After this segment, you
can see Jim's Lightning
Round picks
here...
Jim:
Oh my... what a
move... a monster rally
with incredible power,
up an amazing 936
points... 11%... the
best day in 75 years...
Is this the beginning of
a whole new move up, or
is it the proverbial
"flash in the pan?"...
the heartbreaker that
makes up 50% of the
decline, and then fades
tomorrow?... something
to sell into before we
go back down... Is the
rally sustainable?
That's all we care about
now because it already
happened.
Can we go up for more
than one day on a plan
that might or might not
keep banks afloat and,
in some cases, might
cause an increase in
lending?...
Do we even believe
anymore... believe in a
stock market that could
rally gigantically, the
most ever in one day,
after being down
horribly... the most
ever in one week?
I found myself asking
today, is it all
phony?... Was it phony
on the way down?...
Phony on the way up?...
I think actually kind
of... yes.
We were artificially
forced down last week by
emotion, and by some
potential bank failures.
And we were artificially
up today by motivated
stock buyers on a
vacation day for the
tortured bond market...
That's right... Columbus
Day... The bond market
was closed... That's
where all the pain is...
Call me a skeptic, but
today is as ludicrous as
it was last week...
We've got a market that
can't be trusted either
way, and I want to sell
tomorrow... That's
right, sell tomorrow...
on any of the stuff we
bought in the dark hours
on Friday... because
this stock market simply
cannot be trusted.
I think the market went
up today, because the
Europeans have shown
that they will do
anything necessary to
avoid a second Great
Depression... and we are
simply being dragged
along for the ride
because, so far, nothing
we've done in this
country has amounted to
a hill of beans, even
though I like that
troubled asset
program... It's going to
take a while to get
going...
We also rallied because
Morgan Stanley (MS*)
didn't go under... now
there's something to
hang your hat on... but
it did look like a
possibility on Friday...
An amazing brokerage
firm almost went under,
because our government
took too long to approve
it...
After the worst week in
recorded market history,
it is reasonable to
expect a bounce on any
good news... including
an amorphous plan that
might breathe life into
a banking system that
was indeed, and still
could, be drowning...
But let's belabor that
metaphor...
All we did was keep the
patient from drowning...
We didn't say it could
compete in the Olympics
against Michael
Phelps... We can't even
expect it to get out of
the hospital bed,
because the approximate
cause of the drowning
wasn't a vicious
undertow, but the
inherent sickness of a
swimmer - the U.S.
economy - that never
should have been in the
water to begin with...
So what does this plan
do, that we're all
talking about?... What
is this plan about?
Let me spell it out for
you... We don't know...
We think that, because
the President's team
gave us a sketchy look
at things on Friday, and
we saw some good things
from Europe last night,
that it put some money
into the hands of
capital, star banks...
but we don't know how
much... we don't know
which banks... we don't
know if they're doing it
with equity... with
preferred, or common
stock... how about
bonuses to management?
Are they taking those
away?... Or is it just
going to be another
elegant lending
guarantee program that
won't matter if there's
no new money invested...
Now it does feel a
little like the
back-room plan I
suggested on Friday,
where we just stick a
lot of money in banks,
and tell them to go
lend, as we guarantee
the debt that they've
issued in the past...
We know we're only going
to give it to qualified
banks... but we have no
idea what's a "qualified
bank"... Is
Citigroup (C)
qualified, despite its
losses? Is
National City Corporation
(NCC)
qualified, despite its
losses? How about
SunTrust Banks Inc. (STI)?
It was down big at one
point... Does that
qualify?... Or, does it
only go to banks like
Wells Fargo (WFC),
that don't need it?...
How about
Goldman Sachs (GS*),
up $20 and change?...
What do we do if we have
to wrangle over equity
and make lots of
decisions about what the
government gets in
return?... Does the plan
help us get more credit
card lines to pay our
bills?... More mortgage
money?... More car
loans?... We have no
idea, but we sure liked
it...
