One Right, One Wrong on Metals, Housing

Gutsy and complacently negative. That's how I would contrast the Citigroup upgrade of three metals stocks and Wachovia's downgrades of three housing stocks.

Gutsy, because at this point in the cycle, you probably should be a seller of the metals if the Fed is the only game in town. But complacently negative because you should be a buyer of the homebuilders if the Fed is almost done.

I believe that the Citigroup metals piece recognizes the multi-year nature of cyclical demand as countries worldwide get industrialized. There are whole sections of the world that are really back where we were in the 1920s, including Central Europe, Latin America, India and, of course, China. The demand for resources is deeply rooted in this geographical distribution not in U.S. demand, which is what the Fed can kill with higher cash rates, the so-called inventory costs.

The homebuilders, on the other hand, should be the second quarter's winners as new home sales have dropped, the group's radically out of favor and interest rates may have almost peaked for the cycle. My playbook says that's when to move (as I mention again and again in Jim Cramer's Real Money: Sane Investing in an Insane World). I believe it is important to go against the Wachovia downgrade and embrace the Citigroup report.

Random musings: Wherever I go, I hear about two stocks: Apple (AAPL - commentary - Cramer's Take) and Sirius (SIRI - commentary - Cramer's Take). Retail investors are too embedded in these stocks, Apple because everyone knows the Apple stores are jammed and the iPod is still selling, Sirius because of its dollar amount and because of Howard Stern. I see Apple trying to stabilize here, but I see Sirius still churning as the shareholder base turns over. Could be like TiVo (TIVO - commentary - Cramer's Take), at best. ... ... You know I always read every email and blog Comment, and it has just crushed me to not be able to answer every one. So I've gotten some help from two members of my research team, Dan Adams and Frank Curzio. They've started answering for me, as TSCResearchTeamDan and TSCResearchTeamFrank, when I spot a Comment I've just gotta answer. So keep posting your Comments about stocks and the market. I'm excited to be joining the conversation, even by proxy.

At the time of publication, Cramer had no positions in the stocks mentioned.

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