Jim:    A nasty day... just a nasty one... Maybe we deserve it. We've put in three great weeks...

Of course it's the usual characters that have brought us down... the two twins of mayhem, Fannie Mae (FNM) and Freddie Mac (FRE)... as well as the endless drumbeat of analysts slicing numbers for the financials. Sure the banks and brokers were expecting to make more money at one time, and they will.... but we've been discounting that news endlessly... FNM and FRE... in Cramerica, we've been saying are going to $0 for a while. We reiterate the position, and look forward to the Treasury taking its pound of flesh from the common stock shareholders... in return for a payback to you and to me when things get better... because, after all, we're the ones funding the bailout that will, ultimately, stop the certainty of house price depreciation.

And then there's tech...

Well, tech had been our leader. It took a real header today... giving back all the gains we had from last week. I think the pullback will be short-lived. 'Tis the season to own tech... and, if oil keeps going down, as we think it will, people will bounce right back into that group... Research In Motion (RIMM), Google, Inc. (GOOG), Intel (INTC), IBM (IBM)... I'd buy them.

Although we probably don't want to admit it, stocks are a lot like baseball... We've been red-hot, but you can't win every game...

Today's pullback, and maybe tomorrow's, is much more about us being up so much than about a radical downturn in the economy, or on corporate earnings...

Sure, I would love to pin it on the earnings. But the main earnings report was from LOW, the discount retailer, and it was good... Oil... I'd like to pin it on oil, but it did nothing... FNM and FRE?... Nothing new there either...

Nothing fundamental moved this market.

When I first learned to love baseball... I always heard my Dad say, after the Phillies would win three or four straight, look out Jimmy, we're due for a loss... I never understood how you could be due for anything. Many of you were like me, when my Dad told me what could happen... When it comes to stocks... if you're good, why should you ever lose?... But lose you do.

We were due. We still are. This is our couple of days comeuppance...

Now let's learn how to learn to make some money in the future...

Riddle me this Batman...

Which stock is cheaper?... Which has a better value?...

McDonald's (MCD*) or the Burger King Corporation (BKC)?...

And don't say BKC, just because it's at $28, while MCD* is at $63...

Some of you still confuse this... We know that it doesn't make BKC $35 cheaper. We could do some subtraction, but it ain't working!...

Tonight, and everyday this week, I'm picking two companies that you know, okay... two companies that are just household (names)... same industry... basically saying it "have it your way"...

In other words, I'm going to help you figure out what you want, and at what price you want it... I'm doing the fundamentals... this show's about the fundamentals...

But how do you know what you want?... Here's how...

I'm actually going to explain something that you'll never hear any pro on television actually explaining... what actually makes one stock more expensive than the other... and, beyond that, the checklist of what money managers secretly use... it's like in their drawer... to look for in a stock.

You'll have a good idea of how they think after this show... how they award points... because their opinions are the ones that count.

I'm going to give you a novel, proprietary 10-point scale that's very similar to what they're using in their mind, okay?... And we're going to use it to judge stocks and you're going to learn it... It's a scale that takes everything I think you need to know about a company into account... It's a work-in-progress for me...

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We're beginning with this analysis first...

Before we talk about specific companies, we have to talk sectors...

These are restaurant companies... both of them... we both know. Remember, I'm only picking things, household names you know. And, when money managers look at sectors, they're generally looking at them versus the benchmark... which is the Standard & Poor's 500... 500 stocks chosen by the S&P, that represent the average... They typically want to own as many stocks as they can in sectors that they think will do better than the average. Again, with the S&P is the average.

This benchmark comparison is the most important step in stock selection... Half of a stock's performance is sector-related...

When times are tough, they tend to go to BKC or MCD*... they trade down. That's called "trading down"... That should make fast food a faster-growing business than much of the rest of the S&P 500. We like that...

So now we know we're in the right neighborhood, and that's important... because the best house in a bad neighborhood will never outperform the worst house in a good one...

