Investing
Cramer: The Past Is a Game Plan for the Present
03/17/08 - 09:34 AM EDT
We want to try to figure out what can happen. We want to try to figure out how to protect ourselves and profit from it. Why is that important? I want to go back to 1987, 1990 and to 2000. Those were three fulcrum years where, if you had a game plan, you could think more clearly than if you were winging it -- which, by the way, is what the Fed is doing. Here's my takeaway from those three crashes. First, away from the Nasdaq's stunning decline in 2000 - a fall from 5000 to 2000 -- you could have made a lot of hay with traditional S&P 500 names with solid balance sheets that were insensitive to the recession. You had great success with Procter PG and Coke KO. You made money. In 1990 with the S&L collapse, you tried to lose less by being in the classic growth stocks, many of which went down. Only the highest-growth stocks prevailed. It's very tough to believe that we will be different now. No real gains. And in 1987, pretty much EVERYTHING was marked down, including a huge amount of stock that shouldn't have been. What rallied first? Hard-asset stocks: copper, paper, that kind of thing. Then the drugs. Then the industrials. I think that menu might be a good place or blueprint for today. In 1987's case, you could make your career by buying distressed stocks of non-distressed companies. That could very well be the pattern again AFTER things settle down later this week. Random musings: Stocks I would not bottom-fish today are ones with perhaps overstated book value: Lehman LEH, Citigroup C, Merrill MER and Bank of America BAC. At the time of publication, Cramer had no positions in the stocks mentioned.
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