First Segment

Final Segment 1 Title: 'Cramer's Game Plan   For Next Week' .  .  .  .  . Featured Stock(s): Fluor Corporation (FLR) Pepsico, Inc. (PEP) Avon Products Inc. (AVP) Clorox Co. (CLX) Coca-Cola Co. (KO) Procter & Gamble Co. (PG) Colgate-Palmolive Co. (CL) Costco Wholesale Corp. (COST) Kroger Co. (KR) 2nd segment picks below...

Next Tuesday, December 11th... the day of the Fed meeting next week... is a day that will live in unfathomability. That's right. We just can't predict or figure out what's going to happen... Right now, I'm about to introduce you to what is, perhaps, the single most powerful force that any hedge fund manager or plain old retail investor has ever faced...

Powerlessness...

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This is an idea that everyone who manages money must ultimately come to terms with...

We have to accept, at times, that we are unable... totally unable... to game an event so big, so important, and so unquantifiable as this Fed meeting. So it's better to just admit our powerlessness and move on...

Last night, I got a call from a caller... he wanted to know about Fluor (FLR)... He wanted to know why the stock hadn't moved. He had done a decent amount of homework, and the homework came out positive, and the stock hadn't done anything. He couldn't understand it.

So I explained the difference between MICRO and MACRO...

Micro is everything you need to know about the specific stock...

Macro means larger forces, like the Fed...

This caller had done all the micro work about the stock, but he ignored important macro factors, like the Fed's intransigence about lowering rates had done to hurt his own stock. Because stocks get sold all the time when people are afraid of a recession, and a recession is exactly what we expect, if we don't get rate cuts...

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What's that have to do with our powerlessness next week?

All right, if the Fed cuts by a quarter of a percent, the recession fears will be right back on the table. Many people are betting that way. You can see those bets by the strength in Pepsi (PEP) and Avon (AVP), Clorox (CLX), Coke (KO), and Procter & Gamble (PG) today... Colgate (CL)... All stocks that should do well if the Fed doesn't cut enough, and we stumble into a recession.

It's going to keep down a lot of stocks that, on their own merits, would go a lot higher... but can't in an environment where we're afraid of a Fed-mandated recession.

Now, if the Fed cuts by a half a point (sound: Hallelujah!), then I think you can buy almost anything... industrials, tech, banks, retailers... so many sectors that have done poorly... even automobiles... yeah, a good portion of those. I think you could buy those stocks, but that's not the same as saying what they'll do... I only know what they should do...

Again, powerlessness...

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A few Fed meetings ago, I tried to game the meeting, and I got it wrong. I got beat up. You know what? I thought the Fed would cut a certain amount, and the market would react a certain way... Let's put it this way... After it was done, I had egg all over my face...

I refuse to do that again.

Instead, I'm going to take a cue from the world-renowned bridge player, Jimmy Cayne, and do something you can do when you play bridge... 'I pass'...

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Is there any store greater than Costco (COST)? I love to shop there. They report on Thursday. The stock's at a 52-week high. But how can you take advantage of what will happen to COST's stock if you don't know what's going to happen with the Fed before it reports?...

I like Kroger (KR) on Tuesday. I think the supermarket chain is kicking butt all over town. But who cares about KR if the Fed does the wrong thing?

So my takeaway for next week... my trading takeaway... It's too hard.

If you want to be a good investor, you have to recognize when something is just too hard or too impossible to analyze... and this is something I talk about in the book... I have to tell you, and it's a major thrust throughout my book... one of the most important traits you can cultivate as an investor is knowing when it's too difficult to figure out, and then moving on...

I do think the Fed will cut by half a point... I do believe the market will run...

But it would be foolish to act on that prediction... It would have been too risky a move at my hedge fund so, therefore, it's certainly too risky for Mad Money...

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