

    Oh and forgot to mention Cramer's pick DWT was down 88% this morning to $0.22 when he had STRONGLY recommended it at around $ 10-$12!!!


    What a joke!!!

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