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Tuesday,
January 20, 2009
(Cont'd from
above)...
Jim (cont'd):
So perhaps, given
Obama’s mixture of
grim reality with
gritty optimism… are
you ready for this…
even after a day
like today… you know
how I like to play
it… it is time to
talk consider what
could go right this
year… we talk all
the time about what
could go wrong… hope
is no longer just
for the audacious…
and especially at
these levels… I
think you could
ultimately pay a
steep price for
being too
pessimistic… and if
we get down to the
levels of November,
I know that will be
the case… even as
that seems downright
impossible at this
red hot minute… and
there seems to be no
hope, whatsoever,
for anything
financial… almost
all of which were
not done going down…
despite the
reversals today…
now, frankly, they
did feel like the
1987 crash…
something I never,
ever, invoke on this
show… and something
that I never thought
would be repeated.
So, in "the glass
half full" spirit of
the day… even indeed
if the glass is half
filled with cheap
scotch… if not grain
alcohol… and we are
sipping it from a
real dirty linoleum
floor… here is what
I think could
actually... yes... go
right this year…
#1... We could take a
queue from 1933 when
we got a major
rally, after three
of the worst years
ever for the Dow
Jones Industrial
Average… simply
because well we got
new leadership… just
like them… the Dow
was off 33.8% in
2008 which was even
worse than 1932,
when the Dow fell by
23% but after a 52%
decline in 1931. Do
you know what
happened in 1933?…
we had a gigantic
66.69% rally in the
Dow… with much worse
fundamentals than we
have now… as grimace
as things seem… the
early years in the
Depression were
unfathomable when it
comes to today‘s
comparisons… between
1930 and 1932 2/5ths
of the banks in the
U.S. failed…
unemployment rose
from 2.95% to 24.9%…
and the government
was actually raising
taxes and cutting
spending… doing
everything wrong… so
it is a real
possibility that the
2009 stock market
could be a reprise
of 1933... which no
one expected… real
low bar… a market
itself that could be
under promising…
with a second half
that might over
deliver… and
remember, in those
days, when banks
failed… your money
was gone… today the
common stocks are
failing… but we have
to believe that the
government will not
allow another Lehman
Brothers… even if
the Treasury
Secretary designate,
was instrumental in
causing Lehman
Brothers… the Lehman
Brothers collapse,
by the way, was very
reminiscent of the
1930’s.
The second thing
that could right… if
Obama listens to
Sheila Baer, the
FDIC Chairman, who’s
made her
organization do a
lab to figure out
what is working for
housing and banks…
we will indeed still
see this housing
bottom this year…
all be it, as I have
always said, for
much lower levels…
Baer wants a
nationwide bad
back…that can buy up
all the bad loans
like the Resolution
Trust Corporation
did during the
Savings and Loan
crisis in the late
’80’s… it will work…
it will keep people
in their homes… and
it will cause hose
prices to stabilize…
she does not care
about moral hazard…
I mean honestly… who
cares if some dead
beat borrowers are
saved… if it means
that we finally save
the whole system…
your house will go
up in value too…. we
corner off the toxic
loans in the
government… uh, by
setting up a bad
bank… and create a
system of four or
five strong banks
that can lend again…
no rally will occur
here without solving
the bank issues…
especially after
today’s unfathomable
disaster… at this
torrent pace, within
a couple of days…
this pathetic group
will have no where
to go but up… added
positive… the First
National Bad Bank,
something Andrew
Jackson predicted…
could put hundreds
of thousands of laid
off white collar
folks to work…
remember, remember
this… they don’t
know how to build
brothers… and you
can’t pave roads in
Brook Brothers
suits… and starched
white shirts… it
doesn’t work in
Zania either.
Number 3 of what
could go right…
Obama could actually
fix housing… and not
fix the remaining
banks… with two
initiatives… they
are not hard to
think of… a one time
tax credit of
$25,000 for anyone
who buys a house…
enough money to get
many potential
homeowners off the
sidelines… and into
houses… and a plan
have the government
to buy any
foreclosed mortgages
from any bank that
wants to unload
them… Obama could
stabilize housing
this year…
potentially in time
for my June 30th
housing bottom call…
as long as he is
careful not to
provide any aide to
the homebuilders…
they have become the
enemy… every time
they build a new
home… that adds to
inventory and pushes
house prices lower…
saving the housing
market doesn’t just
rescue home owners…
it will also stop
the banks from
hemorrhaging money
and allow them to
stabilize… State
Street had a lot of
stuff that was down
$20 today, that was
involved in housing
that caused this… I
wish that Obama
could take one queue
from FDR, and burn
excess houses…
remember FDR burned
crops, slaughtered
livestock… but it is
better to give
vacant homes to
cities… have them
fill them up.
