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Friday, 01/18/08
Posted 01/18/08, 8:16
am |
(Scroll down to see Jim's
comments below) |
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Today's date:
Friday, 01/18/08 |
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Dow Jones: |
12,099 |
-
59 |
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NASDAQ: |
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2,340 |
- 6 |
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S&P 500: |
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1,325 |
-
8 |
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Opening Segment 1
Title: |
'Cramer's Game Plan
For Next Week'
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Featured Stock(s): |
In this Game Plan, Jim
lays out an interesting
alternative to save this
market, and pleads to the
Federal Government to
consider it as an
alternative to their
currently-proposed
stimulus package.
No specific stock picks.
See Opening Segment 2,
below...
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JJC: In
tonight's Game Plan, I'm
dispensing with the usual
list of stocks to buy...
Because, look, stocks may
not amount to a hill of
beans soon, if we don't
put my Game Plan
through...
This is the Game Plan for
the President... for the
Treasury Department...
for the Federal Reserve...
and whoever else might be
listening...
Here it is...
Why can't we get to a
bottom?...
Why do stocks go down
every day?...
Why are people losing so
much money?...
It's because there's a
pervasive fear of failure
out there - a particular
kind of failure... a
failure involving
insurance companies...
They're called mono
lines... But that's Wall
Street jibberish...
We're talking about
MBIA (MBI)
and
Ambac
(ABK)
for the big mortgage
bonds, and
PMI (PMI)
and
MGIC (MTG)
for personal mortgage
insurance that backs up
these bonds.
Now, these insurers have
about $500 billion in what
they call exposure...
The problem is that they
don't have the money to
pay it off, and they need
to...
If these insurers go belly
up, and the smart money is
saying they will... the
system will be
paralyzed... the financial
system...
I would not be surprised
if the Dow Jones Average
(i.e., the Dow) lost a
couple of thousand points
when it's announced that
these companies cannot
pay... a couple of
thousand points.
That would be a lot of
capital wiped out.
At that point, many of the
banks could then run out
of money. You see,
it's a domino effect.
First, the mortgage
insurers go down, then the
banks, then everybody who
needs to borrow... you.
There won't be any homes
sold. We'll have
100% inventory... See,
that's the problem we need
to solve... and it's very
unsophisticated, frankly,
for the government... kind
of analysis that they're
using... putting a check
in every pocket... a
chicken in every pot...
it doesn't work...
. . . .
.
So what should we do?...
We need the federal
government to buy these
companies - the ones I
just mentioned - and close
them...
The mortgage insurance -
all the stuff... the toxic
stuff - will be picked up
by the government, and
then guaranteed. The
government can say, look,
we're not going to pay out
100%. We're going to
pay out 50% on the dollar
for any defaulted mortgage
junk you have that's
insured...
If billions don't turn out
to be worthless, that's
terrific for the
taxpayer... but every
financial accident will
get paid off at 50 cents
on the dollar, instead of
zero on the dollar, which
is what it would be
without government
intervention... and
something that would
destroy our banking system
overnight, and send us
back into the 1800s...
If the government pays 50
cents on the dollar, then
the whole bill comes to
$250 billion. It's
still cheaper than the
stimulus plan that
everyone's proposing...
For that $250 billion, you
get exactly what this
market and this economy
needs...certainty.
The banks will be able to
tally and access their
losses, build reserves and
start lending money...
When you couple my plan
with the 100 basis points
(i.e., full 1% cut) worth
of cuts in the Fed funds
rate that we need right
now... these banks
will be able to make
enough money to save
themselves from bankruptcy
with my 50% backstop...
For $250 billion, max...
we can put this whole
crisis past us, and start
over...
It will probably only cost
$125 billion, but I'm
using the big bear case...
That's about the same
price as everything that
even the democrats are
talking about... but it
would directly address the
real problems and
jumpstart the economy.
. . . .
.
If the Fed takes my game
plan, not only would the
banks be able to lend
again, and know their
exposure... Here's
my prediction...
A 2000-point rally in the
following two weeks...
2000 points down... if we
let this trainwreck
happen, which is about to
occur...
2000 points up... if my
plan is accepted by the
government...
And I know that there are
people - not within the
federal government, but
within the state
governments - who think
that this plan is right.
. . . .
.
The Bottom Line!:
You
want to save the economy?
You want to save the stock
market?... Put down $250
billion. Shut down
these insurers... Take
their book of business
over... Give the munis to
Buffett,
or the highest bidder, and
you prevent the end of the
world or, at least,
another 2000-point decline
in the market which, in my
view, is about the same
thing.
