Making the Most of an Ugly Day: Cramer Chats on RealMoney

James J. Cramer chatted on RealMoney.com Tuesday, Nov. 28 at 4:30 p.m. EST.

jimcramer: Good afternoon everyone. What an ugly day! Let's make some sense of it.

lolden-guest: Hi Jim. This Nasdaq market feels much too much like the peaceful New England town gone awry in Jaws. When is it safe to get back in the water?

jimcramer: I think you have the wrong book or movie, this seems like Carrie and we are reading Steven King. There is massive carnage out there. I am taking my cue from Todd (Harrison) who today pronounced that the long side has about as equal a shot as the short side when it come to the NAZZ. Me, I am strictly a Pfizer, SBC PEP kind of guy in this tape.

mjolnirthor-guest: The signals the equity markets are sending are much more negative than the "official" economic statistics. Is this just the market discounting the future, or does it mean the Fed is way behind in focusing on inflation in the face of a recession?

jimcramer: That's a great question and the answer is a little of both., The fed is focused on wage inflation, which still exists and it is focused on employment, which is full. It was focused on the NAZZ, but that's not a problem any more. They are stuck in a box. Looks really bad to ease when unemployment is so low. They have to wait, In the meantime we get this horrid market as they wait for people to lose their jobs.

bas_123-guest: How much upside is left in MO?

jimcramer: I think MO trades to $50 no problemo but over time.

noelnita-guest: So where does Buzz and Batch go with the money they have left?

jimcramer: Brazil. No seriously, I think these guys are at the root of the problems in this market. They are momentum players without any momentum. They have no place to go. They are trapped, too. And they have assets that are in decline now. Yes, these two exist in many forms in the mutual fund universe and we are -the conventional observers--not privy to their operations but because I am a fund manager I know the truth, which can't be told, unless fictional characters are used, because these guys belong in Allenwood.

kali4-guest: If Dubya is the president-elect, is it time to visit the oil patch?

jimcramer: I think these stocks ran up in anticipation of a victory and now profits are being taken. That said, I think these companies will be able to raise numbers when they report so they are getting real attractive with or without Bush.

laddcap-guest: Jim, what do you need to call a bottom in the Nasdaq index?

jimcramer: Again, I urge you to read Todd Harrison who addressed this very issue repeatedly today. Or read my dream sequence series today which says that things bottom when the multiples become relevant again.

lolden-guest: Are the expectations for chemicals too high? With natural gas through the roof, shouldn't we see Dow, DD, etc. getting lowered estimates?

jimcramer: I think you will see preannouncements galore to the downside in that group but that the stocks are much closer to a bottom than a top.

ghia_1970-guest: When all this tech selling dust finally settles, what will our indicators be as far as what the market is going to give as "fair" valuations?

jimcramer: As I said in my series, this is simple multiple analysis. Stocks bottom in set patterns. I doubt we will see tech stocks trade at six or seven times forward earnings, but we could see them trade at their growth rates!

restless1-guest: Jim, is there anything positive to look forward to in 2001 concerning tech ? What about DSL they still continue to roll it out and can't install enough

jimcramer: DSL is a bust man, that's the point. It is a bust. The telcos didn't do the job. I think the focus should be on other stocks.

shadytoo-guest: JJC, how did the soccer game go last Friday? Earlier this year, you felt that Target would stand out in retail because of its individual niche and plan. Do you still think they are one of the survivors?

jimcramer: First, funny thing about the soccer game. The adults were so animal-spirited that we were up 4 to 1 before my friend Bowers Espy and I reminded the adults that we were supposed to lose, which we did, 5-4 in the next hour.

