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Cramer's 'Mad Money' Recap: Get Ready for the Bears

TheStreet.com Staff

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The bears are getting to ready to slam some stocks next week regardless of their earnings reports, Jim Cramer told viewers of his "Mad Money" TV show Friday.

Best Buy (BBY Quote), Research In Motion (RIMM Quote) and Goldman Sachs (GS Quote) all report next week, and Cramer said he likes all three. They represent what he used to call "the fulcrum of the market" during his days as a hedge fund manager.

But Cramer expressed caution on these three stocks going into their quarterly reports. It's too important, he said, to the bears for these stocks to be crushed.

Take Goldman Sachs, which he owns for his charitable trust, Action Alerts PLUS, which was highlighted in a Wall Street Journal article for betting against mortgages. While this might seem like good news, it's bad for the stock, Cramer said.

"The thing about stocks is that they react a lot better to unknown good news rather than known good news," he explained. "You need a combination of a low price plus an upside surprise to get a stock to go up."

Cramer said he expects the bears will slam this stock down regardless of what it reports. That will give people a great opportunity to buy Goldman after its quarter.

The same goes for Best Buy, he continued. Cramer believes it will be a better buy on a pullback after it reports.

As for Research In Motion, Cramer said there are a lot of people betting against this stock, too. Although he likes RIMM very much, Cramer said he believes the short-selling raid could put a lid on the stock.

Goldman Sachs, Best Buy and Research In Motion should all get hit by the shorts, "who will try to jam them down," Cramer said.

Therefore, if market players are unable to take the short-seller raiding, they should think of selling these on Monday before they are beaten down. Then once the beat down happens, and only then, should people consider buying the stocks back.

Holding the Fed Accountable

"You know I am no fan of the Federal Reserve these days," Cramer told viewers. He said the Fed has become totally unaccountable, but unfortunately investors are stuck in an era in which only a few people are willing to tell the truth about an institution that is not doing its job.

He welcomed one of these few people to the show: Congressman and GOP presidential candidate Ron Paul of Texas.

Monetary issues, Paul said, are what drove him to get involved in the government in the first place. He explained his passionate interest in the Fed's recent steps to deal with the credit crisis. He said he finds it amazing that whenever he visits a college campus and talks against the Fed, he is greeted with applause.

Paul said Fed lacks oversight and is more secretive than the CIA. The Fed "ought to be more open," he said, noting the government doesn't have any interest in it and is neglectful, he said.

Paul said he saw the housing bubble and credit crunch problem coming a long time before Ben Bernanke became the Fed chairman. Over time, it got worse, reached a climax and has been total chaos the last year, Paul said.

When Cramer asked why the Fed doesn't see the bigger picture that 7 million people could lose their homes, Paul said it's because they believe in themselves too much. He always hears people talking about how interest rates are too low or how they're too high.

Instead, said Paul, market forces should determine interest rates.

Paul lamented the condition of the economy, with the standard of living going down, the dollar going down and the U.S. dependent on borrowing money. Despite this situation, he said his fellow candidates don't realize a domestic problem persists.

"I don't think they've heard the message," the congressman said. "They don't have an understanding of monetary policy" and if they do, they like the benefits from the current policy.

Paul, said Cramer, is creating an atmosphere in which it's OK to call out the Fed. The institution is making policy with no checks and balances, and Paul is changing things by speaking out, he said.

Flextronics Bounces Back

What could be better on "Speculation Friday" than a company that went from being a dud to a force to be reckoned with, Cramer asked. That stocks is Flextronics (FLEX Quote), an electronic manufacturing service.

Flextronics, whose stock has been flat for years, bounced back from mediocrity when it bought its competitor Solectron in October, Cramer said. This deal made Flextronics the No. 2 player in its market.

Now, to be able to compete with it, Flextronics' rivals will have to make their own acquisitions, otherwise they're going to lose, he said. And with all the consolidations that are likely to take place, Flextronics' pricing power should increase dramatically, he added.

Moreover, the Street, Cramer said, thought it would take longer for Flextronics to integrate its acquisitions, but now it realizes that it will take a shorter time. This means analysts will have to revise their estimations.

Flextronics is a stock market players should consider buying, he said.

Mad Mail

In his "Mad Mail" segment, a emailer asked if the recent cold snap is a reason to buy Under Armour (UA Quote). Cramer said he considers VF Corp (VFC Quote) a "safer play."

Lightning Round

Cramer was bullish on Blue Nile (NILE Quote), Masimo (MASI Quote), Agrium (AGU Quote), Mosaic (MOS Quote), Halliburton (HAL Quote), Schlumberger (SLB Quote), Grant Prideco (GRP Quote), VF Corp (VFC Quote), Fuel-Tech (FTEK Quote), GameStop (GME Quote), Synchronoss (SNCR Quote) and L-1 Identity Solutions (ID Quote).

Cramer was bearish on The Knot (KNOT Quote), Terra Industries (TRA Quote), WSP (WH Quote) and Leap Wireless (LEAP Quote).

Want more Cramer? Check out Jim's rules and commandments for investing by clicking here.

For more of Cramer's insights during the Lightning Round, click here.