Cramer's Mad Money - So Long Great Depression II (3/2/09) 14 comments
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Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Thursday April 2.
The End of the Depression
Cramer declared the Depression is over and the bull market is beginning after the Dow's 200 point move up on Thursday. He said the definition of a bull market is a 20% rally off the bottom, and the Dow and the S&P 500 were up 23% and 25% respectively. The Street responded to bullish remarks from President Obama. Cramer also gave credit to Fed Chairman Ben Bernanke for lowering interest rates and the Treasury Secretary for offering hedge funds incentives for buying up toxic assets. These incentives have solved the problem of collateralized debt obligations and have allayed fears of nationalization of banks. While Cramer says the country may still face a recession and a terrible unemployment number on Friday, he thinks the worst is over, and would wait for a pullback before buying most stocks.
Celgene (CELG)
Cramer says Celgene is a broken stock, but not a broken company. The stock has declined 47% from its 52 week high and was taken down an additional 10% when it reported it expected only 20% growth and 25-30% long-term growth (yes, this was considered disappointing) and declines in sales for its blood cancer drug Revlimid as fewer people will be able to afford health insurance and the cost of the treatment. However, Cramer noted sales of the drug were up every month since the beginning of the year and the Revilimid is taking market share. Celgene trades at 19 times earnings, has $3 billion in cash and is expected to raise an additional $900 million in cash in 2009. Cramer is bullish on Celgene.
Sell Block: United States Oil Fund (USO), MGM Mirage (MGM), Las Vegas Sands (LVS), Wynn (WYN), International Gaming Technology (IGT)
Cramer would sell United States Oil Fund, which has been dramatically underperforming in spite of the increase in oil prices. The data speaks volumes: USO underperformed spot prices by 73-111% between April 2006 and July 2008. Crude is down 30% since the beginning of the fund, but USO has declined 58%. Oil has risen 8.5% since the beginning of the year, but USO has dropped 14%. Why is USO doing so badly ? The fund buys listed crude oil futures contracts and replaces them once a month.The disparity in prices caused by contango make the fund less profitable.
Cramer is releasing stocks he once condemned: MGM, Las Vegas Sands, International Gaming Technology and Wynn, from his Sell Block because there finally is some potential upside for these companies as the credit crisis is improving. Stocks in the gaming sector have been down from $76 to $96 and have nowhere to go but up, especially since MGM is expected to get funding for its CityCenter project in Las Vegas and Las Vegas Sands is resuming construction of its new casino in Macau. While he doesn't think the stocks are a buy right now, he is at least reducing their sentences.
Cramer's Outrage: General Growth Properties (GGP)
Cramer said one Barclay's analyst needs to "spend more time with this family" because his brain is already on vacation. While he readily admits his own errors, Cramer is outraged when analysts refuse to acknowledge their own bad calls. A certain Barclay's analyst was bullish on the REIT General Growth Properties from $32 all the way down to 65 cents, where he finally declared that he wasn't going to cover the stock anymore. Cramer thinks the analyst should at least have apologized for losing people money.
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This article has 14 comments:
Oh please spare us from Cramer .. Why cover a oxy-moron!!
He calls it both ways simultaneously so he can later be 'right' no matter what happens.
The bailout, stimulus plan and deficit spending will not succeed because Govt officials and economists do not understand the problem. The basic problem is too much debt built up over 25 years. YOU CANNOT SOLVE THE PROBLEM OF TOO MUCH DEBT BY ISSUING MORE DEBT. Reckless spending and debt over 25 years has caught up with us. It is impossible to change what has already been done.
So, Cramer is wrong the depression is over - it has just begun. When the world's attitude becomes negative, then people stop buying, banks stop lending, and deflation/depression occurs. For the government to stop a natural cycle is an illusion - like a Ponzi Scheme. To believe govt' officials can stop deflation is egomania.
In JC's own book, Sane Investing in an insane World, he gives an example of just this same thing.
We are not in the 1930's, this is the 21st Century and you just can't compare the old days.
Today the whole World is helping each other to fight this downfall economy.
I everyone thinks like you, we should all be hidding in caves.
Some of those Giant Casinos are too big.
When not many people inside, it feels lost.
Yes as mentioned by JIMS (not to be confused with Jim!) the market rallied 50% during the great depression before finally bottoming out, i expect we will test the moving average at around 1000 in the dow, before going lower.
There was also a large bear market rally during the 2000,2002 bear market and that bear lasted 2.5 years, we are now at 1.5, and this is much, much worse.
In conclusion it is amazing the difference an "S" makes in ones intelligence when comparing Jims.
But that doesn't mean we have avoided a very deep and long recession that will continue for another year or two. There is no way to avoid working through the collapse of the housing market; that is still happening. And the negative effects of the worst deficits since WWII have not even been seen yet and cannot be measured.
Cramer has had too many tantrums too many times. He was the one who was telling everyone and their grandmother to sell everything and hide in the basement six months ago. For those who llistened to him - AFTER the worst of the crash - there is nothing left to invest.
He announced on one talk show after another that stocks were a dangerous investment for anyone. Now he has decided that a new bull market has begun? Really? Has he heard of a bear market bounce? What does he have to say to all those people who listened to his panic and sold everything? Yes, it is ultimately their responsibility - but he did play a role.
I have heard enough from Cramer and the other celebrity-pundits. Let's have a return to the boring, sober-suited, conservative, reserved bankers and brokers of the distant past. I don't want to hear any more screaming and carrying on and wild mood swings.
Oh yeah! The bankers and brokers have done real well in the past 18 months. I sure would like get some advice from them.
If you do not want to watch Cramer "screaming and carrying on", don't watch him. If you think Cramer knows nothing and his picks are the "kiss of death", don't watch him. Your television has several channels to choose from.
I do not watch Cramer so he can tell me what stocks to buy. I watch his show because I think it is funny. And I watch his show to get some ideas on sectors and specific stocks which I can do my own research on. When I buy something, it is because I think it is a good prospect, not because Cramer, IBD, Fast Money, or MSN says it is a good buy. I take credit for my wins and I take responsibility for my losses. And always remember, this is supposed to be fun.
BTW, in Sane Investing in an Insane World, Cramer says that the large cap stocks are studied to death and you will have a very difficult time making big money outguessing the professional analysts. The biggest money is to be made in smaller stocks that are not yet covered by the analysts. But Mad Money mostly recommends S&P 500 companies and the Lightning Round is all S&P 500 companies. The attornys at NBC will not allow him to comment on smaller stocks lest they be criticized for moving the market. So quit trying to get rich by buying S&P 500 stocks that Cramer recommends on Mad Money. It's doubtful that you know something on a large cap that isn't already baked into the price. And quit getting so angry at Cramer. It's not worth it. Watch if you enjoy. Turn it off if you don't.
Gee whiz The whiz Kid is at it again,
At least he isn't Bernie Mad doff but for the sake of sanity have some due diligence, I hope they didn't threaten your 5 year contract because, you're hedging; but also your getting a little silly in the head. After three of your books i have to say you're letting the three stooge T,V, act get to you.
Have some patience Europe hasn't even figured out where we are yet. relax don't make yourself and people crazy, that take undue risks.
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