As for market scares in general, I started this story on a Friday evening when all was quiet. Now that I'm doing final revisions on Monday morning, I find myself thinking, who knows? A crash could come any day. Or a pop. Or a bomb somewhere. Or a bad number out of Korea. So as of this minute in time it appears that Cramer's short-term bullishness has been vindicated. Right now, Cramer's keel is still attached.
Cramer's theoretical model is "fundamentals." For the most part, he likes to buy stocks in individual companies. He likes to study the balance sheets, read the SEC docs, listen to the conference calls, and figure out if there is really a productive business priced at a bargain level. Sometimes he gets it wrong, but mostly he wraps his recommendations inside reasons that help you to think about the way the market is working. Like a good teacher, Cramer presents his own choices in ways that help you to think on your own. He offers a market theory.
Along with the other two families of market theory that I will discuss below, the "fundamentals" camp assumes the perspective of the investment class. Cramer can discourage wage raises for Wal-Mart workers because they would raise the price of goods for customers, which will drive down store sales, which will, you guessed it, hurt the stock price that investors need most. We'll come back to this problem later.
Fundamental analysts such as Cramer, Peter Schiff, H.S. Dent, or Warren Buffett have market theories grounded in the study of earnings, demographics, economic, and yes, investment trends in the Real World.
The second family of theorists can be called "chart technicians." What they study is the price and volume action as it can be pictured in hundreds of ways. The vintage form of technical analysis--the candlestick chart--is attributed to an 18th Century rice trader in Japan.
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