Target is the class of the field and it acts great and it is one of my faves still, but retail is very hard to own here.

lolden-guest: Mr. Cramer, in that great book on LTCM, they showed the dangers of derivatives. Do you think the banking/financial community is in danger from the iceberg of these unregulated derivatives they carry on their books?

jimcramer: I think these derivatives aren't nearly as important as they were in 1998. They are only in danger from a lack of business!

maddave1-guest: Your thoughts on the storage sector, specifically BRCD, EMLX and QLGC? Are they the last generals to be shot or will they survive the carnage?

jimcramer: _We have purged so many momentum names but we remain long Brocade and it hurt us today. We don't think anything will be immune, including biotech, despite the impassioned defense on RealMoney's site by Lissa Morgenthaler this afternoon. I do like her though!

cdtbud42-guest: How much time is left on Todd pre-announce earnings clock?

jimcramer: We are five days away from pre-announcement land and I think it will be nasty.

street_adlevit-guest: Jim, do companies like SUNW get any credit for rut terating their guidance and basically promising not to preannounce?

jimcramer: No none at all. That is a Sisyphean task during multiple compression time. SUNW will bevalued like any hardware company in the end, nothing special about it. And I like SUNW!

paulworth-guest: Is it imperative that we have a classic selling climax before this is over?

jimcramer: I think it is. We need to see a major mutual fund go bust before this one is done. One of these big funds just plain blowing up. I think it is becoming increasingly realistic that something like that happens and I am focused on it intensely.

jgiven-guest: Jim, like your new priorities re-adjusted attitude. Lissa M. just posted article saying biotech no bubble and it will trend higher due to speed of new drugs to market. What is your take?

jimcramer: That's a tough call and I just said I didn't think it would hold up, but I like those stocks in a slowdown much more than I like software and hardware. Thanks for the kudos on the new focus. I have made many mistakes in my life but one I can still correct is spending more time with my kids before they are not kids. God they love it too!!

curlycoat-guest: Any thoughts on AMAT to buy here.

jimcramer: I think this stop bottoms in the mid 30s but it is a matter of time before it gets there, It cant be owned except for a trade.

donkeith1-guest: Do you think the troubled telco's COVD, TGNT etc. are going to survive or go under?

jimcramer: I think it is clear that they wont survive. I think that is what the market is telling us.

mwatkins-guest: Wouldn't you think that neither long nor short is a better place for most of the less nimble folks? Market either starts to heal very quickly or the SPX is going to break down. October lows not far ahead. After that is all new territory but not only for tech. Such a break would definitely increase the tempo of carnage... so my question is, do you believe that "Do Nothing" is often better in such an environment?

jimcramer: At the risk of hurting our own subscription efforts, I think I have written a plethora of stories about how the market is just too hard for most people and they should be sidelined. I think when the bear phase is over we will have credibility because of that call and that the other sites won't, I have gone out of my way in the last few says to talk about how some sites are now being revealed as pure bull market sites and have no value here whatsoever. TSC will still be standing even as the others are revealed to be mountebanks.

cmarz-guest: Jim, back to the Fed, when does the rapidly developing credit crunch in the corporate bond market become too much to ignore?

jimcramer: If that were your criteria they should have changed bias already!

kelivingston-guest: With VCs imploding and banks getting stingy, is there risk to earnings growth longer term in the tech area?

jimcramer: Yes, that is why the multiples are being compressed. There is severe earnings risk. First time in a long time too!

tkhenry-guest: Isn't the employment number a lagging indicator?? That's what I remember from the '70s.

jimcramer: Yes, it is a rearview number, that is why it is not a great indicator but it is important to the Fed.

timurphy-guest: JJC, thanks for your interest in the little guy. what does the Fed REALLY want? A dead stock market, lower growth, lower inflation? Come on Big Al (Alan Greenspan)!

jimcramer: The Fed wants lower inflation, period. Thanks for recognizing why the heck I do this. I sure do take a lot of flack for the efforts.

weadie-guest: Jim, with Greenberg giving examples of a softening real estate market, do you see any plays on the downside in that area?

jimcramer: Not unless you want to sell your house and rent. The problem is there is no pure housing play, as the ones that come to mind would benefit from lower rates that the weakness would cause.

rivaldo11-guest: Crude oil getting tired, euro recovering is that relevant at all?

jimcramer: Sure, it is one of the reasons why the financials don't want to go down heavily and why the Gillette proctor complex is stronger.

lolden-guest: Do you think the hiring of Joe Lockhart by Oracle helps balance their brain drain?

jimcramer: No, but I always liked the guy. I really liked that McCurry guy though.

arniebodner-guest: Assuming a Fed easing following the plunge down, when will the financial look attractive?

jimcramer: Yes, the risk here is credit risk. SO pick your financials wisely but you will make money, Check out FNM--it is working big time.

