Wednesday, February 11, 2009
(Cont'd from above)...

Jim (cont'd):    How do we get through these nothing days when there is so little to like… about the market… just hold our nose… I mean look, this week is once again giving us another reminder that the stock market is not for everyone… we have recessions… we have times when earnings are destroyed… we have periods of tremendous stress… right now we have all three… we have seen CEO’s who have tried to pop their own stocks on this show… or at least, the very least, irresponsibly optimistic when they out to know better… we know that more Madoff’s lurk under the rocks… we know that the government won’t protect us from the short selling bear raids… we know that the SEC’s enforcement arm is a joke… so we have to take care of ourselves… we know that stocks in general have been a terrible place to invest for a decade now… but not all stocks have been bow wows… not every sector has been a big canine… there has been takeovers… there has been some IPO’s… how about the Mead Johnson today… how about the Mead Johnson, if you get on it that will make you a little money… $2.43 to be exact.

Look, I know that it is difficult… we are right in the teeth of the recession… and it feels like everything that can go wrong will go wrong… it feels like nothing is working… I have said it before… these are the times that try men’s souls… and in Cramerica we are no sunshine patriots… no summer soldiers here… although we, meaning me, we are like T-Pain… buy us a drink because we have swagger… and they call me Shorty Snappin when I am in the hood… or at least when I am playing shuffle board at the Elks club… but remember we have been here before and we do come back… this is what it was like for me in 1989, 90... I was trading… I was trading like a banshee… everything was falling apart… oil had spiked… inflation was terrible… hey at least we don’t have that… the banks were getting crushed… retail just annihilated… we were about to go to war… the market could only rally on short covering like last Friday… it was a total nightmare… we were here when the dot.com bubble burst in 2000... and nothing could go right… and the Nasdaq went down about 85%… I guess what I am saying is that this is just what happens… we get ugliness… we get panic… and finally we get to where we have to go… it is called a bottom… for most stocks we obviously haven’t gotten there yet… but I don’t want you throwing your hands up…. getting panicked… getting blown out just because things are miserable… what I am saying that this incredible cacophony of negativity… is part of the process… the easiest thing to do is just give up… I have emphasized over and over again that the market is a terrible place for short term money… money that you might need for big outlays in the not too distant future… we have got people in Congress calling for dividend cuts… we have no financing to clean up the banks… I think Geithner is addressing that… positively… we have got soaring unemployment… and foreclosures… I cannot blame anyone for leaving the market.

Let me ask you something… what happens if things get better… I mean, I know they are not… I mean it is even absurd to think they could, right…. I mean everyone knows they get worse… but could you step aside with your long term money and get back in at just the right moment… are you that good… get in just at the right moment… are you that precious… are you better than Warren Buffet, I mean, he isn’t that precious… how about the great Peter Lynch at Fidelity… he took my IRA and tripled it over the course of 15 years… even I am not that arrogant… when the market rebounds you want to be there to take advantage of it… until then how are you supposed to deal with the incredible chaos… and yes let’s use the word despair.

First off if you want to ensure that you have money for retirement… or pay for college… or whatever you need… you need to be diversified… how about some stocks…. how about some cash… how about some gold… how about some bonds… that is the best way to do it… recognize that not all stocks go up at once… and even when we do bottom we tend to bottom in thirds… and even when it feels like everything is going down… you can find something that is going higher… that is why I constantly preach diversification… I think that is why you should own something gold… that is your insurance policy because gold thrives on the chaos we are having… nothing worked… wrong… gold soared $24 today… your gold stock would keep you in the game and balance out the pain…. my charitable trust owns Freeport-McMoRan (FCX*)… what do you own?

Second, you need to own some consumer staples… even when they go down big they go down less… and the great things about these stocks… the stuff in your medicine chest, okay… is the fact that when they do go down they actually get cheaper… there is not a lot of competition… I don’t know about you but there is no way General Tso's Corn Flakes… no matter how bad things get we have no appetite for Korean metal flour… Singapore Ketchup…um… although we have been known to sling around some Singapore Slings on occasion… like the annual day after my birthday celebration.