Because sector is so important, we're going to spot each one of these companies 3 points in our proprietary scale... we're going to give them both 3... with 5 being the best in the slowdown... that would be utilities... People tend to cut back on everything but utilities, right?... And 1 being heavy equipment and machinery, which languish in a bad economy... so we're right in the middle...

.  .  .  .  .

Now we go head to head (comparing MCD* to BKC)...

What are we looking for?...

Growth, growth, growth...

First growth... All managers are fixated on growth... growth in earnings, growth in sales... And, after a company's sector, it's what we award the most points for... How fast is the industry growing? Are these growing faster than the industry? That's the important point!

How much room for growth is there?... Not just who's had the best growth, but who will have the best growth going forward?... Yes, we have to be predictive...

And, when it comes to growth, the past isn't all that helpful...

Think about it... You know, if you looked at MCD*, before it became a large player overseas... just a domestic company... you would have thought it was tapped out. From the looks of things here, BKC is growing faster than MCD*... it has much more to grow, doesn't have as much overseas exposure... The room for expansion matters.

I mean, look, we heard from Jim Skinner, the CEO last week... They're already in 110 countries...

I'm going to give 3 points to BKC here... 3 alright... That's a lot when you think about it... and I'm only going to give 1.5 to MCD*, because it still has some growth...

But now you're looking at a score... But you're starting to look at a big, big lead for BKC...

Next, I want you to look at consistency...

Growth itself isn't nearly as valuable for me as consistent growth... That's a sign of good management and execution and strategy... Those are three words you should remember... Who stumbled the least from quarter to quarter?...

That's easy! It's going to be MCD*. I mean, BKC has only been public since May of 2006. Let's give MCD* 1 point for this, okay...

Now, BKC has a small half point edge... It's MCD* 5.5, and BKC is holding at 6...

.  .  .  .  .

We move onto the dividend...

I care a lot about dividends... more than most people. Why?... Because, look, over time, as much as 50% of a stock's overall performance - how much money a stock makes you - has come from the dividend stream, not from buybacks...

MCD*, a 2.4% yield. BKC, a 0.9% yield. Easy plus! MCD* also has a long history of raising its dividend... another point for MCD*... It's now Golden Arches, 6.5, the King, only 6, alright...

.  .  .  .  .

We care about raw costs. How much of the company's costs can its management control?... Who makes the most money off the sales? These are the operating margins!...

Just think of two lemonade stands, okay... One runs sloppily, that spills lemonade and pays too much for lemons... and one is run well that does the opposite...

High raw costs make it hard to compete, because you either raise prices or become less profitable. MCD* has done the better job of controlling these costs of growth... but BKC seems to be catching up, turning itself around. That said, there's no comparison... MCD* has been awesome... as Skinner, the CEO, told us last week... It's leveraging, it's got monster size that's able to beat up on the suppliers. That's how it's keeping its prices low, despite skyrocketing commodities...

MCD*... listen to this... 12-month operating margin of 25.7%... BKC, 14.3%... Even though BKC has been improving margins every single year, this is still - in a rising commodity environment, for everything that goes into a cheeseburger - a real game breaker... it's evidence that MCD* is much better run...

Give MCD* another point and a half for this... a point and a half... This really matters to me, okay...

.  .  .  .  .

So now, you're at 8 (points for MCD*)... This one's been pretty stationary... BKC at 6...

8 to 6, okay... You now have all the points I care about...

Right now, at current prices, MCD* is a much better buy than BKC... 8 to 6... It's the fast food place to own in this environment.

Now, let's look at how the market's currently valuing these two companies... Remember, I'm judging the companies and whether the market's right...

MCD* sells at 18x earnings... that's called the multiple, right... 18x earnings...

BKC sells at 19x earnings...

Wait a second... The market's paying too much for growth... I mean, sure, I give a lot to growth here, but even if we ourselves recognize that, by giving it 3 points, you can't pay this much for growth. You have to temper the love for growth... and the market's too passionate about the growth of BKC.

We think, given our critical point scoring, that MCD* should be selling at a higher multiple, not a lower multiple, than BKC... The market's got it wrong. It's absurd...

Here's the bottom line!...