Jim Cramer is Scaring the Livid Daylights Out of Me

I watch Jim Cramer on CNBC from time to time - I am not a religious viewer and don't track all of his picks as I know that many do. I know that his track record this year has been OK - much better than previous years - and those who have followed him would have caught the tail end of the Apple, RIMM, Google and Goldman Sachs. They probably would have also caught some of his duds, but that is a risk that they should understand.

Rather than invest in momentum plays, I prefer to study stocks and pick them carefully based on valuation. One stock that I have held for many years is EMC, and it has done well (I bought it in 2002 at 4, after it fell from over 1000 in 1999). Where there have been long periods when watching this stock is like watching paint dry, it has recently done very well. I continue to believe in EMC's strategy and that the stock represents good value for the long term.

Last night, I was at the gym and I happened to catch the beginning gof Cramer's show. I saw him explaining to his listeners and watchers why they need to get into EMC and need to get into it now. He believes, as do I, that the long term prospects for the stock are good. He however went on to say that VMWare, which EMC is partially spinning off, is the reason why the stock will go dramatically higher over the next several weeks. He went on to basically say something like "VMWare is the next Google and EMC is the way to play it."

It seems to me that everyone has known about the VMWare spinoff for months - EMC was trading below 16 when it was reveiled. The stock has already seen a tremendous move of people piling in so that they will be in when the spinoff occurs. It is no doubt possible that EMC's stock will go up another 30% on the spinoff as Cramer has suggested, but I think that the history of spinoffs show that the parent company falls as people who got in for the catalyst start to move out.

In a stock market which is already way ahead of itself, I am concerned that Cramer is pushing the small guy into stocks and telling them to prepare for liftoff. If things don't materialize the way that he is suggesting, these small investors will move out causing the stock to experience a dramatic and quick reversal.

While I'll stay long EMC for the long term, Cramer is making my stomach churn because I have seen this all before (like 1999). I'd be much happier if I didn't see Cramer pushing unreasonable expectations on small investors and causing them to pile in right now.

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