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Wednesday,
January 21, 2009
(Cont'd from
above)...
Jim (cont'd):
My fellow
Cramericans… the
state of the market
is stronger than you
think… as witnessed
by the Dow’s 279
point rally today…
look at the state of
companies actual
earnings… IBM
terrific up an
outstanding 11 ½
points… and that
means I expect
Hewlett-Packard to
give us a solid
number… Johnson &
Johnson, which I own
for
my charitable trust,
ActionAlertsPlus.com,
wasn’t nearly as bad
as the press makes
it out to be… a
total bargain…
Abbott Labs, another
AAP name, delivers
spectacular numbers…
Forest Labs was
better than
expected… in spite
of today’s downgrade
from the guys at
Golden Slacks… the
big mineral
producers, think
BHP, Rio Tinto, are
cutting back
production to the
point where I think
Freeport-Mcmoran
also in the trust,
should be bought,
not sold, despite
today’s misplaced
downgrade by Morgan
Stanley… Wal-Mart
still delivering
positive numbers
even though it was
smacked down by
Credit Suisse and
subsequently plunged
almost two points…
talk about an
opportunity…
Northern Trust… a
bank… it actually
beat the numbers…
vaulted $13... while
PNC leaped $8 and
when it reported a
decent number, you
have to admit it
smoked the shorts…
even once loved, but
now hated, JPMorgan
zoomed $4.54.. it
has been crushed by
the selling brought
on by the
outrageously
marketed SKF, the
Ultra-Short
Financial Pro
Shares, one of these
ETF’s of mass
destruction… because
JPMorgan is the
largest way to give
the index… we have
got Altria coming on
strong… General
Mills is recovering
from the selling
assault that
occurred, after it
reported a great
quarter… two more
stocks down today,
they can be grabbed
at nifty prices…
United Technologies
just delivered a
number that seems
not so bad… and in
this environment of
negativity and not
so great
expectations… I
consider it good…
how about Research
In Motion, excellent
sales… Intel didn’t
get blitzed despite
all the negative
news… and China is
up for the year… as
the freight
industries I follow
look real good…
Many stocks,
especially the
accidentally high,
notoriously B.I.G.
plus 4% yielders
have fallen back to
levels where they
bounce well… I see
them bottoming… I
think you have to be
a buyer… I pull the
trigger right here…
they worked last
time… I think they
will work again.
So with all these
companies that are
doing pretty well
considering… how
come the market is
in just horrible
shape… because
despite today’s rare
respite… the
financials are
killing us… we all
know that it is
impossible to
separate the ailing
financials from the
rest of the market…
but I also know that
the market kept on
ticking even after
the disasters we
know as bear… as
Fannie and Freddie…
Lehman Brothers…
AIG, Washington
Mutual, and
Wachovia… now a
market that loses
Bank of America and
Citigroup… yes it
could happen… is not
a market that could
rally… but if those
two are kept in
business… if the
preferred stocks and
bonds are insured…
and if we separate
them from the
healthy banks like
JPMorgan and Wells
Fargo… then we will
get past this
moment… even if it
means that we flirt
with the S&P 500 and
Dow Jones lows…
actually the latter
more of a function
that includes Bank
of America and Citi
than anything else.
The state of the
market away from the
banks, frankly,
isn’t that dire… but
the market is saying
so what… truly the
financials will tell
us if we pierce the
November lows… not
any sector or
individual stock…
that is where all
the stress is… that
is what has to be
cornered off and
solved before any of
the fundamentals
away from the banks
mean anything at
all… so it all comes
down to what the new
Obama administration
does… can Obama fix
the financials…
rescuing the good
ones, like JPMorgan
and Wells Fargo…
without destroying
their stocks more
than they have been…
while saving the
preferreds and bonds
of Citigroup and
Bank of America…
because the
destruction of
Fannie Mae and
Freddie Mac
preferreds, along
with Lehman’s common
stock, preferred
shares, and bonds…
have brought the
rest of the banks to
their knees… while
everyone knows that
we fault Tim
Geithner… the
president of the New
York fed… and
Obama’s treasury
secretary designate…
for much of the
destruction… as well
as pretty sloppy tax
bookkeeping for an
IRS boss… at this
point we need the
man… we need him to
be approved now just
to fix things…. hey
I will take any
secretary… might as
well be this one…
only because we are
in the jam of a
lifetime… at least
the lifetime of this
well preserved 64
year old.
