Jim Cramer’s stock picks beat the market on the average according to an academic study by two Northeastern University professors. On Wednesday’s show, Jim Cramer talked a lot about the debt crises in Europe. On the one hand, the uncertainty is lowering the cost of raw materials so smart companies are able to reduce their overhead and preserve profit margins even if sales have declined somewhat. On the other hand, the Eurozone debt crisis is causing some investors to be bearish, shorting stock and taking losses for doing so in some cases. Further, these “bears” may lower their earnings estimates for companies. As a result, a company like Pepsico (PEP) that may be reporting lower earnings than it estimated for itself is still able to beat the lowered bar set for it by the “bears”. In turn, its stock goes up and the bears lose money.
Jim Cramer’s opinion is that the economy isn’t home free just yet and there is a lot to be worried about because the EU is linked to US market performance in general. Some companies exist apart from that influence but more realistically, “there may be too many bears out there worrying about the same thing for it to become a reality.”
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