Cramer's 'Mad Money' Recap: The Bear Stearns Fiasco

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"The financials of the financial stocks cannot be trusted," Jim Cramer warned viewers of his "Mad Money" TV show Monday.

Cramer made his comments in the aftermath of what he described as the "sweet-heart" deal JPMorgan(JPM Quote) got from the Fed to buy Bear Stearns (BSC Quote).

The Fed's actions led Cramer to urge investors to stay clear of the all of the financial stocks, with the lone exception of JPMorgan.

In his analysis of the Bear deal, Cramer said those with money invested at Bear are not in jeopardy of losing their accounts while those who invested in the company will likely see their investments vanish as the common stock drifts towards zero.

"You can't count on takeovers anymore," Cramer said, "there will only be take-unders from here on out."

According to Cramer, any financial company that has lent a lot of money to hedge funds is in jeopardy because its book value will fall as a result of the fire sale of Bear whose book value dramatically fell over the weekend to a stunning $2 a share.

"Until we hear otherwise," Cramer said, "consider all of the banks' book values to be lies." "These companies will likely be saved, but the pattern will be to have their equities wiped out."

On a side note, Cramer remained bullish on the coming IPO of Visa, stating that with the financials in such turmoil, the Visa IPO will likely be priced below its true value, offering investors a rare opportunity to post a gain.

"Visa is a financial with absolutely no credit risk," he said.

In Apple I Trust

"After this selloff," Cramer told viewers, "investors should pick amongst the rubble for the real banks."

The real banks, he said, are not banks at all but rather recession-proof companies that are flush with cash.

Cramer recommended companies in the "real" economy such as those that manufacture products. These companies, which all benefit from a weak dollar, include Procter & Gamble (PG Quote), Colgate (CL Quote) and Pepsi (PEP Quote).

Cramer also recommended strong companies in the tech sector, such as Cisco (CSCO Quote), Intel (INTC Quote) and Apple (AAPL Quote).

"All of these companies also have strong balance sheets," said Cramer.

He also reiterated buys in the agriculture sector, such as Caterpillar (CAT Quote). And he also likes 3M (MMM Quote), Honeywell (HON Quote) and ExxonMobil (XOM Quote).

Going Strong

Cramer welcomed Michael Ward, President, chairman and CEO of CSX Corp (CSX Quote), back to the show to discuss the company's outlook. Earlier today, CSX raised its guidance for 2008, beating Wall Street's consensus estimates by 7 cents to 10 cents a share.

Ward explained that his company is performing well, shipping a mixed bag of products ranging from coal, grain and fertilizer to metals, chemicals and ethanol.

He also noted that competing trucking companies are being challenged by both higher fuel costs and a shortage of labor that is giving railroads the upper hand in the current economy.