And if Obama’s team
can safe the banks…
will Obama’s
stimulus package
really work and safe
us in the second
half… in Cramerica
we believe in
accountability… we
want to be able to
keep track of how
Obama is doing… so
as of tonight we
have created a new
index of 6 Dow Jones
Industrial stocks
that will give us a
daily report card of
his administration…
we are calling it
the Obama
Accountability
Index… the six
stocks are: Bank of
America, Citigroup,
Caterpillar, General
Electric (parent
company of this
network), General
Motors, and
JPMorgan… we equal
weighted in the
index… meaning we
start with an equal
investment in each
name… the index
starts at 100 using
today’s closing
prices for each
stock as a baseline…
and we will track
the Obama
Accountability Index
here at Mad Money…
you can even
replicate this index
at home… buying an
equal amount of each
of the Obama
Accountability Index
names to bet with
him… or if you
wanted to, you could
short them to bet
against him.
Why these names…
Bank of America and
Citigroup are
obvious aren’t they…
they are the most
troubled of the big
financials… and
Obama’s
administration will
have to work out a
solution for them,
like I explained
before… JPMorgan is
in there because we
also need a way to
assist the healthier
banks without
destroying their
common stocks…
Caterpillar is the
stock that will tell
us whether Obama’s
infrastructure
stimulus is for real
or not… General
Motors because the
autos need a really
long term safe… or
it will be double
digit unemployment
here we come…
finally, General
Electric because it
is the
quintessential
diversified
conglomerate that
should pick up if
the Obama
administration picks
up the economy… but
go down if the
financials continue
to fail… because so
much of it’s
business is
financially
oriented.
These six stocks
will be Obama’s
report card… they
will grade the
success of his
administration's
financial weanings…
there is just too
much at stake, not
to hold him
accountable… given
that we are now
capable of looking
up kids test grades
everyday on the
internet… it seems
only fair to grade
Obama regularly with
these 6 stocks… no
one wants that kind
of scrutiny… but we
Cramericans demand
accountability… and
this is the Obama
Accountability Index
that satisfies our
needs.
Here is the bottom
line…
▼ ▼
▼ ▼
▼
The Bottom Line!:
The overall market
is actually
healthier than you
think… but we can
not get out of this
morass… until the
new administration
fixes the
financials… That is
why our "Obama
Accountability
Index" includes
Bank of America (BAC),
Citigroup (C)
and
JPMorgan (JPM*)
on the banking side…
the other three,
Caterpillar Inc. (CAT),
General Motors
(GM),
and
General Electric (GE)
all about stopping
unemployment in its
tracks… and getting
the economy back on
track… Mr.
President, you get
honorable, or maybe
Cumma Sum Laude… or
you flunk… and the
stock market flunks
right along with
you…. Cramericans
speak to me… let’s
get started.
BAC, C, CAT, GE, GM
& JPM are the stocks
to watch to see if
the new policies
work...
[verbatim recap]
▼ ▼
▼ ▼
▼
Jim went on after
this segment to take
questions from
his live
audience, and
responded with his
comments...
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Q:
With all of
the volatility
in the banking
sector at the
moment, when do
you expect the
financial stocks
to recover?
Jim:
We will not see
the financial
stocks recover
until we get a
bottom in
housing, which
is why I like
Sheila Baer so
much… she
understands the
root and branch
cause of what is
causing the
banks to go
down… which is
the incredible
decline in
housing… we get
house price
stabilization…
then the bank
problems will go
away… the
previous
administration
tried to give
them from top
down… they
figured give the
banks checks,
they will start
lending… the
banks don’t want
to lend because
the collateral
keeps going
down… you want
to solve the
banking crisis…
you solve the
housing crisis…
only that, can
cause stability
in the
financials.
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Q:
With all the
financial
scheming that we
have seen, with
Bernie Madoff,
the big
leveraging by
the investment
banks, and the
spread that it
has through out
the entire
economy, and the
effects that it
has had. How do
you think we can
re-incentivize
good ethics in
the financial
sector?
Jim:
I actually want
to take a
contrary
approach… I want
to have a
financial
prosecutor… a
guy who
literally does
nothing but take
cases like the
Madoff case… you
have to throw in
allegeds,
because that it
was they tell
you in journal,
you go to
journalism jail…
you take things
like the Madoff
case… you take
all of the
people who knew
and were selling
stock while
these
institutions
were failing…
and you subpoena
everyone of
them… you get to
the bottom of
it… and only
after we have
the perp walks…
the indictments
and the
convictions,
will we make it
safe enough for
the average
person to get
back into this
market. That’s
how we do it.
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[verbatim recap]
[end of segment]
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