Market Combat: Cramer vs. CAPS

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:

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.

CAPS Says
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!