RealMoney Radio Recap: Saluting General Motors

"Given all of General Motor's(GM Quote) problems and the way they're going about fixing them ... I believe the stock will be at $40 next year," Jim Cramer told "RealMoney" radio show listeners Wednesday.

Cramer said that GM should be able to reinvent itself from a large company that loses money into a small one that makes a ton of cash.

Cramer emphasized that he has been a long-time hater of the stock, despite the fact that it is one of the largest sponsors of his television show "Mad Money," which airs on CNBC.

But now he believes that management is addressing the company's problems and taking action, so Cramer likes it here near $23.

However, he said, GM is a stock to buy for a trade, meaning that it could be held for about three months. Toyota(TM Quote) is still his favorite auto company, and Cramer added that it just reported a great quarter.

He recommended Toyota at $70, and now it's above $120. Toyota is the better investment, Cramer said, adding that it could still go up substantially over the next six months.

We like to apply the Goldilocks rule in business, Cramer said, referring to the notion that it's good when things are not too hot and not too cold. We especially like this when it comes to employee compensation, he said.

For example, Cisco(CSCO Quote) reported what looked like a great quarter, but Cramer said that when he drilled down, he was worried about the amount of options being issued to employees.

Sales were up 5% for routers and 13% for switches, but Cisco's compensation expenses were way too high, Cramer said, adding that these options prevented the company from rallying.

An argument could me made that all of the tech stocks have a problem with aggressive, excessive compensation to employees, Cramer said.

He said that there is one thing that Oracle(ORCL Quote), Intel(INTC Quote), Microsoft(MSFT Quote), EMC(EMC Quote), Sun Microsystems(SUNW Quote) and Dell(DELL Quote) all have in common. They have problems with compensation and they all don't go up.

Cramer owns Microsoft for his ActionAlerts PLUS charitable trust portfolio.

He said that compensation is a good reason to rethink one's tech exposure, adding that better "neighborhoods" to be in are minerals, oil, aerospace and infrastructure. They don't issue a lot of options and they're doing better, said Cramer.