Cramer: Santa does exist on Wall Street
Jim Cramer cherishes the moments when investors stop obsessing about the Federal Reserve , the Presidential election and overvaluation of stocks and just start buying up their favorite companies. It is rare that this occurs, but that is the gift that December brings.
"It's December and in December we get into what I call the era of good feelings. That is when you get a tacit deal between major investment firms and large institutional shareholders," the "Mad Money" host said.
Simply put, it is the understanding that analysts won't rock the boat and downgrade stocks at the end of the year. Especially when it could hurt the very accounts of hedge funds and mutual firms that the analysts cover. If analysts don't have anything nice to say, they shut up and save it for January.
The opposite rule goes into effect, too. If someone has something good to say, then they are encouraged to shout it from the rooftops.
Cramer saw endless downgrades of airlines this year. But on Tuesday that all ended when airlines soared due to the lack of analysts to deflate them. No one was there to get in the way of low-cost carrier Spirit Airlines (NASDAQ: SAVE) as it surged higher along with Delta (NYSE: DAL) and American Airlines (NASDAQ: AAL).
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Or how about the run in Valeant (Toronto Stock Exchange: VRX-CA)?
It wasn't that long ago that this drug company was a total pariah, labeled as a price gouger with lots of recriminations of its distribution system. Yet somehow the stock managed to rally more than $8 on Tuesday.
Valeant and Mondelez (NASDAQ: MDLZ) both have a shareholder in common, Bill Ackman, the hedge fund manager who just doubled down on Valeant. Many money managers were betting Ackman would be crushed by this investment, but they quickly learned on Tuesday that perhaps he wasn't.
So in Cramer's long career of investing, he knows December tends to bring gifts to all investor portfolios. Analysts will bring nothing but good news.
"With December here, accept that Santa Claus does exist on Wall Street and he doesn't say ho ho ho, he says buy buy buy," Cramer said.
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