'Mad Mail'

First Niagara Financial Group Inc. (FNFG)

Q:      I was wondering what your thoughts on FNFG are. Since you suggested it on April 24th, it's been going down. I know there hasn't been any major news released on FNFG, but is it still worth owning? Should I hold this stock until the SEC completes the PNC acquisition?

Jim:    FNFG has raised a lot of capital, so it can buy a series of banks, not just this one. I would buy every time this company raises capital, because First Niagra Financial is going to, I believe in this era, double, triple and maybe even quadruple in size by the time this era is over... because it's a well-run bank with a good balance sheet.

'Mad Mail'

CGM Focus Fund (CGMFX)

Q:      In your book, you recommend the high-flying CGMFX. I have been a long-time holder of CGMFX and an admirer of Ken Heebner. The question is, can Ken Heebner bring CGMFX back from the abyss?

Jim:    I have always been a believer in Heebner. I am not his friend... I don't know him... I have followed him for many years, and you buy him when he's down... He's like a stock that, right now, is having a bad streak, that's going to come back.

'Mad Mail'

General comments...

Q:      Have the people talking about deflation been to a grocery store lately? I've watched a bag of chips go from 8oz. to 6oz. and the price go up... cat litterbag go from 10lbs to 6lbs... and the price goes up... a can of tuna go from 8oz. to 5oz. and the price goes up. I could go on and on. Is this not the definition of inflation, if not hyperinflation?

Jim:    I have to admit that there are a lot of things that have gone up in price, but mostly because of the wrappings that they're in... including cereal... because the actual cost of cereal has come down. I have not seen prices come down as much as I would like, and you haven't... but it is occurring, and I am not giving up. But there is a big lag... all the companies said there is a lag... Watch, three months from now, the prices will be lower... that's what I'm saying from the commodity...

'Mad Mail'

Geron Corporation (GERN)

Q:      With all the important human stem cell tests coming up, especially GERN's tests on humans to regrow spine tissue, when do you expect real volume and big, positive movement in these stocks?

Jim:    These are all speculative stocks, and I have been against these, and want to sell them everytime they go up, because we like earnings... and because we believe healthcare is in a bear market... and, in a bear market, all of these speculative stocks in healthcare are not going to do well. I don't like that stock.

'Mad Mail'

General comments...

Q:      I recently read that a few analysts believe we could drop below the March lows before coming back. Do you think it is likely that stock prices could fall all the way back to their March lows? What would drive the markets back to such a low level?

Jim:    I have to tell you that Mark Haines and I discussed this ad infinitum... I don't think we're going back to those levels. When it got to 6300-6500, if you remember, I said that Doug Kass, who had the hot hand and works with me at RealMoney.com, said that we had bottomed. I said that the risk had gone out of the market, and we decided to get in... If we go back to the mid-7000s, it would be a gift, but we're not going to see those levels again... Because, even when I did a disaster... did an absolute disaster analysis of the Dow... with all the banks going to $0... I still couldn't get through 5300-5400... If we get back to that level, again, it's a gift, and I don't think we will. It would take major banks to collapse, and I don't think that's going to happen. I think the opposite's true... Almost all the banks have refinanced now.

'Mad Mail'

MacroShares Major Metro Housing - new ETF

Q:      A new ETF is coming public soon, MacroShares Major Metro Housing, to trade under the symbol, UMM... It's designed to deliver 300% of the national home price index, and expire November 25, 2014. Do you regard the UMM as a good way to go long real estate?

Jim:    No, I do not... The way you go long real estate is to buy property... I think this is still one more ETF that shouldn't exist, that won't be the way to do it... If you want to buy real estate, you don't buy it in a mimicking ETF, with triple the leverage, which is bad. Go buy a house.