Cramer's Mad Money - Give Geithner a Chance (2/10/09)

Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Tuesday February 10.

The Good in Geithner’s Plan

Cramer’s prediction came true; the Dow plunged 382 points after Geithner released his plan. However, Cramer says he has been spending a lot of time picking apart Geithner and decided to dedicate some energy toward discussing the good in Geithner’s plan. He liked the idea that the Treasury Secretary admitted the need for a gigantic credit facility so the private sector can buy banks and bank assets. This will allow for the creation of “good banks.” Cramer also praised the “stress test” for banks which would determine which institutions should receive aid and which shouldn’t. Other than that, Cramer agreed that Geithner’s plan was a disappointment, but he would “give Geithner a chance” to get it right. The two buzzwords needed right now are “forbearance” and “time”; draconian measures are not going to help. In the meantime, Cramer would buy China, recession stocks and accidental high yielders. Cramer decided to cut Geithner some slack rather than laying into him once again; “After all, he’s the only Treasury Secretary we’ve got.”

4 Step Plan for Mary Schapiro

After Christopher Cox’s performance at the Securities and the Exchange Commission, during which he repealed protective legislation, allowed naked short selling and missed the largest Ponzi scheme in history, one may assume that his successor, Mary Schapiro can only do better. Cramer gave Schapiro a four point plan to help undo the sins of her predecessor.

1. Reinstate the uptick rule. This rule was established in the wake of the Great Depression, and required traders to wait for a stock to tick up in price before selling short.

2. Ban naked short selling which doesn’t require traders to borrow the stock first.

3. Ban ultrashort ETFS. These devices sidestep the rules and give a $1 investment the impact of $2 and shoot down stocks. “It is market manipulation pure and simple,” said Cramer.

4. Make sure all rules are enforced to prevent corruption.

Off the Chart: Transocean (RIG) Schlumberger (SLB)

Cramer was in search of a “Geithner free” space and decided to take a look at Transocean. Based on the chart, Transocean seems like a buy. On December 24, the stock bottomed and since then, the stock is up 40%. While this is an indication that we “missed the train” chart-watchers feel differently, commented trader. Higher highs show that there is a greater willingness to buy. However, Cramer prefers to consider looking at the fundamentals, which point to falling oil prices and the expiration of many of RIG’s contracts in 2010 as more in control of Transocean’s destiny than technical patterns. In spite of the fact that Transocean trades at a mere 4 times earnings, Cramer prefers Schlumberger, which is more resilient and is not dependent on just one area of oil. Estimates of the stocks are low, so it is not likely to disappoint.

Cramer’s Outrage: Principal Financial Group (PFG)

Principal Financial Group complained about being placed on Cramer’s Mad Money Sell Block and its management wrote in a letter; “Before Jim Cramer comments on the sector in future, he should consider that not all insurers are created equal.” However, Moody’s has put Principal Financial on the watch list for a potential downgrade and the company’s quarterly report shows that it lost half of its book value. So Cramer agrees with Principal that not all insurers are created equal; “Principal Financial is worse than the rest.’

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Comments

[NITRAM:]

I HATE TO BLOG ON ANYTHING "THEY KNOW NOTHING" CRAMER
ITS NOT A MATTER OF GIVING GEITNER A CHNACE. MONDAY THE MAN IN THE WHITE HOUSE SAID HIS TREASURY SECRETARY WILL GIVE FULL DETAILS OF THE PLAN THE NEXT DAY. I GUESS OBAMA MENT AH AH AH AH MAYBE. ALL GEITNER ACCOMPLISHED WAS PISSING OFF THE COMMITTEE FOR NOT SENDING IN THE STORY PRIOR TO HIS SHOWING UP. ITS JUST MORE PROOF THAT OBAMA AND HIS COURT JESTERS HAVE NO IDEA OF WHATS GOING ON.

Feb 11 07:39 AM

[Alphameister:]

As I recall, "fundamentalist" Cramer hated DRYS below 5, then loved it near 15. Presumably Cramer isn't the only analyst who can see downstream margin pressures on drillers like RIG given P/Es in the 4 to 5 range.

Feb 11 08:46 AM

[Maxe Paul:]

As usual Cramer is "flip flopping", i mean how are the smart people going to be able to short his buy lists if they are banned? LOL. Maybe if short sellers were banned even Cramers picks would be winners more often!

Feb 11 10:05 AM

[long_on_oil:]

A caller asked about RIG last week and Cramer told the guy that RIG is a strong sell and he doesn't even want to talk about RIG anymore. If you take anything Cramer says seriously you will end up getting burnt. MAD MONEY is for entertainment purposes only and not to be taken seriously by any serious long term investor. If Cramer recommends buying RIG today, you better watch the show everyday because tomorrow he might make it a strong sell. If you miss the strong sell show, you are toast.
Cramer is just a typical investor like the rest of us. He tells you to buy but is very slow and often wrong on the sell side.
I would love to know what his overall record is. There have been several times that I created a portfolio on stocks he recommended so I could follow them and most of the time the portfolios lost money. His AG related is one example. In feb 2008 he put strong buys on DE, MON, POT, MOS and AGU, well those stocks are now down over 48%. Need I say more.

Feb 11 11:27 AM

[bub:]

booyah,cramer.enjoy your show.know you try hard. you can't always win.
but you admit your mistakes.that's more than they do in DC. a lot of
doubletalk. you're right,not all insurance companies are created equal.
marty weiss talked about this 20 years ago,when he created his own rating
system. i don't think there were any AAA.and it turned out he was right.
i agree,short sales on upticks only,and nothing naked in the market.it's fun
listening to you. you are the most entertaining./bub

Feb 11 01:18 PM

[train wreck:]

Funny, in 2006 Cramer was saying exactly the opposite and was making waves voicing opinion that short sellers in no way could move a market in a stock. Which is it Jim?

thestreet.com/b/rmoney...

Feb 11 03:04 PM