Cramer's 'Mad Money' Recap: China's Great Leap Forward (Final)

Sell Block

In Thursday's "Sell Block" segment, Cramer discussed colleague Ron Insana's call earlier today to sell defensive stocks in favor of a truly bullish portfolio. Cramer said he's not as bullish as Insana, preferring instead a more defensive and diversified portfolio. He did however find a few gems in Insana's comments.

In particular, Cramer agreed with Insana's call to sell the likes of Microsoft (MSFT Quote) and Pfizer (PFE Quote).

But Cramer advised keeping Verizon (VZ Quote) and Disney (DIS Quote), along with Bristol-Meyers (BMY Quote) and Cisco (CSCO Quote), two stocks which Cramer owns for his charitable trust, Action Alerts PLUS.

Cramer agreed with Insana to buy more banks, like Bank Of America (BAC Quote), JPMorgan Chase (JPM Quote) and Wells Fargo (WFC Quote), three more Action Alerts Plus names, along with Cramer fav Huntington Bancshares (HBAN Quote).

However Cramer strongly disagreed with owning any homebuilders. He said he wouldn't buy Hovnanian (HOV Quote) or Lennar (LEN Quote) and would rather see investors in Home Depot (HD Quote), which he also owns for his charitable trust.

Although he held Insana in high regard and admired his bullish call, he said he could not be as bullish for the time being.

Prize Money

"When it comes to enforcement and examination, the Securities and Exchange Commission has been a big failure," said Cramer. He said the agency simply doesn't pay its people well enough to make it worth their while to catch the bad guys. But Cramer said there is a solution, one that's in use by the British.

Cramer said that in Britain there's a concept of "super regulators," ones that are paid three to five times as much as their counterparts here in the U.S. Although these super regulators are highly incentivized to catch the bad guys, this system would likely fail in the U.S. because it's too expensive.

But he said there is another system, which was used by the old British Navy, that's perfect.

Cramer said prize money is the answer the SEC needs. Let regulators keep a percentage of the money they earn for the agency, he said. The bigger the offense, the higher the fines, and the more a regulator can earn, he said. This plan will cost the government nothing, he added, since all incentives are paid by the bad guys.

Cramer also advocated paying reward money to whistleblowers. He said if a percentage of the ill-gotten gains were paid to whistleblowers, someone from Bernie Madoff's firm would've stepped up years ago. Cramer said reward money would work in many areas, including for the commodities futures markets.