Case Proved Markets watch Cramer

Yesterday Jim Cramer talked to the CEO of Energy Transfer Partners (ETP) on the show Mad Money.

The CEO was very upbeat about the natural gas pipeline and distribution companies prospects. The company does look interesting to me.  I am looking to buy in a few weeks or so.

In a previous post I warned about jumping in too soon after such a presentation on TV. ETP stock price today is a perfect example.

The stock opened today at $46.40 and in minutes was trading at $46.83 as the morning closes it is trading at $46.74 a little off the high but still at a premium. 

Trading volumes are also high, yesterday the stock traded 400,000 shares today it traded 428,000 shares in the morning session alone.

My case, Market Makers make a killing when popular programs like Mad Money on CNBC talk about a partuicular stock. 

Watch out for the sudden urge to jump into a stock picked on programs such as Mad Money, they are not neccessarily bad stocks, but you will see inflated pricing on them for a few days. Hold back, ok you may miss this spiike in price, but you will also not be paying over the odds for a stock that begins to fall to its old level in a few days.

Mark the stock, wait patiently on the sidelines and when the stock stabilises buy then and enjoy reaping greater profits.

Watch Advisors on TV With Care

It is ok to watch programs on stock investing.

Watch programs such as Mad Money with Jim Cramer and Fast Money with care. These CNBC programs are great sources for fiinding out about possible investments.

Be CAUTIOUS: Analysts and Market Makers also watch these programs and you will often see tipped stocks on these programs rapidly increase in price.

Why is this?  Market Makers and Analysts know that stocks tipped by experts on these shows will attract a lot of attention from the average investor. The average investor will see the price rise as a positive and buy-in too quickly. They will though also see the stock proce often fall within a few days.

The wise small investor will watch these pundit programs and make notes as to the stocks talked about.

Put them on a watch list and leave them alone for several days or weeks.  Yes you will miss the initial upsurge of the stock but you will not be locked in when that surge washes through and the stock falls to its original trading point.

As the stock falls to near its old trading level. If things still look good to you, then consider buying in that stock

Buy in good quantities if you can in order to reduce the trading costs by averaging.  Trading costs are the death of many a small investor.

If a trade to buy and sell costs $10 each your single share of stock will need to rise #20 before you can break even.

If you buy 10 shares then a stock needs only rise $2 to break even.

Buy 100 shares of the same stock and it need only rise 20 cents to break even.