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Jim Cramer welcomed colleague Ron Insana to the "Mad Money" TV show Friday to defend his recent gutsy call to sell defensive stocks and buy into banks, insurers and home builders.
On Thursday night's show, Cramer took issue with some of Insana's picks and pans, and tonight it was Insana's turn to fire back.
According to Insana, we've reached a secular bottom in a lot of areas in the market, and with so many stocks priced for failure, he said there are incredible opportunities for investors.
He said that the pain is not over for home builders like
, all of which Insana endorsed.
However, he said that in a portfolio with limited funds, he needed to make a choice to either stay with the yields from defensive names, or make a bet on the eventual secular trends.
Insana said he's standing behind his call, even if unemployment continues to rise. In fact, he said he would not be surprised to see unemployment reach 11%. But, he said, historically if you'd invested in the markets at the peak of unemployment, you have been rewarded handsomely. Insana expects this time to be no different.
So while Insana admitted he may be early in recommending the home builders, he said they are all priced for failure, despite the fact they're buying land at incredibly low prices and the likelihood of further consolidation is high.
Turning to the banking sector, Insana said simply that if the banks are not going out of business, investors have to own them. He said his position is not necessarily bullish, but he no longer feels the world is going to end for this sector.
Cramer told viewers that it's always good for theses to be challenged, as Insana did for Cramer at the market lows in 1998, and as he is again now.
Cramer said investors have become too negative, and no one seems to care about good news anymore.
Cramer disagreed with this position, saying that the opportunities in the markets are seriously outweighing the risks. He said investors don't even realize how negative they've become and how they are ignoring the signal to buy.
Where is all the negative sentiment coming from? Cramer said it's coming first and foremost from the government and the Obama administration, who seems to introduce new regulations or taxes just about every day of the week.
Cramer said the
Dow Jones Industrial Average
could rise a few hundred points if only Congress would take a vacation already and stop holding hearings.
Cramer said the second reason for all of the negativity is the decline in oil prices. He said that for some reason everyone seems to think if oil's falling, everything else should too. "But isn't cheap oil, gas and plastics a good thing," asked Cramer.
He said the oil futures markets should have no bearing on the stock market, especially in light of recent manipulations.
Cramer said he's not buying into the negativity. Instead he said he would be buying into stocks like
, two stocks he owns for his charitable trust,
Action Alerts PLUS, along with
Cramer also likes technology and recommended looking into
Cramer found a way to profit from the recent cyber attacks that plagued government Websites as well as the sites of both the NYSE and Nasdaq exchanges.
He said that Internet security firm
may be at the beginning of a new speculative theme, as cyber attacks hit the mainstream.
Cramer said protecting your company's data from attacks is becoming big business, and companies like ArcSight are at the forefront. The company is benefiting from both more and more high profile attacks and from increasing requirements for companies to log their computer activity for compliance purposes.
Cramer said while ArcSight is a speculative play, it has everything he looks for, including a 34% growth rate, no debt, $91 million in cash on the balance sheet, new products and great traction with existing customers.
He said while ArcSight trades at 33 times earnings, the earnings estimates are too low and investors could pay up to twice the company's growth rate for the stock.
"There's a real need for cyber security," said Cramer, and ArcSight might just be the best way to profit from it.
In an atypical interview, Cramer welcomed all-star MVP shortstop for the Philadelphia Phillies, Jimmy Rollins, to the show to discuss the similarities between baseball and investing.
Rollins agreed with Cramer's theory that investing, like team sports, is all about mental toughness and staying in the game even during the losing streaks. He said that no matter what, investors should stay focused on getting to the top, and that they won't see the top until they've first seen the bottom.
Rollins said the worst thing you can do after a long losing streak is to swing for the fences all of the time. He said its better to calm down, get back into a rhythm, and keep keep making small steps towards success.
ramer was bullish on
He was bearish on
International Game Technology
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At the time of publication, Cramer was long Honeywell, Home Depot.
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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