Jim Cramer
Jim Cramer fills his blog on RealMoney every day with his up-to-the-minute reactions to what's happening in the market and his legendary ahead-of-the-crowd ideas. This week he blogged on:
- the commodity beating,
- the next bull markets, and
- the facts about the banks.
The Herd Is Trampling the Commodity Names Originally published on Monday, Aug. 4, at 11:18 a.m. EDT No hope for any commodity plays. That's what people must be thinking. That's what you do when you sell down stocks like Deere (DE Quote - Cramer on DE - Stock Picks) and Freeport (FCX Quote - Cramer on FCX - Stock Picks) even after they have been clocked. The thinking is that with the commodity collapse comes drastic cuts in numbers, so the 12 and 7 P/E's for next year aren't realistic at all. I always come back and say that these are companies that have fundamental international worth, perhaps more worth then their $28 billion and $33 billion valuations, respectively. I also want to emphasize that these are moving targets. At this point, people are fleeing these because they fear valuations that might be three-quarters of what they are now, as you don't sell down 3 or 5 if you think that the stocks are only going down by one-eighth. I bring up this analysis because these are companies that traded so much higher, that have so much worldwide earnings power and scarcity value and worth to others, that I simply don't believe they can be crushed like banks from here. Now, it is possible in a recession that FCX's earnings can get cut, maybe by a quarter, although a half seems like a stretch, and from here I think you are betting on a 50% earnings cut. Deere's harder. Not really linked to the economy, but to worldwide demand for better food and for renewable energy. But, again, I can see a 25% reduction in earnings. More than that seems hard.
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