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Monday, 02/11/08
Posted 02/11/08, 11:19
pm ET |
(Scroll down to see Jim's
comments below) |
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Today's date:
Monday, 02/11/08 |
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Dow Jones: |
12,240 |
+57 |
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NASDAQ: |
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2,320 |
+15 |
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S&P 500: |
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1,339 |
+7 |
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Happy Birthday to
Jim Cramer!!
Feb. 10, 1955 -- A
Powerful 53!
( NOT 64... ) |
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Opening Segment 1
Title: |
'Dow For The Count'
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. . . .
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Featured Stock(s): |
No specific stock picks.
See full comments below...
See Opening Segment 2,
below...
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JJC:
Yesterday (2/10/08)... I
turned 64... (actually, he
turned 53)... Better
be a young looking
64-year-old, than a young
53-year-old... And it
looks like Dow Jones has
decided to give me the
worst birthday present
ever...
This morning, they gave me
yet another reason to stop
quoting the Dow Index...
to stop treating it like
it represents the
market... Because
the guys at Dow Jones made
it perfectly clear that
they either don't have a
clue... or they're
deliberately trying to
make the Dow Jones
Industrials Index as
unrepresentative of the
economy as possible!...
And I am 100% convinced
that they're ruining this
once-great index, just to
spite me as a belated
birthday present...
They had an opportunity,
because
Altria (MO*)
is getting split up, and
has to come out of the
index... They had an
opportunity, so that the
Dow better reflected the
way things are going in
this economy...
I like to look forward,
not in the past...
. . . .
.
There are three big themes
that I think any
responsible person would
want to emphasize, if they
want to nail the future...
The growth of the natural
resources sector in
importance... and that
includes oil...
The strength of companies
that sell beyond our
borders... the
rest-of-world (i.e.,
ROW)...
And, of course, the
decline in worth and size
of the financial sector...
. . . .
.
So, of course, they do
almost the exact
opposite... but
let's not act surprised
that the new management
really bungled this one...
C'mon Rupert (Murdoch)!...
You know this stuff cold!
Make the real changes!
Get rid of the
negative-ness...
. . . .
.
As of February 19th,
Honeywell
(HON),
the quintessential ROW-er,
with a management team
that has totally embraced
the idea that exports are
the future... will
be kicked off the index...
Sheer genius, if you're
trying to make the Dow
Jones Average
irrelevant...
In one fell swoop, they
remove a stock that
represents one of the
three big themes they
should be enshrining...
And what do they add to
replace MO* - which had to
go... and HON - which
should have stayed?...
We get
Chevron (CVX)
and, of all things,
Bank of America (BAC)?...
a financial... I
guess the sector's
shrinking so fast, they
figured they had to add
another bank...
What better way to destroy
the Dow?...
. . . .
.
I'd say they had a
fantastic opportunity not
to add another financial,
but to drop one!...
American International Group
(AIG)!...
We do not need still one
more totally opaque,
hard-to-understand
financial like BAC... who
knows what they actually
own... joining the
Dow. We need AIG
out...
And, while we're talking
about this travesty
masquerading as an
insurance company, I
should do the responsible
thing, and put AIG where
it belongs...
Not on the Dow, but on the
Mad Money Wall of Shame!...
with the newest member
right here... I'm
adding the CEO, Martin
Sullivan who, the way I
see it, has shown himself
to be completely over his
head... and,
frankly, he gives
incompetence a bad name...
I'm just glad I threw AIG
in the Sell Block, back on
December 13th...
which could have saved you
from a 21% loss, even
though it was a
heavily-criticized
decision to put it in the
Sell Block...
If Sullivan doesn't
already feel like he's got
egg all over his face,
let's put it there!...
(Jim then threw an egg at
Sullivan's picture on the
Wall of Shame)...
. . . .
.
If anyone at Dow Jones had
wanted to make the Dow
more relevant, they would
have dropped AIG and added
Google-licious!...
Google Inc. (GOOG)...
another great example of a
company that's doing
business with the rest of
the world... 48% of their
sales coming from overseas
for the last three
quarters. This one
is clearly here to stay...
While we're at it, if
anyone from Dow Jones is
listening, it's time to
dump
Pfizer (PFE)!...
Pharma is another example
of an incredible shrinking
sector, yet they've got
PFE,
Johnson & Johnson (JNJ)
and
Merck (MRK)
in the Dow...
Why not replace PFE with a
stock that represents a
sector that's actually
growing... Ag!...
(agriculture)... and
why not add a
Monsanto (MON)
or a
Deere (DE)...
Although, MON is more
likely to be the Seed
World centerfold next
month...
And don't forget, this Dow
Jones index contains both
Verizon
(VZ)
and
AT&T (T)...
Isn't that a little
much?... There are
only really two telcos in
this country, and both are
in the Dow?...
