Mad Money Recap
Cramer's 'Mad Money' Recap: Bulletproof Your Portfolio
TheStreet.com Staff
11/08/07 - 08:06 PM EST
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Investors should shield themselves from the coming housing-led recession with a bulletproof portfolio, Jim Cramer told viewers of his "Mad Money" TV show Thursday. Cramer said the current situation is similar to that of 1990, where there was a sharp downturn and averages fell 13% in six months because of credit problems related to commercial real estate. Right now, he said, the credit problems are in residential real estate. He said if investors are going to make money, they have to own stocks that worked in 1990. Those included high-growth stocks, indestructible stocks with solid balance sheets, high dividend-yielding plays, and companies with international exposure.
Dodging Bullets
"When the going gets tough, your first priority has to be capital preservation," Cramer told viewers. "What stocks would I want as my bulletproof vest?" he asked. "I've got five stocks for you." The first is Altria (MO Quote - Cramer on MO - Stock Picks), a stock he owns for his charitable trust, Action Alerts PLUS. Altria is as indestructible as it gets, he said. It has a huge farm business, has little exposure to higher commodity prices and is a big "rest of worlder." The company is splitting into two businesses--a domestic business and an international one -- and that should unlock a lot of value," said Cramer, adding it has a 4% dividend yield.Sell Block
During his "Sell Block" segment, Cramer urged viewers to take Under Armour (UA Quote - Cramer on UA - Stock Picks) off the table. He said it is a high-multiple stock that has lost its momentum. Usually when he hears about increases in inventory from a company during a conference call, it is a read flag, Cramer said. But when he heard about it from Under Armour he went against his rules and thought it was OK to buy it because the company's CEO Kevin Plank was so positive on the stock. Then three insiders sold some positions of their stock. Cramer said he doesn't know why these insiders sold, but they crossed a line. He said he doesn't believe Under Armour would have been up nearly as much after its inventory increase if he hadn't championed it. Cramer said he feels like a dope because these three insiders were able to sell their stock at higher prices. Moreover, he said the company is losing momentum. He also said retail is a tough place to be right now and the remaining markets Under Armour wants to get into are going to be defended like crazy by competitors like Nike (NKE Quote - Cramer on NKE - Stock Picks). "Sell Under Armour," Cramer said. On a side note, he also advised viewers to sell the four horsemen of the mortgage crisis: PMI Group (PMI Quote - Cramer on PMI - Stock Picks), MGIC Investment (MTG Quote - Cramer on MTG - Stock Picks), MBIA (MBI Quote - Cramer on MBI - Stock Picks) and Ambac Financial Group (ABK Quote - Cramer on ABK - Stock Picks).Mad Mail
In his "Mad Mail" segment, Cramer told viewers he got only about two hours of sleep last night because of Nastech Pharmaceutical (NSTK Quote - Cramer on NSTK - Stock Picks). He said he feels bad and angry about the stock's recent performance. The stock, which closed at $7.09 Thursday, has lost nearly 50 percent of its value in three days.