Jim Cramer's Key Lesson to Stock Picking

Discussion in 'Stocks' started by eagle488, Oct 10, 2006.

Is US Steel (X) a buy right now?

Poll closed Oct 15, 2006.
  1. Its a buy.

    9 vote(s)
  2. Its a sell.

    8 vote(s)
  1. Sometimes Cramer does state some intelligent things.

    He talked about how once word hits the media, Wall Street has already factored it in to the price. This does make sense and can be used as a key indicator.

    If you see a stock featured in a highly positive light in a news article in, for example, Businessweek then you should consider shorting it. If you see a stock featured in a highly negative light, then you should consider buying it.

    However, in regards to United States Steel, its current chart appears to be like AskJeeves during the year 2000. US Steel does have earnings and trades at a low P/E. We have to ask ourselves how did X go from 15 to 64 bucks in two years. I will answer that question with these answers:

    1) Housing boom
    2) Metals boom
    3) New cars purchased from home equity loans
    4) Building/condo boom
    5) Global growth

    The next question is do you see the above factors increasing or decreasing in the next two years? No more housing boom for sure. Metal prices seem to be on the down trend along with oil. I dont see as many new cars on the road anymore. Will global growth be as strong in the next 2 years with rising interest rates? I think not.

    So for Cramer to recommend X a strong buy right now is laughable. As a long term buy, I would have to pass. As a day to day trade, maybe. As a long term short, its possible.

    Cyclical industries are just that, cyclical. One year they grow like a weed, the next they sink like a ship. GM was very profitable in the 90s and look where it stands today.
  2. A.B.C. The cat is out of the bag. Quick scalp only

  3. patch227


    Do you trade using this logic or are you looking at stocks just for interest?
  4. The above is my short thesis on US STEEL (X). Bottomline is that this is a cyclical stock. The cycle is now over.
  5. pv150


    There was no trade on cramer's untimely insight about the media. It's nice to know but wouldve been nicer 10 pts ago, since he claimed to know it all along. Just worthless monday morning quarterbacking. Maybe next time? :p
  6. Cramer did not recommend US Steel. Well he did and he didn't. He specifically said it has gone up too much in the last few days to recommend it at this price, but it is a buy when it comes back down from this rally.

    The steel industry is MY industry. I've been in it for 33 years. Steel demand is still VERY STRONG. Housing has little to do with the steel industry. The industry has climbed with weakening national auto sales. When that market picks up along with the continued general global demand from India and China you will see these stocks continue to rise.
  7. Recession ahead. Price target=$20 Interest rates rising, growth will slow. The US has a headache, the world has a heart attack.
  8. patch227


    So do you trade/invest on your thesis or is it just for interest?

    How many people on this board actually invest in Cramer's picks?
  9. The pinhead would be running money and not his mouth if he had a clue.
  10. Are you saying that I shouldnt listen to Cramer? That he SOMETIMES gets it right?
    #10     Oct 12, 2006