harvmel-guest: Jimbo, many of us have, in part thanks to TSC, become way more defensive then ever. For us, it is now more of a question of whether we move from 85% cash to 95% cash. Can you address this concern?

jimcramer: I think if you are in that ideal position you start buying here. Yes. And thanks for recognizing that we got it pretty right. I don't know anybody else who did but the journals who chronicle our every move are fixed on writing our obituary more than ever and it doesn't fit the thesis

sa1tp-guest: If a Butch and Batch fund blows up, will you identify them as such so we know what to look for when trying to pick a tech fund? (I'm done trading tech stocks BTW)

jimcramer: Not until they are indicted.

street_bobbys-guest: Have all of the interest rate hikes hit the economy yet and if not even if the fed cuts are we in for a hard landing?

jimcramer: No we are not in for a hard landing if the Fed eases. It is still well within their control. It will be for a couple more months.

penq45-guest: Will tax loss selling continue to hit the B2B's, Gary B. Smith thinks CMRC goes much lower?

jimcramer: I think he is dead right. I think the action in VERT is indicative about how bad it can get for CMRC.

cargal-guest: Jim, thanks for all of your candor. Please help me understand non-tech trading cues: do we look for low price/sales? Balance sheet ratio quality? Any micro-level advice?

jimcramer: I can't answer this question in a simple chat but I can tell you that I look for better than expected earnings there just like tech.

mfoxer-guest: Isn't the moral of the story in tech investing this year that long positions have to be hedged using options, that way the investor wont be left behind if the market rallies but also will have limited downside risk.

jimcramer: No, the moral of the story is that stocks do get overvalued and buying and holding doesn't always work

vincent201-guest: Todd wrote today about taking off his bear suit, and maybe going long selectively for a trade. Which stocks do you think will be the first to rebounce if the Nasdaq bounces back?

jimcramer: Intel, Microsoft, Sunw Cisco

chaste-guest: Gold stocks have done nothing for about 20 years. Is it time for a meaningful gold stock rally?

jimcramer: That would be the stupidest thing that could happen. This is a deflationary selloff

mcracoli-guest: Will a Fed ease help home construction stocks or do they react contrary to interest rates going down?

jimcramer: They explode to the upside, they are perfect.

hhardyiii-guest: How do you play Microsoft's posturing around the Election Legal battle?

jimcramer: If they make the quarter it goes higher, that's your focus.

gruntal-guest: JJC, I remember the days of Thursday p.m. money supply numbers and Thursday morning unemployment claims seems to me that Thursdays are becoming important again, yes, no, maybe?

jimcramer: They have always been important and you have to watch those claims closely now.

arniebodner-guest: Jim, I love what you are about at TSC; don't ever let the naysayers get you down. You have it right at work & thinking about life at home! Any rationale to add to box makers on the swoosh down?

jimcramer: The consumer is weaker and it is the wrong time to buy these.

orpheus0-guest: Jim, how long do the boring foods and restaurants work? Is there more upside?

jimcramer: Absolutely. In fact people will end up paying big premiums for these stocks the longer the Fed doesn't ease.

street_jhkeller-gues says: Groceries look good here? AHO and the like?

jimcramer: I don't like AHO, I like Safeway, but I would avoid Albertsons

dermking-guest: In the summer the Nasdaq had a 30 plus percent counter trend rally from the May lows. Do you suspect that we will see another bear market rally in the Nasdaq anytime soon?

jimcramer: Sure, there are enough people out there that need to make something happen, it could happen, but I am not banking on it.

kodiak19-guest: Intel is still selling above 8X sales while PC biz is slowing. What is the downside in your opinion?

jimcramer: Back to where it was a month ago.

ghia_1970-guest: What's your rationale for holding on to BRCD still, even though TheStreet.com profiled it as one of the highfliers remaining?

jimcramer: I think that Brocade is a very well run company and I keep it as a reminder of where those stocks are. We have to keep an eye on stocks like this if we are going to do our jobs well.

sbschmidt-guest: Any relevant golden observations from the Trading Goddess on any particular sectors lately?

jimcramer: She thinks that the S&P names, the boring S&P names are good again. That will have to do it, Great chatting, and I sure hope you give the gift that keeps giving -- subscriptions to Real Money!! Thanks

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