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March 2016
#41
The market has had a monster run since the middle of February, but Jim Cramer finds that stocks are still incredibly undervalued. There could be tons of reasons why the market moved up such as the Fed on hold or relief of stress in the oil patch. But in Cramer's opinion, these reasons only expose that there are thousands of stocks with different prospects and different valuations. "I think that a lot of this move has to do with the fortunes of individual companies, and how much more their stocks may be worth than where they are currently valued," the "Mad Money" host said.

Cramer: Stocks are incredibly undervalued

Incredibly undervalued, we're not convinced of that, especially considering this:

Stock based compensation as part of executive pay is widespread. The common practice on Wall Street is that it is added to earnings, we can see no valid accounting reason for this. It's probably the main driver between the growing gap between GAAP and non-GAAP earnings. That gap is often substantial, artificially boosting earnings, it's basically a bubble.

A Worrying Artificial Bubble In Earnings | Seeking Alpha

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#42

This is actually good news:

The data show that the share of income going to wages increased over the course of 2015 and is now 1.6 percentage points above its post-recession low point in 2012. The labor share of income seems to be on the upswing.

The labor share, the ongoing recovery, and structural forces - Equitable Growth

The world is suffering from excess savings over investments and even century low interest rates have not been able to diminish this problem, which is a prime characteristic of secular stagnation.

The savings accumulate in surplus countries like Germany and the Netherlands (less so China, these days), but most of all in companies. Japanese companies have savings worth half the Japanese GDP, for instance.

Despite record low interest rates, record high profitability, and record cash hoardings, business investment isn't growing enough which leads to slower growth and a decline in quality and quantity of production factors, reducing growth in the future.

A shift in income from capital to labor would remedy all of this. It would increase spending, thereby creating that elusive top-line growth for business, reducing the vicious cycle of lack of top line growth leading to cost cutting in order to at least increase bottom line growth. But the cost cutting is worsening the demand problem.

With more top line growth produced by a reduction in excess savings would also start to normalize interest rates and put the economy on a higher growth path.

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#43

We set out these thoughts in greater detail here, or how to cure secular stagnation.

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#44

We're buying 500 share Ambarella (AMBA) at $45. We should have done that last week..

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#45

Had been looking at AMBA for a while but Morgan Stanley's upgrade (and 9% rally) forced the issue, to establish at least an initial position. The markets for their products are widening and the trouble at their biggest customer (GoPro) should be much less of an issue going forward.

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