And the most important
point, even if it
works... All we are
doing is taking the
sequel to the Great
Depression off the
table... We will not be
creating earnings that
will beat estimates, and
we will not be solving
the bigger problems of
Ford (F),
Chrysler and
General Motors
(GM),
let alone the endless
house price depreciation
that needs to be stopped
in its tracks... before
we burn through the new
capital the government
is printing...
We will not be raising
our standard of living,
or making it so people
spend more or go out
more, or have a
super-de-duper holiday
season. Don't get me
wrong... It's a terrific
thing to take the Great
Depreciation off the
table... It's worth
rallying on, but not
sustainably... and it's
difficult to counsel
anything but the renting
(i.e., short-term
trading) of stocks that
have any exposure to the
global economy which is
getting weaker, given
that the earnings
estimates are still way
too high, and business
is just getting bad...
That's why, once
again... I know you're
tired of hearing it...
but we're falling back
to our mantra... of
getting in these stocks
that do well in a
slowing economy... the
ones that pay good
dividends... And we're
going to keep limited
exposure to the
financials, because we
like the food banks...
the Kellogg Co. (K)
and the Heinz (HNZ)'s
of the world...
Do you know that, even
after this incredible
turn, these
recession-proof names
bounced back the hardest
today, because a severe
recession is still on
the table... and we've
added a couple of
oils... stay tuned for
that... because some of
them actually have good
yields now... and we
insist on picking up the
stocks that have been
driven down by
liquidations, which get
a break in this rally...
As you'll see in the
rest of the show, the
notion of "forced
selling"... creating
values... intrigues
us... makes us more
bullish...
I think the forced
selling, by moguls and
hedge funds, is a sign
of a bottom, not a top,
even in a recession
scenario... but only in
some cases... as you'll
see later... because
we've analyzed the ones
that have been kicked
out, and we don't like
them all.
Add stocks that have
been forced down by
liquidations to the pile
of other stocks near
cash (i.e., with a stock
price that is near their
cash value alone)... and
you know we like
those... stocks that are
basically like
KBR, Inc. (KBR),
selling almost at their
cash...
We like the solid
dividend ones...
Kinder Morgan Energy Partners
(KMP),
up 6.5 points today...
that remains our fave...
And the stocks that make
food, beverages, soap
and tobacco... If you
can smoke it, eat it or
drink it, it could be a
buy in this market...
This miraculous 900+
point move today was
what we call an
"oversold" rally... What
"oversold" means is that
stocks were pushed far
lower so quickly that,
when the sellers
disappeared... whether
they were forced sellers
(e.g., hedge funds and
mutual funds that have
clients demanding their
money back, so they are
forced to liquidate, or
sell, their stocks, no
matter what the price),
or not, you caught a
gigantic bounce. It's
something that we were
weary of last Friday,
and made us feel more
bullish, because we had
never ever been as
oversold as we were on
Friday, after an 18%
decline... a phenomenal
decline...
But it's not something
that makes us want to
invest in something
other than the stocks
we've been telling you
to buy all the way
down...
It is better than a
"dead cat bounce"... a
term I retired, after my
cat, Komag, was hit by a
truck, and didn't bounce
at all... but it's worse
than the start of a new
bull market, even though
I heard that throughout
the day... We're still
down substantially from
where we were last
Monday...
I would love for us to
rally some more, so we
can get out again...
Even after today's
rally, if you don't come
through this period with
the notion that stocks
en masse have failed us,
then you don't care
about making money off
of stocks... you've been
brain-washed into caring
about holding them.
After all, as an asset
class, equities now have
made us no money for a
decade...
Somehow the people who
tell us to buy and hold,
no matter what, haven't
been totally
discredited... but I
think that "buy and
hold" philosophy was
completely obliterated
by the annihilation of
so many loved stocks
since September 19th...
and most of those stocks
will never get near
where they were a year
ago, even after today's
huge rally...