Quizzacle?...
What a great moment to
replace one of them... I
think VZ... with
Cisco
(CSCO),
a telco equipment provider
that's also a
rest-of-worlder...
. . . .
.
Now, I know that all the
money's indexed to the
S&P, not the Dow, so it
really doesn't matter.
It's just an exercise...
but the bottom line is...
. . . .
.
The Bottom Line!:
As long
as we're treating the Dow
like it seriously
represents the market, the
Dow Jones might as well
make a serious effort to
make sure it does just
that... At least they gave
us a good reason to throw
eggs, and make a mess!...
Which is my perogative
when I'm 64!...
[See Jim's 2nd Opening
Segment stock picks
below... ]
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See all of tonight's stocks'
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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 |
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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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Opening Segment 1
Title: |
'Military Precision'
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. . . .
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Featured Stock(s): |
Raytheon Co. (RTN*)
See RTN*'s official
website
here.
See the Yahoo!
Finance profile for
RTN*
here.
See Opening Segment 2,
below...
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JJC:
It's easy to feel like the
Wall Street insiders have
an edge over you, when
you're investing as a
homegamer... that
they know more...
that they have more
resources... that the game
is rigged... and the
pros will beat you
everytime...
But that's simply not
true...
Believe me, we wouldn't
have much of a show, if
that were the case...
And it's not true, because
when it comes to what goes
on in Washington, you'll
do better by reading the
Washington Post... than
you'll ever do by
listening to some of these
analysts...
. . . .
.
They all the defense
budget could not possibly be
as big this year as it is...
and could definitely not be
big next year...
Just a week ago, on the 4th,
Goldman Sachs came out with a
note on defense spending that
really freaked out everyone...
including me!...
The note had an ominous
line... 'Early
indications of slowing growth
in defense spending...'
That was the concensus on the
Street... that defense
spending would disappoint...
And, once again, when it came
to Washington, the Street got
it wrong!
. . . .
.
Today, we learned in a big
frontpage article in the
business section of the
Washington Post, that the
defense budget is huge...
Bush is asking for $515
billion in 2009...
That's a 7.5% increase over
the 2008 defense budget.
That's just a low-ball number,
according to Fred Kaplan, over
at Slate... I like it.
Our defense spending next year
will come closer to $713
billion...
This blindsided Wall Street,
which consistently
under-estimated the
President's insistence on
keeping defense spending high.
We're the world's policemen
and the fact that Congress is
totally in the pocket - or
maybe in the wallet, to be
more accurate - of the defense
contractors...
. . . .
.
The analysts covering the
defense contractors just added
no value here...
They had us worried about
program terminations, when the
actual budget that came out
didn't terminate a single
program!
. . . .
.
Now that the overall defense
budget for 2009 is much bigger
than the analysts thought,
hey... do you mind if we try
to make some money off of
it?...
And we'll do that by
exploiting one of the other
big ways that analysts screw
up...
. . . .
.
The analysts know that the
defense contractors are in
bull-market mode...
But, if you're an analyst
covering the defense
contractors, you can't just
say everything is a buy... You
have to be more negative on
something. Otherwise, it
just likes you're being
rigorous...
Even though I think the most
rigorous thing, in reality,
would be to tell everybody to
buy every defense stock...
they can't do that. They
can't just say everything's
great...
Which leads us to
Raytheon (RTN*)...
one of our favorite stocks on
this show, and something owned
by
my charitable trust...
In fairness, I did schnitzel a
little... I schnitzelled
a little RTN*... I cut it
back, off the table...
but that's only because it had
had such a great run. My
position in the stock was so
big that it would have seemed
piggish, and we know what
happens to pigs who don't
sell...
. . . .
.
The analyst at Goldman
downgraded RTN*, based on the
specifics of the company...
they were worried about free
cash flow. But the
specifics of the company have
nothing to do with why RTN*
works...
It went up, because the sector
- as a whole - was strong...
Unfortunately, again, if
you're an analyst, you can't
just say that even the worst
house in the defense
neighborhood is better than
the best house in pretty much
any other neighborhood...
There are reasons to like RTN*
specifically... like the fact
that it's got the highest
international sales in the
group... and, on Mad Money,
you know we're all about the
international or, as we call
it, ROW... rest of world...
But I think the best reason to
like the stock is that it's
not getting the love it
deserves from the Street, and
that gives you an opportunity
to buy it lower than it should
be.
. . . .
.
The Bottom Line!:
The
analysts just can't get
national security right.
Only the press can... and
I say that means buy
Raytheon Co. (RTN*)...
although, I wouldn't
necessarily
pull the
trigger here, okay?... Wait
for a pullback. It
just went up on this
"sell" to "hold"...
I think you can get RTN*
for less.
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