After this segment, you
can see Jim's Lightning
Round picks
here...
JJC:
Sometimes we just have to
take our lumps...
Sometimes it seems like
the market's just
impossible to make money
in... made all the more
difficult by the fact that
it's the end of the
quarter... the end of the
2nd quarter, and the big
institutional investors...
they've lost confidence in
the whole market. They're
not like you... they like
to panic. They're dumping
everything.
This decline has to be one
of... let's call it a
dozen severe selloffs I've
had to deal with in my
25-year-long career... a
career that began, I have
to remind you, when the
Dow was more than 9,000
points lower than it is
now... That's right...
more than 9,000 points
that I guess I would have
been spooked out of...
most certainly, if I had a
lot of days like today,
and I didn't understand
how the market works...
It's still the best solace
I can give you right now
though...
You see, we have to accept
these declines. I'm not
saying endure them,
they're too hard... we
have to accept them. We
build them in... we
acknowledge that things go
wrong. Sometimes, we just
sit, we take a little
beating... We raise a
little cash, where can
sell marginal positions.
We circle the wagons
around the stuff we really
like, and we jettison -
sell, sell, sell - the
stuff we don't. And we
thank heaven's that we
knew that pigs get
slaughtered, and we
weren't pigs...
This may be one of those
times...
Going through the laundry
list, it seems as though,
on a day like today,
there's very little to
like. Tech? No...
Aerospace? No... Banking?
No... Sell, sell, sell!...
Brokers, Industrials,
Consumer Products?...
Healthcare? Maybe... Food
and Beverage? Possibly...
Oil? Probably... Gold?
(bull sound)... But that's
just today. That's just a
Thursday, before the end
of a quarter...
And you know what?...
There's stuff to buy in
there right now. There are
bull markets to find and
I'll get to those in a
moment.
I want you to think of the
themes, though, that have
gone under in just the
last few days, because
they explain the action
more than what's happened
today...
We had a cascade of
pin action in different sectors...
The airlines can't buy
planes, because they don't
have the money, thanks to
high fuel costs, so we
sell
Boeing (BA)...
and everything that goes
into a plane from
Honeywell
(HON)
to
United Technologies
(UTX)...
General Motors
(GM)...
They're running out of
cash... So we sell
everything in a car, from
Johnson Controls (JCI)
to
Visteon (VC)...
Banks need cash, oddity
and irony... or maybe not
that odd anymore, but they
do... So we sell
everything that goes into
a bank, including the
technology companies that
supply them with their
systems, like
Oracle (ORCL).
Meanwhile,
Nike (NKE)
can't make its numbers,
and that's the best
consumer products company
out there...
Research
In Motion (RIMM)
reports a pretty darn good
number, but it's not
enough, and RIMM is the
last of the four horsemen
of tech, now that we've
sold almost all of the
Apple (AAPL).
If the best tech story out
there isn't working - even
as I like it still - the
market says, who needs
tech?...
Now, here's what the
market's subtext is...
If a company needs
money... If it buys raw
goods... If it uses oil
and gas... If it needs the
consumer to spend... that
company cannot meet or
beat the estimates that
Wall Street sets, so they
go down...
All of this combines to
make the selling in the
overall market so heavy,
that even the oil and gas
companies that have
benefitted from higher
prices... they go down
today.
Only gold rallies... and
that's not a good sign.
Gold rallies when nothing
else is working. And look
around... almost nothing's
working.
We're faced with a parade
of horribles, instead of a
fabulous July 4th parade
that I'd like to offer
you... There's an abiding
sense that things have
gotten, and are spinning,
out of control. Investors
and traders alike smell
recession... and see
inflation... the
combination that makes
everyone want to reach for
gold. I always tell you to
have some gold, but I'm
not going to make
excuses... I tell you to
own a lot of stocks.
Right now, I don't like
the market, other than a
handful of things that I'm
suggesting you circle the
wagons around...
Minerals and oil and
gas... some agriculture...
But there still have to be
days like this one, when
everything from
ConocoPhillips (COP)
and
CVRD (RIO)
and even the sainted
Potash (POT)
go down... I need you to
think, though,
opportunity, not enemy...
See, those are still buys,
when the smoke clears, not
sells. Why? They don't
need the money. They don't
need the consumer. They
don't need oil and gas.
They don't buy raw goods.
The only thing they buy is
their own stock...
something, by the way,
that really exacerbated
the problem today...
because, did you know that
companies are forbidden to
buy their own stock at the
end of the quarter...
which is why things were
particularly egregiously
ugly today.
I do not have a solution
for this moment.
Every night, I come out
here and proclaim that I
am worried about WB,
including the dividend...
Washington Mutual (WM),
a
Wall of Shame
stock...
Bank of America (BAC),
dividend too high...
Citigroup (C),
you know I hate it... sell
it.
American International Group
(AIG),
please...
Fannie Mae (FNM),
Freddie Mac (FRE)...
(bear sound for all)....
You know I'm fearful about
General Motors
(GM)
and
Ford (F)...
