Clueless - Cramer's Mad Money (10/8/08)

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Includes: AA, DOW, EXC, GNK, KHC, KMP, NSC, PFE, PKG, PM, PVR, PWR, SO, T, TSM, USB
by: Joan Wickham

Stocks discussed in the in-depth session of Jim Cramer’s Mad Money TV program, Wednesday, October 8.

Too Little Too Late

Jim Cramer told viewers that the worldwide interest rate cuts today were simply too little, too late to help the markets. Cramer said the rate cuts should help banks in the short term, but they are far too late and shallow to make any difference for stocks in 2008. Throughout the financial crisis, he lamented, Federal Reserve Chairman Ben Bernanke has been "clueless" and so incredibly behind the curve that he should be fired. Cramer compared today's markets to that of 2003, when then Fed Chairman Allen Greenspan took short-term interest rates to just 1%. Back then, he noted, there was no financial crisis of epic proportion, no credit crisis and no housing crisis. Yet today, Bernanke expects the markets to be fixed with just a mere 1/2-point cut. Cramer acknowledged today's rate cuts represent a huge influx of cash and are a step in the right direction, but he said it would still take two years for the markets to recover. He called for several more rate cuts to completely remove the chance of a depression from the table. In the near term, Cramer advised viewers to be cautious and stay in a capital preservation mode. He told them again to sell into any strength in the markets and to continue to raise cash throughout the remainder of 2008. "Put any money you might need for purchases in the next five years into a Federal Deposit Insurance Corp. insured savings account," he said.

Wind and Energy - Quanta Services (NYSE:PWR)

Cramer checked in with Quanta Services chairman and CEO John Colson, to see if this wind and energy play is still blowing strong in a crumbling market. The company builds transmission lines for energy, cable, natural gas and telco firms, and also does hurricane cleanup. Cramer last recommended Quanta, which his charitable trust owns, on July 15 at $29 a share. Since then, the company's shares have fallen to under $19 a share, and that has Cramer worried. Colson said Quanta has not been affected by the market meltdown, noting its business has been going strong. He said the recent wind tax credit extension passed by Congress will help Quanta, which builds and maintains power lines and switching stations for alternative energy projects. Colson said Quanta's fundamentals remain strong, and he's seen no cutbacks or cancellations of any wind power projects. He reminded viewers that utilities build wind farms for their renewable and low-carbon benefits and those benefits are not affected by the daily price of oil. He said the company expects to see $150 million in revenue this year from wind and renewable sources and strong growth going forward. Cramer said Quanta is much better today than it was when he recommended it in July. He attributed the decline in the stock price to nothing more than relentless hedge fund selling, noting a huge 3.8 million share block that crossed the ticker on Tuesday. So Quanta is looking like a classic case of broken stock, rather than broken company. And that situation is usually a buy on Mad Money.

Am I Diversified?

Portfolio One:

  1. US Bancorp (NYSE:USB)
  2. Kinder Morgan (NYSE:KMP)
  3. Southern Company (NYSE:SO)
  4. Pfizer (NYSE:PFE)
  5. Taiwan Semiconductor (NYSE:TSM)

Cramer congratulated the viewer for an excellent dividend-paying portfolio that'll likely make money while all others lose money.

Portfolio Two:

  1. Genco Shipping (NYSE:GNK)
  2. Penn Virginia Resources (NYSE:PVR)
  3. Heinz (HNZ)
  4. Norfolk Southern (NYSE:NSC)
  5. Packaging Corp. of America (NYSE:PKG)

Cramer said this portfolio was diversified and ready for a rough market.

Portfolio Three:

  1. AT&T (NYSE:T)
  2. Phillip Morris (NYSE:PM)
  3. Exelon (NYSE:EXC)
  4. Dow Chemical (NYSE:DOW)
  5. Alcoa (NYSE:AA)

Cramer said this portfolio is diversified but is losing money. He's also not a fan of Alcoa or Dow Chemical after their recent acquisition.

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