Drug Stock Rally Is Pain Relief, Not Politics

You want to know how amazing this drug stock rally is? Last time we had a party change in the White House, 1992, these stocks were being slaughtered!

Yet when I listen to these Democrats, I can only cringe about the drug stocks. The only companies that would fare worse would be Blackstone (BX - commentary - Cramer's Take) -- that sucker has no bottom -- and Fortress Investment (FIG - commentary - Cramer's Take), which is beginning to rival Vonage (VG - commentary - Cramer's Take) for the worst deal in a long time from peak to trough.

Yeah, only hedge funds, which have cried for special tax treatment and then done it anyway, are going to be harder hit that the big bad drug companies, because the Democrats can't bear to help them and they are almost all located in New Jersey, which they will win anyway.

Of course, this remarkable rally in drugs has nothing whatsoever to do with politics. It has to do with consistency and how these stocks have become one of the lone centers of consistency in an era when everyone except people who come on TV recognizes that we are about to get into a real house-of-pain recession. This is a bear market in the rest of the market talking -- transports, tech, retail, housing, banking -- not a desire to own the pipelines of outfits like Wyeth (WYE - commentary - Cramer's Take) or Pfizer (PFE - commentary - Cramer's Take) or Glaxo (GSK - commentary - Cramer's Take). When you get diagnostic stocks -- one of my absolute favorite sectors -- just ramping every day, you know that the issue is recession, not new products.

These are, alas, the flipside of MBIA (MBI - commentary - Cramer's Take), MGIC (MTG - commentary - Cramer's Take), Countrywide (CFC - commentary - Cramer's Take), WaMu (WM - commentary - Cramer's Take), Fannie Mae (FNM - commentary - Cramer's Take), Freddie Mac (FRE - commentary - Cramer's Take), PMI (PMI - commentary - Cramer's Take). If or when they fail, you will pay $30 for Schering-Plough (SGP - commentary - Cramer's Take) or $70 for Merck (MRK - commentary - Cramer's Take). In fact, these stocks, which are at pretty low multiples, are being taken up because people feel they can't take Pepsi (PEP - commentary - Cramer's Take) and Coke (KO - commentary - Cramer's Take) to a 30 multiple, although it sure looks like they are going to try.

ALL JIM CRAMER BLOG ENTRIES | POST A COMMENT | READ COMMENTS  

---

Jim Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. Outside contributing columnists for TheStreet.com and RealMoney.com, including Cramer, may, from time to time, write about stocks in which they have a position. In such cases, appropriate disclosure is made. To see his personal portfolio and find out what trades Cramer will make before he makes them, sign up for Action Alerts PLUS. Watch Cramer on "Mad Money" weeknights on CNBC. To order Cramer's newest book -- "Jim Cramer's Stay Mad for Life: Get Rich, Stay Rich (Make Your Kids Even Richer)," click here. Click here to order "Mad Money: Watch TV, Get Rich," click here to order "Real Money: Sane Investing in an Insane World," click here to get "You Got Screwed!" and click here for Cramer's autobiography, "Confessions of a Street Addict." While he cannot provide personalized investment advice or recommendations, he appreciates your feedback and invites you to send comments by clicking here.

TheStreet.com has a revenue-sharing relationship with Amazon.com under which it receives a portion of the revenue from Amazon.com purchases by customers directed there from TheStreet.com.