The market acted
totally irrationally
today, some good
names got knocked
down...
Jim:
They are getting to
the ones that
shouldn’t be gotten
to… the sellers are
hitting the stocks
that weren’t
supposed to have any
risk…. the ones that
were thought to be
so well run, that
they would be able
to withstand the
vicissitudes of the
economy… stocks of
companies that are
referred… that
everyone thinks of
in hallowed terms…
they are getting to
the names that we
thought were safe…
and it is killing
this market…
Do you know what
they did today?…
today, they shot the
duck… that’s right…
they alienated the
stock of AFLAC Inc. (AFL)…
Aflac… that is a
supplemental
insurance company
for heaven’s sake,
how could you screw
that up… they
slashed their market
cap by 1/3.… AFL is
one of the best run
companies in the
world… with the most
fair salary
alignment between
the CEO and the
shareholders in the
land… AFLAC is the
role model when it
comes to
compensation for
corporate America,
the exact opposite
of Cramer totally
non-fave John
Thane…. and the
market went out and
banged the darn
duck… great props
department uh….
because alas the
company took
premiums and
invested in bizarre
British bank high
bred bonds…
something that
Morgan Stanley says
is a big negative
that is rapidly
escalating…. no
kidding, British
banks seem to be
vanishing into thin
air… heck, no air…
faster than Jordan
Sparks could sing
the National Anthem…
I bet the Queen of
England has her
money stashed in
Duxiana (mattress)
at Windsor Castle…
say it ain’t
so…AFLAC investment
officers invested,
well like quacks…
billions of dollars
in exposure… that
only a handful of
people knew about…
quack, quack, quack…
even a wheel chair
bound Dick Cheney
could have hunted
down this one…
largest decline in
25 years…
See all
of
tonight's
stocks
mentioned
on
Yahoo!
Finance,
here...
Thursday,
January 22, 2009
(Cont'd from
above)...
Jim (cont'd):
Or how about State Street Corp. (STT)?...
That
company's stock was
more than cut in
half on Tuesday...
because it had
billions of dollars
invested in asset
backed securities
that are losing
value seemingly by
the day… if not the
second… when I was
Goldman Sachs I
considered State
Street the single
most blue chip
investment
institution in the
world… it was where
you kept your
securities, for
heaven’s sake… State
Street was a vault…
a vault for crying
out loud… I used to
think that State
Street was paved
with gold…. turns
out State Street is
filled with pot
holes… this
custodian bank, as
they call it,
invested some of
your money billions
of dollars of junk….
just complete and
total garbage… most
of us didn’t even
think that it had
downside exposure to
anything other than
safe
cracking….wrong….
blue chip goes to
white chip over
night… although it
did get a lift today
on take over talks
that might make
sense… but we don’t
recommend stocks on
a take over basis if
the fundamentals
aren’t solid… and
now that we know
that State Street
safe has a hole in
it… we don’t want to
touch it… come to
think of it.. at one
point I would have
said that Goldfinger
launched his
nefarious operation
grand slam against
Fort Know, because
State Street was too
hard to take down…
now I think this
bank has Denny’s
grand slam all over
it’s face…. State
Street… who’d a
thunk it?...
Or how about
SunTrust Banks Inc. (STI)…
Do you know
what Sun Trust is?…
Think of it as the
First National Bank
of Coca-Cola… a
conservative
southern bank that I
have always regarded
as being above
banking… just a
repository of great
southern wealth,
including the
fortune of the
family that founded
Coke… today Sun
Trust slashed it’s
dividend… they
slashed it’s
dividend by 84%… I
was always under the
impression that Sun
Trust doesn’t loan
to people who need
money… turns out
they lend to a ton
of dead beats… and
they are defaulting
at a pace that makes
me say no Coke, Pepsi…
I know you
have never heard of
it, but there is the
bank called
Fifth Third Bancorp (FITB)
out of
Cincinnati, it used
to be the best run
bank in the land…
now Fifth Third is
down, just today… by
almost 1/3 reduced
to a measly $2.85...
