Jim (cont'd):

“We would also like to point out that the lead Goldman Sachs analyst who provided the note in question was in his role for only one week prior to the release of the report. Comparatively, the Principal Financial Group is covered by 16 sell side analysts. Of these individuals, four recommend a buy, eight suggest hold and four recommend sell. Of the analysts who have a “buy” on The Principal, three are among the most experienced and highly regarded in the industry. Before Cramer reports on the life insurance industry again, we ask that he considers the idea that not all insurance companies are created equal.”

In retrospect that is kind of outrageous… that Principal would send me that email… and then when they announce their quarter last night… report that their book value has been more than cut in half… they have got a huge increase in unrealized losses… we gave Principal a chance after they sent us the email… we said that we rely on Goldman Sachs and begged them to prove Goldman wrong… but it was Principal not Goldmans that let us down… remember in their email Principal stressed that Moody’s had just maintained their stable outlook… but here is what Moody’s had to say about Principal today… “Rating outlook changed to negative from stable because of continuing investment losses and weakening earnings capacity.” … I say live by the Moody sword die by the Moody sword… Principal can not have it both ways… Moody’s has put them on a watch for possible downgrades… ratings speak for we no longer like you the way we did when we blessed you before.

And when I put this one in the sell block… all I was really trying to do was get ahead of a big decline… the stock was at $18.76 then… and now it is $11.99... that is a 36% decline… that is what I wanted you to avoid… that is why Barron’s likes my stuff so much… because I get you out of these big decliners… okay… we were worried about Principal’s portfolio… and even though they got mad at us… as it turns out we had every right to worry… they have got gigantic exposure to mortgage backed securities and asset backed securities… the hardest hit part of the market… and what bothered us more than anything else… is that I think there is a lack of transparency here… I mean, who even knows what they really own… so I guess the highly regarded analyst that Principal was talking about in their email got had… they are now scrambling of course to defend their buy ratings… because they are senior statesman, they don’t want to change… they look like idiots… they were focused on earnings streams… which looked good… but we have never cared about earnings streams when it comes to these insurers…. no… we have always cared about their investments… that is the real issue… that is what is causing their decline… it is not the earnings.

Look, we are about trying to get you out of stocks before potential losses… we are not seeking to apologize for the declines… or make excuses… the Goldman Sachs guy may have only been at it for one week… but maybe that was key.. perhaps what was needed was a fresh eye to get this one right… Principal did get one thing right though… not all insurance companies are created equal… you bet… some like Principal Financial are worse than others… particularly this one down 77% year over year… the prosecution rests.