Third, this is why we like the stocks with big dividends… even if it goes nowhere a stock that yields 5% doubles your money in 14 years… that is that rule of 72... you divide 72 by the yield, and the number that you get is how many years it will take to double your investment… that said… you have to stay up on these… as many dividends are being cut… including some that I have blown… an unexpected one, Great Plains Energy Inc. (GXP)… which blew up… it cancelled its dividend… city power and light.

Fourth, you speculate a little… it keeps things interesting… it keeps you in the game… right now I would be speculating with a high quality bio-techs… they is a the lead group for the year… bio-techs and medical devices are both great places to speculate in 2009... they are working.

Here is the bottom line….

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The Bottom Line!:     That is how you stay in the game long enough for things to rebound… while you are watching TV and seeing my friend Lloyd Blankfein raked over the coals… by a fiend, a demon, how many different ways can you get peoples names wrong… how about the Secretary Bernanke… I heard that too… anyway, this is how you stop yourself from losing too much money… and you try to make some even in this awful environment.

Stay in the game and you could be in prime position for when the market turns...   




[verbatim recap]

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Jim went on after this segment to take questions from callers, and responded with his comments...

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Q:    Now that Obama has come out with his new $90 billion stimulus package. Trying to buy out the recession, what I am afraid of is that we are going to go into another depression like when FDR was back in presidency, what are your thoughts on that?

Jim:    Alright, I was telling my friend Stephanie Link, who runs ActionAlertsPlus.com, my charitable trust with me… get a copy of The Great Crash of 1929, John Kenneth Albury’s book… I keep it on my desk at all times… it is very interesting… the recurring theme throughout this book is why didn’t they do more… didn’t they see it coming… why didn’t they spend more… why didn’t they bust the budget… why didn’t they put more money into getting jobs… why didn’t they think better… it was all avoidable… well that is exactly where we are right now… I don’t want to pick up The Great Crash of 2007-08... and say well why didn’t they do more… or my grandkids… why didn’t they spend more money… what were they thinking… we are doing it so we don’t have this… it is real simple… here is the handbook… we don’t want the next version to come out that says 2007, 2008, 2009... it is really about that.

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Q:    If sub-prime mortgage is the wildfire of this recession, then the media is a napalm. My question is do you feel like main streams media relentless pursuit to drive fear and loathing into the general public is fueling this inferno of a recession deeper into oblivion?

Jim:    I am thinking that right now you have hit upon…. you know that is kind of a gonzo statement that you made… I am thinking about the jelly canisters of napalm… I am going up the river with Apocalypse now… here is the truth… David Favor has an unbelievable piece, a two hour piece tomorrow night on our network… and I think that what you have… and I mention that because I think it is a very sophisticated look that doesn’t fan the flames… here is the way I answer your question… I know that I shifted when I felt that we could still avoid this garden variety depression… I was out there screaming my darn fool head off… doing that August 2007 rant… really trying to get people to focus… trying to get Congress to focus… trying to get the Fed chairman to focus… I totally failed… once it was very clear that we were just going off a cliff… I switched…. I don’t use the analogies to the Great Depression… other than to say that we are going to avoid it… and I use numbers… I talk about hard core numbers… I do not want to be part of the mob… what the mob does… if they want to fan the flames, they can do whatever the heck they want… CNBC, NBC, GE, Jeff Immelt, Jeff Soaker, Mark Hoffman, have given me an opportunity to tell the truth… with plain facts… I take advantage of it… I can’t help those other guys… whatever the heck they do… that is their ball game… I don’t pay any attention to them… maybe you shouldn’t either.

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Q:    I am getting ready to retire. And I am in need of income and I need to protect my principal. What about purchasing some utility stocks for income, which could be sold after the recession ends?

Jim:    I am not going to be opposed to that at all… it is funny when you were talking like that… shouldn’t I just talk about Municipal Bonds because they yield 5%… these general obligation bonds… that are backed up by tax revenues… those are a good bet… I do like Com Ed, I do like Duke… we have seen some danger in the utility stocks… the stocks got hammered today because of Great Plains… I think that if you buy a basket … I may even advice you, in case you don’t want to do the research on which ones need financing… to a utility mutual fund… you never hear me say these things… but right now the utility business is so difficult… I prefer you to be in a pastiche if not a mosaic of utilities… thru a utility fund.

[verbatim recap]

[end of segment]

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