Sell, sell, sell... You
know I don't like retail
or the airlines or the
homebuilders or banks or
technology...
It doesn't leave much,
does it?... Except for the
usual Cramer suspects that
you know so well... that
you should be circling
your wagons around...
Gold... which I always say
is part of a diversified
portfolio as insurance
against days like today...
That's what I'm doing for
my charitable trust... which is
beating the heck out of
the market... but is still
losing money, despite
diversification and lumps
taken.
Judging by the miserable
way the market went out
today, I don't think we're
done with the selloff. I
don't want to be a
Pollyanna by any means...
And that means you need to
have more cash. If you
don't have enough cash,
sell something... sell
something you don't like.
I sense you'll need it,
and you'll be able to buy
things at lower prices...
but not right now.
What do I think will rally
first, when we come back?
What shouldn't you
sell?... The stuff that is
in short supply and the
stuff that rallies in
recessions...
So, natural gases...
Chesapeake (CHK).
Oil services...
Schlumberger (SLB).
It's the
Heinz (HNZ),
the
GlaxoSmithKline (GSK),
along with anything that
China needs... They're out
of steel, they're out of
copper, they're out of
oil, they're out of
coal... So I think you
should buy those now - or,
at least, don't sell them
- in expectation of a
turnaround.
If you're in the banks...
if you're in the
retailers... if you're in
the autos... if you're in
aerospace, I think you
should sell, okay... Raise
cash. Don't hope. Hope is
not part of the equation.
We need to raise cash to
pay for the
recession-proof stocks and
the stocks of companies
that sell what China
needs.
When we get into the light
in the tunnel, and I do
not believe it's a train
coming at us, those stocks
will recover first.
Here's the bottom line...
<verbatim>
. . . .
.
The Bottom Line!:
Now we raise cash... I
know, down $350, you wish
you didn't have to but,
you know what, we've got
to be sensible... We know
that we ring registers
here all the time. If you
don't have cash, wait
until things go lower, and
then pick, okay... Is this
the right level to pick?
For some stocks, yes.
You've heard the ones that
I like. That's what will
let you stay in the game,
even for moments like
this. And remember why you
watch Mad Money... it's to
catch the next 9,000
points, which you may miss
if you decide to leave the
table.
. . . .
.
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General sector discussion regarding
today's dramatic 358-point decline, and
which areas to avoid, and which ones to
monitor.
Cash is critical here. Sell what's
not working so you have additional
capital, ready to invest as the market
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JJC:
The story we've been
talking about all week is
the future, and the future
is offshore drilling...
and how believe this
debate in this country...
whether we should be
allowing it or not... is
moot, because we now have
American technology that
lets us explore, drill and
produce offshore oil with
significantly less risk of
doing the kind of damage
to the environment as
before... but the
politicians refuse to
recognize these great
American technology gains.
And this story doesn't
change... just because the
Dow is down 358 points. In
fact, to me, it gets more
attractive, because the
stocks in play are
cheaper, but the
businesses are doing
better.
The day that we stop
looking for opportunity is
the day they should take
my show away...
I've been recommending the
companies that make the
technology for cleaner
drilling... all week.
These stocks are exactly
what I'm talking about,
when I say we return to
the long-term themes that
have been working when the
market takes a big hit
like it did today.
Even though these areas
have been slapped around
for the last few days, I
don't think there's
anything out there
suggesting that oil prices
are going lower
long-term... They were up
today... a new record...
Or that there will be less
exploration and drilling
for oil... Do you believe
that?...
I believe my thesis is
very sound... It's just
that the market has had a
bit of a Verdun feel to it
lately... But you like
that, because it means you
can buy good stocks for
less money. If you don't
think like that... again,
take the show away...
Tonight, our clean
drilling technology is
drilling fluids... Again,
the best stories right now
are the most boring...
These fluids are the
lifeblood of drilling. If
they had better drilling
fluids in 1969, when the
big oil spill off the
coast of Santa Barbara
wrecked offshore drilling
in this country, seemingly
forever... Well, that was
the Three Mile Island of
offshore drilling. If they
had better fluids, there
wouldn't have been a
spill...
That's why, tonight's
stock is so important...
It would have stopped the
spill, and we would still
be drilling.
If you're an oil company,
you pump drilling fluids
into a drill hole, and the
fluids bring the cuttings,
the rock that's being
drilled out of the ground,
to the surface. The fluids
also cool and lubricate
the drill bit. It gets
mighty hot down there...
And they keep the drill
hole stable...
These fluids have been
particularly
controversial, because a
lot of environmentalists
are afraid the oil
companies will just dump
the drilling fluids, along
with the cuttings, into
the ocean, spoiling your
beaches... which is pretty
much how it was done,
until 1980, when drilling
fluids were oil-based and,
thus, didn't dissolve...
creating big, disgusting
piles of fluid residue and
cuttings in the ocean...
again, what the
politicians still think
can happen, because they
haven't done the work like
we have...
