'RealMoney' Radio Recap: Playing the Brokers

With the dollar lively, high volatility in equities and big bond auctions, "the newfound activity is making the brokers huge money," said Jim Cramer on his "RealMoney" radio show Wednesday.

The best way to play the brokers is by owning the best and the worst: Goldman Sachs (GS Quote) and Morgan Stanley (MWD Quote), he said.

Goldman Sachs is the pure best-of-breed play, said Cramer. The company has its fingers in every pie on Wall Street, he added. If anything, word on the Street is that Goldman has perhaps become too dominant, and he is hearing talk of companies wanting to buy Refco (RFXCQ Quote) just to keep a company linked to Goldman from getting it.

What's more, at 11 times earnings, Goldman is cheap, Cramer said.

Morgan Stanley, on the other hand, has performed poorly over the last 18 months. But it has new management, and new CEO, John Mack, is a "tough, no-nonsense businessman who doesn't like to lose," said Cramer.

With Morgan's stock at $53, that's a "sign the company has lost," he said. But, with the new management, "the game has just begun," said Cramer.

Cramer expects that Morgan Stanley could see its stock rise on a potential takeover bid from a European bank, or he wouldn't be surprised to see the company report a better-than-expected quarter soon.

The time is right to own both of these "premium franchises," said Cramer. Goldman Sachs is cheap on an earnings basis, and Morgan Stanley is cheap on a takeover basis, he said.

Am I Diversified?

In his weekly "Am I Diversified?" segment, Cramer had these things to say about stocks in callers' portfolios:

Urban Outfitters (URBN Quote): Cramer's "favorite fast-growing retailer." He is expecting the company to have a "terrific Christmas."

Elan (ELN Quote): "Not a high quality company." Cramer prefers Genentech (DNA Quote) for exposure to the pharmaceutical sector.