I remember meeting
Fifth Third’s
management in 1980’s
and thinking if I
had to buy one
regional bank stock
and put it away it
would be that one…
now it is putting
it’s investors away…
true statement… I
would rather drink a
fifth Kentucky
Gentleman than sniff
a fifth of a third….
and that is as low
as a Bourbon I‘ll
knock back on my
cheap linoleum
floor… Fifth Third
ain’t those people
ever heard of
fractions… Sun Trust
and Fifth Third…
who’d a thunk it?
And then there is
Microsoft (MSFT)… I haven’t
liked
Mister Softy
in
years…. rejecting
the Lightening
Rounds participants
endless entreaties
to endorse the
stock… I have always
dismissed it as
nothing but a bank
with windows and a
good vista… has it
happens the vista is
not so hot… the
windows seem broken…
and it really is a
bank with all the
negative
connotations that
carries these days…
Microsoft… this cash
machine… this ATM…
has always been
known as a job bank…
but the bank jobs
has been pulled off
there too… say it
ain't’ so… 5000
people are getting
broomed at what was
for years the
fastest growing
company in the
world… great
earnings form IBM,
Apple… and tonight’s
stellar report from
Google… thank you
Cramer fave Eric
Schmidt… make us
wonder if Mr. Softy
has just gone away…
yep… it is melting….
who’d a thunk it?
Aflac, State Street,
Sun Trust, Fifth
Third, Microsoft
these names are not
supposed to slip up…
but in this
environment
companies that you
would never even
imagine could screw
up… because they
were too
conservative, too
stocky, too
predictable…
companies that were
meant to put us to
sleep… not euthanize
ourselves… are self
emulating on a
seemingly daily
basis… and when they
implode all at once…
what are we going to
do… why we sell,
sell, sell… and that
is how come we
closed down 105
points, we are down
a lot more at one
point… after a huge
day just 24 hours
ago… why goes
through this litany…
well lately I have
been getting a lot
of emails saying
“Where is the bone
Jim”… the one that
is trying to find
the next Microsoft…
the one that is
trying to isolate
which of the great
tech companies to
invest in… the best
solar plays… the
clean coal solution…
the trick to
eliminate friction
on the electric
wires… so we can
send electricity
thousand of miles
from its source… not
to mention cold
fusion… the answer
to all of these
emails is simple…
when even the
stodgiest most
consistent of
financial and tech
companies can bruise
you… then it is not
the time to roll the
dice… it is the time
to diversify… play
defense away from
the financials and
tech… and own the
stocks of companies
that don’t need
capital… the foods
and the drugs… the
companies that don’t
need to grow their
way out of whatever
morass they might be
in… like the morass
of personal
computing, or
banking… you need
stocks that don’t
need Tim Geithner to
succeed… and don’t
have John Thain
hanging out anywhere
near them… oh, and
by the way, if I
were Geithner I
wouldn’t be
confirmed I would be
investigated, and
most likely indicted
for tax fraud… and
if I were John
Thain, after the way
he pantsed his own
firms employees… and
then Bank of
America’s Ken Lewis…
well let’s just say
that Bernie Madoff
is off somewhere
smiling… because
Thain’s egregious
actions have bumped
Bernie from the
front pages… keep
those two away from
Cramerica… they
don’t deserve this
great nation.
Here is the bottom
line….
▼ ▼
▼ ▼
▼
The Bottom Line!:
Diversification
won’t solve the
who’d thunk it
problem… but at the
very least if you
are diversified you
won’t be saying
who’d thunk it about
your whole darn nest
egg...
Being diversified
could be your best
defense against the
curve balls this
market’s throwing.
Aflac, State Street,
Sun Trust, Fifth
Third, Microsoft
who’d have thunk
it?… no air… no air.
[verbatim recap]
▼ ▼
▼ ▼
▼
Jim went on after
this segment to take
questions from
callers, and
responded with his
comments...
``````````````````````````````````````````````````````````````````````````````````` Q:
I listened back to
you October, I took
20% out. But I do
own Bank of America
and JPMorgan, and I
have held those
positions for some
time. So I guess
what I am asking you
do you take the vote
of confidence
yesterday from the
insider’s buying
some of the stock
back, as a good
enough sign to not
watch my position
completely
disintegrate with
all this let the
common shareholders
go?
Jim:
Alright, let’s think
about this Rebecca…
not that long ago a
man stood right
here… a man by the
name of Bob Steel…
Bob Steel had just
bought a million
shares of Wachovia
Bank… and I said
that well you
wouldn’t buy a
million shares of
Wachovia unless you
really believed in
the darn thing…
well, Wachovia blew
up… so I am no
longer using insider
buying as a sign for
anything when it
comes to banks… I
own JPMorgan (JPM*)
for my ActionAlertsPlus.com, my
charitable trust
and if you followed
along with me, you
would say that I
still believe in
Jamie Diamond… but I
have to worn you I
think that Bank of
America, after what
John Thain did, and
maybe you could say
that Ken Lewis did
it to himself, the
CEO… but after what
John Thain did… I
don’t know… I don’t
know… it is too low
to sell… there is
not a lot left… it
doesn’t raise a lot
of money… John Thain
how do you look at
yourself in the
mirror… well, mirror
mirror on the wall…
well, liable won’t
let me say what he
sees when he looks.
``````````````````````````````````````````````````````````````````````````````````` Q:
I am a 63 year old
ex Nucor Steel
worker. And I am
just real worried
about the market, my
portfolio,
everything. Should I
hold what I have
got, or just get out
of everything?
Jim:
There is a guy that
I work with, his
name is Eric, I
won’t use his last
name, he hasn’t
given me permission…
but he writes at RealMoney.com,
which is part of
TheStreet.com, where
I am chairman… and
we spent most of the
day talking about
hedging… and uh
because people are
worried or nervous…
like if you have
something in your
IRA or 401K, and you
are worried, and you
try to hedge it with
some ridiculous
pro-ultra bear
thing… no, what you
do is that you have
to sell… you have to
sell Teri until you
are comfortable…
there is no crime in
selling… no, of
course, I happen to
be the only person
that comes on TV
other than
professional bears,
or people who play
Yogi, or Boo Boo, or
any of the likes…
who actually tells
you to sell… but I
think that you
should sell until
you are comfortable…
because this is not
a good time… it is
not a good time in
the market… even
though people come
on all the time and
say that this is the
buying opportunity
of a lifetime,
including Warren
Buffett… it is not…
I mean I started
this thing in ‘81, I
started my first
stock in ‘79, these
are the worst times
that I have ever
seen… I cannot go
out there and tell
people to buy, buy,
buy… I think you
have got to be
prudent, you stay
diversified, you buy
stocks with good
dividends that are
recession resistant…
I can make piece
with that… but if
you cannot make
piece with your
exposure… cut it
back… cut it back.
``````````````````````````````````````````````````````````````````````````````````` Q:
In this particular
financial
environment, and
getting in the
market for the first
time, what do you
think of index
funds?
Jim:
I say, in
Real Money:,
the paperback
version, which has
sold 7,000 copies so
far, which isn’t
bad… that people
should be embracing
index funds who do
not have the time or
inclination to pick
individual stocks… I
know I say this over
and over again… I am
often tagged as a
guy who says hey go
out and buy
anything… in
everyone of my books
I endorse index
funds for people who
do not have the time
or inclination… you
are watching this
show because you do
have the time or
inclination… so I am
not going to tell
you to turn this
show off, you
shouldn’t have the
time or inclination…
but if you are
jammed… and you are
trying to find the
easiest, cheapest
way… I think you
take the index fund…
I like the total
return… the total or
the S&P… they are
both fine.
