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NEW YORK (
) -- "If you want to make money in this market, you have to break the rules," Jim Cramer told the viewers of his "Mad Money" TV show Wednesday.
He said viewers need to ignore the traditional wisdom of "buy and forget" and the notion of only investing in index funds. It's not too hard to pick your own stocks, he said, if you do it correctly.
Cramer said the truth is simple, if investors do their homework, they'll have the edge on Wall Street. But since homework can often be time consuming, he said investors also need something to keep their interest, and that's speculating.
Cramer said he encourages investors to use up to 20% of their non-IRA portfolios for speculating. He said speculating can not only but fun, but also immensely profitable.
Case in point, Cramer's June 5 declaration that student loan purveyor
was his speculative stock of the year.
Cramer said back then, Sallie was trading at $6.61 a share, which was just 3 times its earnings. Cramer said people then were simply betting that Sallie Mae, along with the entire student loan industry, would file for bankruptcy. But that was clearly not the case, which the company demonstrated today with a 24-cent-a- share earnings beat. The upside surprise took shares up 20.67% for the day, and 62% from Cramer's initial buy recommendation.
And Cramer said he still thinks Sallie is cheap at $10.71 a share, given the company said it's likely to double its earnings in the fourth quarter and increase substantially more in 2010 and 2011.
Cramer said investors who bought in at the lows should take some profits, but everyone else should buy in as Sallie crawls back from the dead.
Good as Gold
In the "Executive Decision" segment, Cramer spoke with Ron Hermance, chairman, president and CEO of
Hudson City Bancorp
, to get the latest read on the regional banking sector.
Hermance characterized Hudson City Bancorp as a baseball player batting .350 rather than a home-run hitter. He said those who feel his company needs to bolster reserves haven't looked closely at the company's stellar loan portfolio.
Hermance also dismissed the negative thinking surrounding the New York City metro area, stating that the economies of the region are much more robust than people realize, and that real estate prices, which didn't rise as much as most areas, won't fall as much either.
Hermance also painted a rosy picture regarding the company's dividend, saying that Hudson City has never cut its dividend and returns 50% of its profits back to its shareholders. And given that the company has seen record profits 11 years in a row, Hermance said that's a pretty good track record.
Cramer said Hudson City is "as good as gold" as far as he's concerned, and he continued to recommend the stock.
Pulse of the Economy
In a second "Executive Decision" segment, Cramer spoke with Michael Ward, CEO of
, a company which Cramer said has its finger on the pulse of the nation's economy, as everything our country manufacturers is likely to travel by rail.
Ward said that while he's not seeing a dramatic turn in the economy, "things are improving" to the tune of 3% to 6% increases in volumes across all markets. He said that he expects to see those rate continue for the upcoming quarter.
When asked where the increased shipments are going, Ward said that by and large, most of the cargo CSX is shipping is domestic. He said while the popular Cash For Clunkers has been ridiculed by many, Ward said its been the catalyst that's driving his company to ship around 10 million cars this year.
Ward also mentioned that for one ton of freight, a CSX locomotive gets 436 miles to gallon, helping in the country's efforts to a greener, more energy efficient future. He also noted that CSX is re-hiring some of the workers it laid off previously in the year.
Cramer called CSX "the best railroad in the country" and continued to recommend the stock.
Am I Diversified?
Cramer played "Am I Diversified" with callers to see if their portfolios have what it takes. The first caller's portfolio included
Cramer said this portfolio was "well played."
The second caller's top holdings included
Bank Of America
Cramer said this portfolio also has great diversity.
The third caller had
as their top five stocks.
Cramer also blessed this portfolio, calling it not only diversified, but also "delicious."
Cramer was bullish on
He was bearish on
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At the time of publication, Cramer was long Bristol-Myers Squibb, Bank of America and Vale.
Jim Cramer, host of the CNBC television program "Mad Money," is a Markets Commentator for TheStreet.com, Inc., and CNBC, and a director and co-founder of TheStreet.com. All opinions expressed by Mr. Cramer on "Mad Money" are his own and do not reflect the opinions of TheStreet.com or its affiliates, or CNBC, NBC UNIVERSAL or their parent company or affiliates. Mr. Cramer's opinions are based upon information he considers to be reliable, but neither TheStreet.com, nor CNBC, nor either of their affiliates and/or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. Mr. Cramer's statements are based on his opinions at the time statements are made, and are subject to change without notice. No part of Mr. Cramer's compensation from CNBC or TheStreet.com is related to the specific opinions expressed by him on "Mad Money."
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