The "stay put" people
keep you in your seat
during a raging fire in
a crowded theater...
charred cadavers who are
happily fully
invested...
The bottom
line...
. . . .
.
The Bottom Line!:
The new plan does not save the market.
It just takes another Great Depression
off the table. Don't go nuts here,
okay... Don't go nuts... It still
makes sense - even after today - to buy
the high-yielders, the defensive names,
the victims of liquidation when they get
low enough... But it will never
make sense to buy and hold so-called
blue chip stocks forever anymore.
If last week didn't prove that to you,
nothing will.
Additional comments from Jim after
someone called in with a question:
If I can own - and make a lot of
money... and make 10% (as a dividend) in
Johnson & Johnson (JNJ*),
which is recession proof... or I
can make almost a similar amount in
Caterpillar Inc. (CAT),
I am always going to tell you to go with
JNJ*!
I sold my CAT to buy JNJ* for
my charitable trust, and I
reiterate... that's the way to go!
That's what you need! And stay
owning JNJ* as long as I tell you the
fundamentals are good!
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Second
Segment
See complete
recommendation
comments
below...
Final Segment
1 Title:
'Hedge Funds
Gone Wild'
. . . .
.
Featured
Stock(s):
Trinity Industries Inc. (TRN*)
Broadwind Energy, Inc. (BWEN.OB)
After this segment, you
can see Jim's Lightning
Round picks
here...
Jim:
Look... I want to
love days like today...
huge up days... gigantic
moves... But, if there's
one thing for certain,
it's that this market is
totally untrustworthy...
both to the downside...
but, yes, to the upside
like today...
Look, I told you on
Friday, and again this
morning on the Today
Show... after the worst
week ever for the major
averages... we can't be
as negative, okay... We
want to look for stocks
that are worth buying,
even as we... and I'm
going to emphasize
this... sell the stocks
we own that don't fit
our
soon-to-be-in-recession
scenario... ones that
don't do well when times
get tough.
We want to trim those
stocks... I've got to
tell you, many of them
were battered in the big
downturn, but are
starting to move up...
I'm talking about the
Boeing (BA)'s
and
Caterpillar Inc. (CAT)'s...
and replace them with
bargains of companies
whose stocks got forced
down, because of
nothing... no factors
that have anything to do
with their businesses.
So, CAT, BA... the
businesses could turn
down because of a
recession. Those we want
to sell into strength
that we get tomorrow.
But other companies...
their stocks have been
crushed, not because of
the businesses, but
because of the holders
(e.g., like hedge funds
and mutual fund managers
that have been forced to
sell because of
redemption demands from
clients who want their
money back)...
So, what we want to find
out are where are the
holders who were forced
to sell, and what did
they sell?... And, you
know what?... How about
stocks that have
trampled by "Hedge Funds
Gone Wild".... ?
So much of last week's
selloff was driven by
weak hedge funds that
were forced to sell,
because their clients
wanted out... and, since
you can't give them
stock, you have to
liquidate... you have to
sell your stocks to send
them the money... if
you're a hedge fund
that's faced with
redemptions...
We're going to see more
of this, and the hedge
fund that I am
unfortunately looking
at, because I really
respect this one... the
one that's already gone
wild, perhaps totally
feral... is Jeffrey
Gendell's Tontine
Partners... This one is
a tough one. This guy's
good.
We know that Tontine,
going into today, was
down 50% this year but,
unlike the obituaries
that I see for Jeff, I
believe his investors
will stick with him...
maybe even give him more
money... which could
actually cause things to
bounce on their own...
In either case, the
damage has been done to
the stocks, but not the
companies... which makes
the timing to buy with
Gendell, I think,
exquisite...
Now, we already like two
of Tontine's forced-down
holdings. We didn't even
know that it was his
selling, if it was at
all...
