That's why Sebastian was cautious about the market's recent action, with the VIX rallying alongside the S&P on Oct. 18, which is especially rare going into a weekend. Since then, both the S&P and the VIX have been soaring, causing Sebastian to predict a short-term top in the markets.
Cramer said he's not as pessimistic as Sebastian but he still advises taking some profits and using a little caution after the market's big run.
From Worst to First
When a industry-leading company stumbles, don't be so quick to abandon ship, Cramer cautioned viewers. As some investors learned the hard way, it's possible to transform from a despised loser to a beloved winner in as little as a year.
That was certainly the case with Google (GOOG), whose shares jumped 13.8% in a single day, topping $1,000 a share. But few remember that just a year ago many analysts downgraded Google after a disappointing third quarter citing falling desktop ad revenue that would never be replaced in time by rising revenue from mobile advertising.Fortunately, Google's management was smart enough to also realize that it needed to pivot quickly from desktop to mobile; over the past 12 months it was able to do just that. Google answered all of the analysts' worries as it is selling more ads than ever across multiple screens, noted Cramer. Yet, even with the recent surge in its shares, Cramer said Google trades at just a scant 19 times earnings, equivalent to cereal-makers General Mills (GIS) and Kellogg. Backing out Google's current cash hoard and that multiple drops even further to just 16.4 times earnings -- and that's assuming earnings don't increase from current levels. That's why Cramer told viewers they shouldn't be so quick to abandon industry leaders like Google, or Apple (AAPL), an Action Alerts PLUS holding. If the analysts see major problems with a company's business model, then there's a good chance the company does as well.
Lightning RoundIn the Lightning Round, Cramer was bullish on Walt Disney (DIS), Baxter International (BAX) and Laredo Petroleum (LPI). Cramer was bearish on Linn Energy (LINE) and Micron Technology (MU).
Executive Decision: McAndrew RudisillIn the "Executive Decision" segment, Cramer sat down with McAndrew Rudisill, president and CEO of Emerald Oil (EOX), a small, speculative oil and gas driller with 65,000 acres in the Williston Basin region of the Bakken shale. Emerald currently has just two rigs in operation but plans to double its production over the next year. Rudisill said Emerald is having lots of luck drilling in the Williston Basin, which is why his company will be adding a third rig in April and a fourth before the end of 2014. He said new technology is allowing Emerald to increase the success of all of its wells. When asked about transportation, Rudisill said that currently Emerald trucks its oil out of the region, but noted that a pipeline will be installed by the first quarter of 2014, allowing over $1 per barrel in savings to the company. Turning to Emerald's finances, Rudisill noted the company now has $200 million in cash, with no debt thanks to a recent equity raise of $140 million. That's enough to more than fund Emerald's 2014 drilling plans, he said. Finally, when asked how big the Williston Basin actually is, Rudisill said estimates continue to grow and currently sit at 11.2 billion barrels or more. Cramer said that while many drillers have seen their shares already soar, the smaller Emerald may be the next way to play the American energy revolution.
No Huddle OffenseIn his "No Huddle Offense" segment, Cramer said the only reason investors buy Netflix (NFLX) is because they hope someone else will buy it even higher. Cramer said even Netflix CEO Reed Hastings admitted his company's stock trades on "heart and culture" more than its fundamentals. For many investors, the decision to buy or sell Netflix is binary. If subscriber growth is up, they buy; if it's down, they sell. By traditional metrics, Netflix remains wildly expensive. But looking at the size of the opportunity Netflix could have in a few years, it's easy to see why some many investors still like the stock, Cramer concluded. To watch replays of Cramer's video segments, visit the Mad Money page on CNBC. To sign up for Jim Cramer's free Booyah! newsletter with all of his latest articles and videos please click here. -- Written by Scott Rutt in Washington, D.C. To email Scott about this article, click here: Scott Rutt Follow Scott on Twitter @ScottRutt or get updates on Facebook, ScottRuttDC
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV