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Tuesday, 12/11/07
Posted 12/11/07, 11:54
pm |
(Scroll down to see Jim's
comments below) |
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Today's date:
Tuesday, 12/11/07 |
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Dow Jones: |
13,432 |
-294 |
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NASDAQ: |
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2,652 |
-66 |
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S&P 500: |
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1,477 |
-38 |
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Opening Segment 1
Title: |
'Fed Reckoning' |
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. . . .
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Featured Stock(s): |
No specific stock picks
See Opening Segment 2,
below...
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Note: This first
segment was dedicated to
comments by Jim about how
the Fed is hopelessly
optimistic, saying...
'What the markets needed
today was some recognition
from the Fed that they're
complacent... they see
what we do... that they do
realize what's going
wrong, and that they're
willing to act to stop
it...
Okay, I wanted a
half-point rate cut...
They gave us a
quarter-point cut. I
wanted a statement saying,
listen, we're worried
about a housing
collapse... we're worried
about the worst housing
market since the Great
Depression... we're
worried about banking
woes.
I got the opposite.
I got a statement saying
that they're worried about
inflation, for heaven's
sake... inflation!
We're in one of the
greatest deflation spirals
since 1932, and they're
worried about inflation!
Now, some of you are
probably wondering... what
the heck's the big
deal?... A quarter
point in the scheme of
things... A
statement... just words
right?...
No. It's all about
sentiment, which matters
really more than anything
else.
Sentiment.
An extra quarter point
would have been the
difference between the Fed
looking like a bunch of
numbskulls, and mature
adults, who actually
understand where we are
and what needs to be
done...
. . . .
.
The Bottom Line!:
You need to invest
with the same cowardice...
the same care... and the
same caution that the Fed
is embracing, until at
least people get their
acts together... which
they ultimately will...
but who knows how long
that will take.
Don't panic, but take
cover in recession stocks,
because today... because
of their timid
quarter-point cut, a
recession just got a whole
lot more likely.
[See Jim's 2nd Opening
Segment stock picks
below... ]
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See all of tonight's stocks'
latest quotes on
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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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Opening
Segment 2 Title: |
'Sharp
Focus' |
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. . .
. . |
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Featured
Stock(s): |
Focus Media (FMCN)
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Tonight, I'm resuming my
status as an all-out
international pimp...
especially after what the
Fed did... and I'm taking
you to China... to tell
you about a great foreign
growth story
that will be down
tomorrow, like everything
else, and will give you a
chance to buy it...
We're going foreign
because, frankly, foreign
is safer than domestic...
Today, we learned once
again that the Fed still
doesn't have a clue...
and, if you get any sense,
you'll want to invest in
stocks that the Fed, with
its utterly reckless and
clueless
attitude - in couched in
terms, of course, prudence
and what I regard as a
lunatic optimism - can't
touch...
The solution to a Fed that
seems unwilling to cut
rates fast enough is to
open your portfolio up to
foreign stocks that I
think will make you a lot
of money, even as we pull
them down tomorrow...
we'll pull them down.
That's your chance... It's
one of the reasons why I
wanted to do foreign
today...
These stocks will be down
because of us, and then
they'll spring back much
faster than we will...
My foreign focus right now
is...
FMCN !... One of my Four Horsemen of
China... along with Baidu.com Inc. (BIDU), Petro China (PTR),
and
China Tel (CHA)...
The Chinese market... the
Chinese people...
incredible. And we are
going to invest with them.
They do not fear Bernanke
over there.
FMCN, the stock, hasn't
done much of anything
since I made it one of my
four horsemen; the other
ones have really soared...
But FMCN, the company, has
been busy rolling up its
competitors with big
acquisitions. I believe
they have made it a much
more compelling company,
and that justifies a
higher
stock price...
. . . .
.
FMCN owns the Chinese
advertising market...
Now the thing to
understand about China's
conversion into a
late-stage capitalist
superpower, is that once
people start having money
to buy things with, they
need to be told what to
spend it on...
Television screens, poster
frames, LED billboards all
over the place... in
stores, on the streets and
shopping malls... It's run
by FMCN, and they display
the advertisements that
the
new Chinese middle class
requires, in order to
learn what to spend their
new-found wealth on...
. . .
. .
Yesterday... and why this
is so time-sensitive, and
why I am glad the stock's
going to be down
overnight, because of our
Fed... Yesterday, FMCN
announced an agreement to
buy CGEN. Get this, it's
their main competitor in
in-store digital
advertising. [Read more
about this deal to buy
CGEN, and the AP news
story,
here. ]
Basically, they pay the
store to put up a
flat-screen TV and run ads
in every kind of business,
and the advertisers pay
them...
This acquisition's huge
for FMCN. It takes out a
key competitor with higher
margins, and then FMCN
gets to raise prices
accordingly.
Now, we like to say that
the Chinese have found
capitalist religion but,
even in this country,
where the antitrust
division of the Trust
Department has been on
loan to Commerce... I'm
not sure that a deal like
this one could get
approved... I mean, it's
so blatantly
anti-competitive and
monopolistic...
Capitalism is about
competition... China has
just embraced something
better for shareholders...
Business is about making
money... forget the
consumers. Let's become a
monopoly and jack up
prices. The Chinese
endorse that...
Earlier this year, FMCN
bought a company called
AllYes, that was an
internet advertising
services company... and
they're now the largest
internet advertising
operator in China...
I wouldn't be surprised to
see
Google Inc. (GOOG)
try to buy a stake in this
company, FMCN, to get
better execution in China.
. . . .
.
Now, originally, I liked
FMCN as a play on digital
billboards... but they've
come a long way from
there. And it's clear to
me, from all of these
acquisitions, that their
mission to revolutionize
China is not a cultural or
economic revolution...
it's not a great leap
forward... but something
that could actually be
very profitable... an
advertising revolution.
The story has become much
bigger and I like it all
the more...
What's better? The stock
has come down to about
$55, from where it was at
$66... Remember, I think
it can go to $52.50
tomorrow... It wasn't on
bad news that they came
down... it wasn't a missed
quarter... It was on some
concerns that their
margins - given all their
recent acquisitions -
could be hurt.
The stock's down for the
same reason that I think
it should be bought, but
the margins we're talking
about here - their
profitability - should
improve dramatically next
year, as the deals are
integrated, especially
this CGEN deal they just
did yesterday, which
should immediately improve
their profitability
because, of course, CGEN
is more profitable than
they are...
The in-store advertising
business has been FMCN's
weakest area but, with the
acquisition of CGEN, it
should be one of their
strongest.
I should also add that,
typically, when FMCN buys
a company, it really
accelerates sales at the
acquired business...
through cross selling...
so, even though the market
is nervous about these
acquisitions, I'm not. I
think they're going to be
great for FMCN.
Even though the top guys
in China are trying to
slow down their economy,
they can't control
inflation... That means
they can't slow down the
growth... which is at the
heart of what's making
FMCN such a great
business, and should lead
to its stock becoming a
big winner in the
not-too-distant future.
Again, I had to divorce
myself from domestic,
after what happened today
with the Fed...
I think this stock has
more potential to come
down in the near term...
I'm making that point
again... because of the
integration risks. But, if
you get opportunities to
buy the stock cheaper than
it is, I'm telling you to
take it...
. . . .
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