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"Today's market action makes me suspicious," Jim Cramer told viewers of his "Mad Money" TV show Tuesday.
He said that after all of the market pundits called for a pullback, everyone ran for the hills and sold when it finally arrived. Even worse, they sold the right stocks and bought the wrong ones.
Now is not the time to be buying oil, technology or agricultural stocks, he said. "These are the worst stocks imaginable."
He recommended selling names like
, all of which were up today.
Don't be fooled into thinking everything is OK, Cramer told viewers. The credit crisis is very real, he said, and banks are still only giving loans to cash-rich companies or those to whom they have already made loans and about to go under in order to avoid huge hits.
The good stocks, said Cramer, are those that were sold today, mainly the recession-resistant food and drug stocks. Cramer said he's still a fan of such names as
He advised investors to wait until the market pulls back enough before starting to start buy again. Cramer even advised selling some of his "accidental high-yielding" stocks, like
, until their yields once again become "accidentally high."
"The sidelines never looked so good," said Cramer. He said now is not the time to play, it's the time to wait for lower prices.
Cramer: Natural Gas Leaks
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Business as Usual
Cramer talked with Tim Sullivan, president and CEO of mining equipment maker
, a stock which he called a cliff jumper, down from a high of $73 a share on June 5 to just $17 today.
Sullivan painted an upbeat picture of Bucyrus' outlook, calling the company's mining equipment the backbone for many large, multinational customers. He said Bucyrus' equipment is not affected by a global slowdown and is usually the last thing to get cut from a project.
Sullivan commented on the recent news from
, which he also owns for his
Action Alerts PLUS portfolio, regarding order cancellations. He called the news an anomaly and not typical of the industry. He said all of Bucyrus' contracts are not cancelable and the company's backlog is solid.
When asked about the effects of President-elect Barack Obama's recent comments about global warming, Sullivan said global warming simply does not affect Bucyrus in the short term.
He said that 77% of countries around the world use coal for power and that is not changing anytime soon. China, he said, opens a new coal fired power plant every week to help meet its energy demand.
A Play on the Auto Bailout
There is a way to play a bailout of the Detroit automakers, but it's not with the shares of
Cramer told viewers. He called the common stock of both companies nothing more than a lottery ticket with none of the winning numbers.
Cramer explained that in the event of a bankruptcy, the common shares of both GM and Ford will be completely wiped out. And even in a bailout situation, the equity in both companies will likely suffer greatly at the hands of the government and bond holders.
"These are not cheap stocks," Cramer asserted, noting that GM is $45 billion in debt while Ford's debt load is $32 billion.
"There is a way to play the bailout though," said Cramer, "and that's through the preferred shares." He advised swapping out of the common stock immediately and investing in the dividend-paying preferred. The yields on the preferred shares are gigantic, said Cramer, now topping 35%.
Cramer told investors to check out "GPM," the trading symbol for the convertible preferred shares of General Motors, now trading at $4.27 a share. These shares, he said, will pay a 17.5% semi-annual dividend in January.
In the case of Ford, Cramer recommended looking up the trading symbol "F-PS" (if you're searching in Yahoo! Finance) or symbol "F-S" (if searching Google Finance) for the shares, which are currently trading at $9.15. He said that while hard to find, both shares yield around 35% and are the only way to play a bailout.
In this segment, Cramer told a viewer that he's a fan of
, which he also owns for his
Action Alerts PLUS portfolio and would be a buyer of all three of these companies.
Cramer was bullish on
Great Plains Energy
He was bearish on
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At the time of publication, Cramer was long Freeport McMoRan, Altria.
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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