The fourth thing
that could go right...
I mean, in the gloom
which is just
unfathomable… are we
missing something
here… China keeps
coming back… the
Chinese market, I
gotta tell you
something, up 9.5%
for the year… best
of the world… they
can be the engine
for the rest of the
world… the Chinese
Communists can pull
all of us out…
because their
stimulus package is
so huge… and unlike
every other country
in the world… China
is not strapped for
cash… and it has
real projects that
need to be done..
.it has the money to
buy American made
goods…China should
be encouraged to do
whatever it has do…
their Malcolm X, by
any means necessary
stimulus package…
could give the
mineral and
machinery stocks the
boost they need.
Potential positive
number 5... the price
of gasoline stays
low enough that
destitute state
governments could
raise gasoline taxes
to close the budget
gap… puts people to
work… this one is an
easy call… allows
for great
opportunity.
The sixth thing that
could right... Obama’s
infrastructure
stimulus actually
works… we get a
gigantic spark in
the machinery
companies… with new
orders for massive
new projects… we
will now this one is
working when
Caterpillar sees an
order spike… sure
sign that we are
actually turning the
tide against
unemployment.
Number seven...
we
take over one auto
company… just one…
as part of an
agreement to receive
U.S. dollars… let
the French-German
coalition take over
Chrysler… let GM and
Ford merge… and
suspend all union
contracts… something
a Democratic
president could do…
that Bush never
could have done… the
surviving American
company becomes
competitive… and
actually, get this,
makes money making
cars… remember I am
saying that these
things could happen…
not that they will
happen… Chevy
F150... Chevy
F150... I like it…
so would Dennis
Leary, my fave voice
over ever.
The eighth thing
that the new
administration could
do right... we
eliminate any
derivatives that
could force down the
healthy banks with
the bad banks… stop
the wholesale of
destruction of the
common stocks and
certainly destroy
all of our
confidence… they
could do this with
the stroke of a pen…
just like they
started it when they
approved the SKF,
and all these
double, and now
triple ways to knock
stocks down… in 1987
we had something
called Portfolio
Insurance that
pushed stocks down
to 1400 points…
1400... I mean
amazing in just a
couple of days… they
totally overrode the
common stocks… now
instruments like the
Ultra-Short
Financials
Pro-Shares ETF… that
is called the SKF…
they give you double
the short selling
bang for your buck..
.they are destroying
bank stocks
indiscriminately…
the healthy ones
along with the bad
ones… the ones that
need capital loans…
and the ones that
don’t… some have no
exposure to
mortgages.. but it
doesn’t matter… they
are still getting
killed… maybe the
new SEC Chairwoman,
Mayor Shapiro,
watches the show or
TIVO’s it… if she
does… she actually
may want to take
action.
Number nine the
administration
accepts natural gas…
boy does that fall
off a cliff… as the
fuel of the future…
and insists that
cars have a natural
gas fuel option…
which would put
hundreds of
thousands of people
to work… we have an
enormous domestic
reserve of natural
gas nationwide … and
by the way… it also
works as a cleaner
bridge fuel until we
develop better clean
energy technology…
you could only
imagine how many
people it would take
to develop natural
gas cars… natural
gas factories,
utilities… start
natural gas filling
stations… make the
drilling equipment,
the storage
equipment, and do
the drilling… this
would be a jobs in
cleaner energy
security bonanza.
Here is the tenth
thing that Obama
could do… call me. I
know… I would set
him straight about
who should be
indicted… who should
be fired… and who
should be allowed to
thrive… judgment
will, uh, not even
prayer will temper
my socriterity… we
need show trials to
restore confidence
in the market… I can
tell them who to put
in the hot seat…
make me head of the
National Financial
Crimes Division of
Justice… that is
right… of the
Justice Department…
hey I want to
Harvard Law just
like Obama… I passed
the bar… I got the
non street and the
street credits… I
can clean up these
Aegean stables,
currently located at
the corner of Wall
and Broad… so we can
get hard working
Americans back in
the market again..