KBR, Inc. (KBR),
which we recommended the
week before last,
because it had gotten
near its cash value...
and
Quanta Services Inc. (PWR*)...
That's a windmill
company. It installs
windmills, but also it
does a lot of utility
stuff.
Look... just last week
on our show, John
Colson, the CEO of PWR*,
a stock that I own for
my charitable trust, talked about
a big seller...
Now we don't know what
really forced it down,
but it I think it was
probably Tontine. The
stock dropped from $28
to $18 on a big seller.
Now we've been nailing
this one, without really
knowing who's been
behind the selling...
but now that we do, I've
got two new stocks that
I think are victims of a
perception of weakness,
if not out and out
weakness, from Tontine
and Gendell... that I
would buy right around
here... And, if I could
get it a little bit
lower... because these
stocks are not liquid
enough... for, if I say
something positive on
them, for them to be
able to not go up... I
don't want that. I want
you to be careful... I
want you to use limits
(i.e., limit orders
only).
Now we know that Tontine
made a big bet on wind
power, including
Trinity Industries Inc. (TRN*),
a railcar company that
we like, because we like
because it makes towers
for windmills... what an
awful chart (that he
showed on the screen)...
and we learned last week
that Tontine sold a huge
amount of that stock...
perhaps, again, to meet
liquidations... This
fund sold more than 5
million shares. Now,
that wouldn't matter, if
there were billions of
shares outstanding for
TRN*, like there are
say, for Exxon... But
TRN* only has 81 million
shares (e.g., in its
"float" of total shares
outstanding), so we know
that this seller killed
it... and we know that
Tontine sold its
holding, because it had
to publish how much it
had. Now
this stock is down over
40% year over year, in
part because of this
liquidation.
Now, Gendell, who runs
Tontine, also owns 47
million shares... 48% of
the shares
outstanding... of
another little stock
that we put in our
"Wind-dex"....
Broadwind Energy, Inc. (BWEN.OB)...
a full-service,
vertically-integrated
wind play we liked, even
though it trades on the
bulletin board...
Remember, bulletin board
stocks tend to carry
more risk than stocks
traded on the big board.
If you don't use limits
on this, and you buy the
stock, you could really
lose a lot of money.
BWEN is a $7.05 stock
that traded at $29 just
in June... because of a
perception that Gendell
has to sell. I don't
think he does. This
stock's been pummeled.
There's nothing wrong
with the business. It's
just an outright buy, if
you can get it under $8.
Oh, and unlike the press
he's been getting
lately, Gendell has been
a terrific stock picker
over multiple years...
You wouldn't know that
from reading the New
York Post, or
anything... but he's
been terrific! And we
are piggybacking off of
his great
homework...
Here's the bottom
line...
. . . .
.
The Bottom Line!:
Tontine (Partners) and Gendell's pain
are your gain. Let them, and hedge
funds trying to beat them down further,
bring
Trinity Industries Inc. (TRN*)
and
Broadwind Energy, Inc. (BWEN.OB)
lower. Then you'll have two great
wind-power bargains. Look,
Gendell's good. He's not going
away. And either are these two
terrific stocks.
. . . .
.
■
Stock Snapshots - Includes
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STOCK
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at the very least, not sell
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think it is indicated by his
comments during the show.
Please read his comments to
decide for yourself.
Thumbs down -
indicates he has said not to
buy or to sell the stock,
based on his comments
We do our best to interpret
Jim's opinion on stocks, as
we think it is indicated by
his comments during the
show. Please read his
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Back up the truck -
indicated by Jim, when he
says the stock is so good,
that he would do a
'mon-back' on the stock...
In other words, this is the
sound someone would say to a
truck driver, "Come on
back... " as he is "backing
up the truck" to load up on
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
bought at this point.
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.
See more
"Cramerisms" & other
financial phrases
here >>
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Jim Cramer recommends after
hearing his suggestions...
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