Rate Cut Mea Culpa and Hats Off to Cramer

The other day Jim Cramer and I were standing outdoors in Manhattan's Financial District to record some videos for TheStreet.com TV. I was throwing out some ideas, but my very first one was rejected. I wanted to argue with Jim about the need for a rate cut. He made a face that seemed to say, "Oh, please. Not another rate cut story."

Cramer had been everywhere pounding for an emergency rate cut. The last thing he wanted to do was talk about it again. The reality is, it's a boring topic. People want to hear about stocks, not about the arcane federal machinery that starts to move when the Federal Reserve injects more liquidity into the system.

And thank God that Jim didn't want to do yet another video on the rate cut. Because I'd be sitting here now with egg all over my face, hoping people would forget about that moment when I would've been pounding the table, screaming at the top of my lungs at Jim, "The economy is fine! We don't need a rate cut," and now here we are -- just two days later -- with a 50 basis-point rate cut from the Fed. If that had happened, I would certainly be embarrassed now. But Cramer was calling it, so let's see what it means.

First off, you must own the financial stocks that two of the greatest investors -- Warren Buffett and Eddie Lampert -- have been buying.

• Bank of America(BAC Quote) -- a 5.4% dividend; $1.5 trillion in assets and growing. The stock trades at a price-to-earnings ratio of 9; and Buffett just bought 9 million shares.
• USB(USB Quote) -- a 5.2% dividend; Buffett added to his position; it has minimal exposure to subprime mortgages.
• Wells Fargo(WFC Quote) -- Buffett added to his position; it offers a 3.7% dividend.
• Citigroup(C Quote) -- Lampert added to his position; the largest bank since the creation of banking; a 4.7% dividend; a catalyst to move 5 points if Chuck ("Purple Rain") Prince leaves.

Let's also pick up some tech since they all sold off too much, given that most of tech has no exposure to subprime-mortgage issues.

• EMC(EMC Quote) -- It owns an $18 billion stake in VMware(VMW Quote). EMC trades for roughly 6 times cash flows if you back that out. This is a $25 stock by year-end.
• Tessera Technologies(TSRA Quote) -- Why do you think the iPhone is so small? Tessera owns the patents on chip minitiarization, and its stock trades for 9 times cash flows. Oh yeah, it also has $240 million in cash in the bank and no debt. Thanks to RealMoney columnist Sramana Mitra for opening up my eyes to this one.
• Apple(AAPL Quote) -- Since we're glorifying the iPhone here, let's not forget Apple, which is 30 points down since the mess started. Poor Apple!
• SanDisk(SNDK Quote) -- Just about everything on your desktop and every gadget is moving to flash. Buy in America and forget Samsung. SanDisk is where it's at.
• Yahoo!(YHOO Quote) -- It doesn't matter whether Yahoo! is good or bad. At some point people will pile in by virtue of insider Sue Decker's $1 million purchase of stock, and this will be that time.
• ChoicePoint(CPS Quote) -- The stock trades at 9 times cash flows. Forget about privacy -- this company knows everything about you and sells it to whoever pays the highest. And that's valuable. It just announced a $300 million buyback.
• Time Warner(TWX Quote) -- While not exactly a tech play, you've got to consider the effect of insider Dick Parsons buying $1 million worth of stock on the open market. The company is worth at least $25 a share in a breakup.
• Procter & Gamble(PG Quote) -- While not a tech play, consider its $30 billion buyback.

We also need to look at health care now. Hey, people are living longer and maybe even more so now that we've got the relief of lower rates.

• Johnson & Johnson(JNJ Quote) -- Another Buffett holding. He recently doubled down. It's probably the safest health care play now.
• Cardinal Health(CAH Quote) -- Just raised its dividend. And just approved a new $2 billion stock buyback even after returning $5.5 billion to shareholders in the past two years.
• Charles River Laboratories(CRL Quote) -- Approved a new $100 million buyback. The stock trades at 12 times cash flow despite trading near its 52-week high.

Let's also not forget global infrastructure plays, now that the world is not heading toward financial Armageddon:

• Macquarie Infrastructure(MIC Quote) -- It offers a 5.7% yield and just increased its dividend. The company basically services airports around the world. You know how airport parking lots charge you an arm and a leg but you have no choice but to pay? Yeah. That's Macquarie.
• ABB(ABB Quote): It's almost like the Caterpillar(CAT Quote) for the rest of the world.

Oh, and that reminds me. There are a lot of companies that are peripheral to the housing business that have been crushed. Let's also look at them:

• USG(USG Quote) -- Another big Buffett pick. The stock currently trades 5 points lower than the price at which Buffett has implied he would back up the truck -- that is to say, the price at which he'd buy more.
• Bed Bath & Beyond(BBBY Quote) -- You would think it sold mortgages given the way this stock has fallen. Listen, everyone needs towels and sheets. They're like staples.

If you want more stock ideas that I believe are likely to soar between now and year's end, check out these portfolios on Stockpickr.com:

• Warren Buffett
• T. Boone Pickens
• High-Yield Dividend Plays
• Top Insider Buybacks
• Companies With AAA Credit

And try to enjoy the weekend for once.

-- James