.without fear that
the chicanery will
destroy their nest
eggs.
Here’s the bottom
line…
▼ ▼
▼ ▼
▼
The Bottom Line!:
Look... we are in
the midst economic
crisis since the
Great Depression…
but it is a new day
and we have a new
President… the
situation is grim…
but there are still
a lot of things that
could go right… and
make things better…
not necessarily
reasons to buy
stocks… you know I
feel that if you
need money in the
next five years to
make a major
purchase… that this
isn’t the place… but
I think that there
is reason and
cautious and
tempered optimism
about the second
half of the year.
It’s a new day and
we have a new leader
- I think we can
right this ship.
Now, out with the
old and in with the
new… I am sorry
everyone else is now
pessimistic… I had
to give you a little
silver lining.
[verbatim recap]
▼ ▼
▼ ▼
▼
Jim went on after
this segment to take
questions from
callers, and
responded with his
comments...
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Q:
Will Obama
get the
cooperation that
he needs to be
successful? And
will these tax
breaks that he
is talking about
really help, or
will they hurt
us in the long
run?
Jim:
We need tax
breaks real bad…
but more
importantly we
need tax
credits… I want
to go one step
further… we need
to make it so
that people get
a huge tax
credit if they
buy a home… I
still don’t hear
that… that was
depressing to
me… I think that
the man has…
look I am not a
political guy… I
never pretend to
be… I heard a
lot of things
that I think
that people on
both sides of
the aisle will
like… but I also
know that this
is America… so
nothing goes
easily… this is
not Communist
China… where
there are
fantastic
Capitalists…
even in the
Polit Bureau.
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Q:
If oil right
now is at $40 a
barrel, lowest
its been, or
close to the
lowest it’s been
in a long time,
all the
predictions,
indicators,
everybody is
predicting that
it is destined
to go back to
$80 or $100 a
barrel. If I
have a little
bit of cash set
aside that I
don’t have to
touch for say a
year or two,
wouldn’t
investing in oil
be as much as a
sure thing as a
sure thing?
Jim:
One thing we
know, no sure
things.. anytime
we use that term
involving common
stocks, it is
absolutely
something that
you have got to
stop me from
doing… I do not
share the $80
optimism… I have
been saying that
oil gets locked
in a range
between $30 and
$50... we are in
the middle of
the range…
however, I think
that when you
buy oil stocks
that yield
between 4 ½ and
8%… and there
are a host of
them… I don’t
need to tell you
which ones… I
think you are
making the right
move… remember
how you buy
things on this
show… you buy
one that starts…
let’s say that
we are buying
Chevron right
now… Chevron is
almost at 4%
yield… so you
buy a little bit
right here, you
want to buy 25
shares of
Chevron… it gets
to 4 ½% you buy
another 25, it
gets to 5%, you
buy another 25 …
gets to 5 ½ or
6%, you buy
another 25...
that is how we
are approaching
it… but it all
at once here… is
a fool’s game…
as I say
repeatedly if
you don’t know
how to do it, in
Jim Cramer’s
REAL MONEY… the
paperback
version.
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Q:
I have a lot
of my IRA money
in a natural gas
index fund, and
with the Obama
administration,
he has a lot of
plans for
natural gas. And
with the price
being low right
now, I was
wondering if I
would be better
off moving that
money into some
small cap
natural gas
stocks?
Jim:
Well, I have to
tell you that I
disagree with
both… I do not
hear Obama
talking about
natural gas… I
think he should
be… I feel that
he is talking
about a lot of
other fuels that
are non carbon
based… it seems
like the
Democrats are
centered totally
on non carboned
based… I would
not be putting
more money in a
natural gas
fund… I think
that natural gas
goes to $4... I
would not be
buying cheap
natural gas
stocks when
there are many
integrated,
integrated
larger oil
companies that
yield between 4
and 8% that are
safer… this is
tough market… I
can’t recommend
risky stocks
like that.
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[verbatim recap]
[end of segment]
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