[See Jim's 2nd Opening
Segment stock picks
below... ]
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See all of tonight's stocks'
latest quotes on
Yahoo! Finance |
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(click any book to see at
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■ |
Stock Snapshots - Includes
all stocks mentioned above |
■ |
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Jim
Cramer's
rating on
this stock |
STOCK
SYMBOL |
Closing
price
that
day |
Opening
price
next
day |
Full Company
Name/Comments
(see comments above for
each) |
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na |
na |
na |
na |
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na |
na |
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Mutual-Fund-Holdings.com
NEW RESOURCE!
See Ken Heebner's CGM
Focus Fund
Top 25 holdings - The No.
3 Top-Performing Mutual
Fund in 2007
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Final Segment 1
Title: |
'Technical Knockout'
'Windows of
Opportunity'
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. . . .
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Featured Stock(s): |
Microsoft (MSFT)
See MSFT's website
here.
Yahoo! Finance profile for MSFT
here.
2nd segment picks
below...
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All week, in a miserable,
down 5% S&P week, I'm
looking for opportunity...
like a moron... no... like
somebody that's done this
all his life... looking
for undervalued and
overlooked tech stocks
with strong fundamentals,
as one of the few ways to
try to make money in this
relentless bear market...
And, may I also just give
you a little caveat?... I
don't ever want to see you
buying into an up
opening... When the
market opens, it's just
been a sucker's play every
single time... every
single time! Don't
you dare buy when the
market's up.
There'll be ample
opportunity to buy when
it's down...
Today, it's time to talk
about the most overlooked
tech stock of all...
the one that no one's
talking about... the one
that no one cares about...
the one I don't know a
soul who owns... the one
that everybody just thinks
is wallpaper...
And I am talking about the
invisible elephant in the
room... a stock that's
down and out but, above
all, safe right here...
I am talking about Mister
Softy...
Microsoft (MSFT)!
. . . .
.
The stock is four points
off its high... It is
perfect for the bear, and
nobody's paying much
serious attention to it,
because tech is hated,
hated, hated, and then
hated again...
And MSFT? Well, it
is tech... But it
has all the
characteristics as the
kind of tech stock that
will work, even in this
unfriendly environment.
. . . .
.
The Fed-mandated attack on
our economy shouldn't
touch Mister Softy...
This stock is the
second-largest global
brand, after
Coke (KO),
which by the way, at $60,
is a real buy...
It's really liquid,
meaning the average daily
volume of shares traded
over the last three
months, is 78 million...
Why does this matter?...
It means it's very hard to
knock it down, and knock
it down quickly, like so
many other stocks...
Above all, MSFT is a
battle-hardened company...
and this one can hunker
down, and make it through
a slowdown. In fact,
MSFT may actually benefit
from the current
environment, as smaller
tech companies get washed
out, and MSFT is still
standing, ready and eager
to take their business...
Plus, MSFT has a pristine,
beautiful balance sheet...
house of pleasure... and a
cash hoard of $21.57
billion! A lot of
credibility there... think
of all that cash...
. . . .
.
Now, not only is MSFT not
suffering in this
downturn, it's actually
thriving... And my
theory is that any tech
company that can deliver,
or blow away the numbers,
in this environment... can
do a heck of a lot better
when things get better,
when the Fed finally wakes
up...
MSFT's last quarter was
spectacular!... and
surprised everybody, and
it was real.
All of their business
units beat and beat big...
They beat the consensus
earnings estimate of 39
cents a share by 6 cents.
It's hard to do when
you're a company as big,
and as highly examined by
analysts, as this one
is...
They beat the consensus
sales estimate by over a
billion dollars...
You think
IBM (IBM)
went up a lot on their
good news?...
This is the one... this is
the one...
They've got sales growth
higher than at any time,
since 1999, and they gave
upside guidance.
Just a perfect quarter
right there...
The weak dollar's a huge
boon for MSFT... They
estimate upside of 339
basis points... jibberish
for 3.39% percentage
points, thanks to that
strong foreign currency...
Goldman's already joined
the party... They
added MSFT to their
conviction buy list on
Wednesday...
The estimates are
rising...
. . . .
.
They've got some catalysts
coming too...
The launch of Windows
Server 2008... the release
of Service Pack 1 for
Vista... which might make
Vista worth buying...
and unlock a lot of
pent-up demand... and
increase buybacks from
their strong balance
sheet...
Product cycles are on
their side, and so is this
environment.
Microsoft (MSFT)
reports next Thursday.
I would be in this stock,
even if we get the bank
insurance collapse that
I'm talking about... I
would be in ahead of this
report Thursday. It
could be the moment when
this invisible elephant -
this $33 elephant that was
down today - starts
getting some serious love.
. . . .
.
The Bottom Line!:
Microsoft (MSFT)
is the best tech stock for
this bear market, and
don't you ever forget
it...
. . . .
.
|
Jim
Cramer's
rating on
this stock |
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