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"This rally isn't just about buying. It's about panic," Jim Cramer told the viewers of his "Mad Money" TV show Thursday
He said the hedge fund managers, once short the market, are now a pack of wild bees, running in the same direction as they try to escape the market's upward momentum.
"There's one thing you can count on," said Cramer, "and that's fund managers moving as a group." But fortunately, he said, the mutual fund managers and the hedge fund managers, move in different groups.
Cramer said the battleground is the tech stocks, which have rallied hard as the mutual fund managers bought everything in sight, trying to get long before the first quarter ended.
The hedge funds, however, have been shorting this group, he said, but are now being forced to jump on board, adding fuel to the already raging fire.
Cramer said the outlook for tech is indeed rosy, with many gadget and gizmo makers having cut inventories too far, and are now scrambling to meet demand.
Many techs also benefit from a weak dollar and are trading at historically low multiples, he said.
According to Cramer, the big winner in tech is
, a stock which he owns for his charitable trust,
Action Alerts PLUS.
Also on Cramer's list of the big fund managers' buying list are
Buy and Homework
No other notion on Wall Street has lost investors more money than "buy and hold," Cramer told viewers.
He said buy and hold is not the right way, nor smart way, for investors to manage their money. Cramer advocated what he calls "buy and homework," i.e. buy stocks and then actively keep an eye on them.
Cramer said one of his favorite stocks has always been
Johnson & Johnson
, a stock which he owns for his charitable trust,
Action Alerts PLUS, and one he called one of the best drug companies out there.
Yet even with Johnson & Johnson, Cramer said he's not afraid to sell it when the fundamentals get bad, or buy it when the fundamentals are good. With the stock having fallen from $72 a share to just $52 a share, Cramer said the fundamentals have just turned good again.
Cramer said J&J was one of the hardest hit by the stronger dollar, and now stands to be one of the biggest winners with a weaker dollar. He said the company has a strong balance sheet, great management, has made two recent acquisitions on the cheap and has the added benefit of a 3.5% dividend yield and a 48 year history of raising that dividend.
On the downside, J&J has two drugs that will lose patent protection, he noted, but that news was baked into the stock long ago.
Cramer called Johnson & Johnson is a buy.
In this segment, Cramer issued a rare "prisoner release" for two banks he hates:
Bank of New York
Cramer changed his mind on these the stocks because of acccounting rules.
Cramer said the government's proposed accounting rule changes are exactly what he's been looking for. He said the real winners from these changes are not the big banks but the banks with no mortgage risk such as Bank of New York and State Street.
Cramer explained that these two banks act as the custodians of other banks' money. And as such, they make huge amounts of clean, stable, recurring revenue. Bank of New York is the largest of these banks, with $22.2 trillion of assets under its care. State Street is the third largest.
Cramer said both banks need to be bought on any weakness. He told viewers not to buy them Friday ahead of Obama's meeting with several bank CEOs.
Instead, he said to wait until Monday and buy these banks before the the rest of the market figures out how much the new rules will benefit them.
Cramer told a viewer that alcohol is not working in this recession and there's no momentum in stocks like
. He said he'd hold it for a long-term play, but not as a trade.
Cramer told another viewer that
is his favorite steel steel since it's the best run company out there and doesn't have a pension problem. However, he said he'd wait for a pullback before buying.
Cramer was bullish on
St Jude Medical
He was bearish on
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At the time of publication, Cramer was long Foster Wheeler, Caterpillar, Johnson & Johnson and Qualcomm.
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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