You see, back then,
governments noticed
this... They started
banning the dumping of
oil-based fluids. All of
the sudden, the drillers
need to be able to recover
the fluids and the
cuttings and find ways to
dispose of the waste. And,
at the same time, use
different, cleaner
water-based and synthetic
drilling fluids.
So, for cleaner fluids,
and for cleaning up dirty
fluids, who does Cramer
like?...
The antidote to those who
hate offshore drilling...
and that is SII...
Listen, this is a stock we
recommended on May 24th of
2006... by the way, when
it was at $39 bucks... a
99% gain... I say so what
if the market hasn't made
you anything in a couple
of years, right... We
aspire to beat the market,
not equal it... And we do
it with stocks like SII,
and we'll keep doing it.
SII is the market leader
for drilling fluids of all
kinds but, as standards
for these fluids gets more
strict, this is the
company that benefits, as
it makes the clean
water-based and
synthetic-based fluids I
was just talking about.
And, by the way, these
fluids are more profitable
to sell than traditional
oil-based fluids. They
cost twice as much and, in
highly-regulated areas
like Europe where they
drill, and the
U.S.-controlled parts of
the Gulf of Mexico,
drillers have no choice
but to go with the cleaner
option...
Republicans who are trying
to convince democrats...
bring SII into your
offices please...
SII puts the clean in
clean drilling. The
company gets 20% of its
sales from systems that
control solid waste
created by drilling, and
recycles fluids that used
to destroy your beaches...
You want to drill without
contaminating the
environment and ruining
your beach? SII is your
company.
Now SII gets about half
its sales from offshore
drilling. Around 10%
coming from the great
stuff, deep-water
drilling. The company has
roughly 50% market share
in drilling fluids,
through this M.I. Swaco
business that's a 60-40
partnership with
Cramer-fave, SLB. And
since only three companies
make up 75% of the fluids
market, I've got one happy
oligopoly... where each
company has tremendous
pricing power.
Oh, by the way... SII is
also #2 in the drill bit
market, and makes tools
for directional
drilling... the kind of
drilling you have to do
for all those shale
plays... Barnett,
Fayetteville, Haynesville,
Marcellus, Chattanooga...
We love these on the show
and we've talked much
about them. That makes SII
a great play on the
increased land drilling
that we keep discovering
and talking about
endlessly with the
wildcats... and we'll
continue to endlessly
recommend.
A 15 million share buyback
authorization... 7.5% of
shares outstanding... Do
you think C has a buyback?
Do you think MER is buying
back? How about WB? No.
You've got to buy stocks
of companies that they can
buy back themselves.
The stock's trading at
16.5x earnings. 25%
long-term growth rate...
What's wrong with this
picture?...
If you buy it now, you're
getting it for nearly $4
less than you would have
paid for it two days ago,
courtesy of the newfound
hatred of everything...
Bottom line...
<verbatim>
. . . .
.
The Bottom Line!:Smith International Inc.
(SII)
is THE play for drilling
fluids, drilling cleanup,
and drilling in all those
natural gas shales like
the Marcellus Shale.
I call it twice-blessed...
I call it part of one of
the few bull markets right
now, that I promise to
find for you every night
on Mad Money.
. . . .
.
■
Stock Snapshots - Includes
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Back up the truck -
indicated by Jim, when he
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In other words, this is the
sound someone would say to a
truck driver, "Come on
back... " as he is "backing
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his cargo. Translation
for buying stocks:
This recommendation by Jim
indicates that, after you do
your own
homework on the stock,
you should feel comfortable
loading up on it, as it is
in a good position to be
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Stumped. - Of the
2,000+ stocks that Jim
Cramer has in his head, for
which he has an informed
opinion, he sometimes comes
across a caller with a stock
he does not know well enough
to opine on... He then
indicates he is stumped and
will have to come back to
it, after he does some
homework of his own on
the stock. This
usually occurs during the
Lightning Round, when Jim
does not know in advance who
is calling, or what their
stock question is about.
Definitions of key phrases
used by Jim, known as
"Cramerisms":
Definition: 'Pull the
trigger' is Jim's phrase for making
the decision at that point to trade -
either to 'buy' or
to 'sell' (although he
usually uses the phrase for
buying), as if to say you
should feel comfortable
enough to make the final
decision without looking
back...
Definition: 'Ring
the Register' is Jim's phrase for
selling a stock, and making
it a final sale, that you
should not look back on.
Put it behind you.
Definition:'Let It Come In' indicates how you
may wait for it to pull back, or have the
stock price come down briefly, as your
chance (after letting it come in) to buy
the rest of your position (i.e., total
number of shares you own in that stock).
Definition:'backing it up'
or 'doing a 'mon-back' is Jim's
phrase for the metaphor of backing up a
truck to load up on a stock by buying
it. 'Mon-back is short for the
imaginary worker saying, 'Come on
back...' as the truck is backing up to
receive its load... Notice that we use
the little truck icon to indicate where
Jim has mentioned this.
Translation for buying
stocks: This
recommendation by Jim
indicates that, after you do
your own
homework on the stock,
you should feel comfortable
loading up on it, as it is
in a good position to be
bought at this point.
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