This article was originally published March 3
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"When it comes to investing, hope is never supposed to be part of the equation," Jim Cramer told the viewers of his "Mad Money" TV show Tuesday.
He said hope is just a crutch that gets in the way of making the right decisions. But in today's market, he said, it might be worth at least taking a look at what investors are hopeful for.
Donning a pair of actual rose-colored glasses, Cramer listed 10 reasons why there might still be some hope left in the markets.
1. Treasury Secretary Tim Geithner came out of hiding and spoke eloquently on the troubles at hand. Investors just feel more confident when Geithner appears, he said, even if there still doesn't seem to be a plan.
Chairman Ben Bernanke also appeared, and talked of new TALP plan that could actually help asset backed facilities get some traction.
3. Two stocks --
-- issued positive guidance, giving the NASDAQ a reason, albeit only momentarily, to rally.
4. The London copper inventory is going down. That's an obscure, but positive sign, that commodity prices may not fall forever, said Cramer.
5. You just can't kill China. The Chinese markets are up 13.8% for the year.
6. Stocks are down so much they have to start looking up sometime. Cramer said
share have now fallen more than they did back in the Great Depression.
7. Oil is done going down and could finally be putting in a bottom.
8. Housing is now more affordable than ever. The housing bottom may come, as Cramer predicted, this summer.
9. There are companies with great dividends. Cramer said there are still companies out there that are raising their dividends, sporting great 4%- to 5%- yields.
10. Only once everyone who wants to sell has sold, can the markets truly hit their bottoms.
Cramer said as grim as things might seem, there are actually a few real reasons to put on the rose glasses. He said he feels the market could trend higher in short term.
A Silver Lining
Investors looking for a silver lining in their portfolios should look at, well, silver, said Cramer. He said in order to Obama-proof their portfolios, investors should have 20% of their portfolios in precious metals.
Cramer's been on record recommending gold in recent weeks, noting he's still a fan of the
SPDR Gold Shares
, but said there's also a case to be made for silver as well.
Silver is currently trading at the largest discount to gold in the last 13 years, but Cramer said he expects that trend to end soon. At current levels, one ounce of gold would buy 72 ounces of silver, when historically it should buy only 52 ounces.
Like gold, Cramer said there are many ways to play silver such as the metal itself, coins, stocks and the
iShares Silver Trust
No matter how investors decide to take advantage of the oversold condition of silver, Cramer cautioned that both silver and gold are still trending lower, so he'd buy in stages as it declines. "Never chase, just bid," he said.
Battle of the Discounters
In this "Off the Charts" segment, Cramer pitted the charts of discounters
against one another to see which trade down play is the one to own in our slowing economy.
According to Cramer, there can be only one winner in this space and he knows which one it is.
In looking at the charts, Big Lots appears to be the winner, he said, adding the stock's most recent low is part of a bottoming process indicating strength. Cramer said with the 50-day moving average catching up to the share price, there appears to be more aggressive buying and less selling on the dips.
Family Dollar's chart, on the other hand, shows a triangle pattern, with every recent attempt to break out being met with increased selling pressure. This pattern, said Cramer, indicates supply is too plentiful and the stock will likely languish before falling back to lower levels.
On the basis of fundamentals, Cramer said he'd be a seller of Big Lots, and a buyer of Family Dollar. Big Lots, he explained, has a close-out business model, and with just about every retailer now closing out inventory to stay alive, he doesn't see how Big Lots' model makes sense any longer.
Family Dollar however, is posting solid growth and making operational improvements to perform even better. Cramer said Family Dollar is a clear winner in his book.
Outrage of the Day
Cramer took aim at the University of Pennsylvania, which today raised its undergraduate tuition rates by 3.8% to cover in part what they stated was a 19% drop in the school's endowment.
Cramer called the move outrageous, saying it should infuriate both parents and students alike. He said for years school endowments have made boatloads of money, but not once has any school ever used the surpluses to lower rates.
Now, in times of need, when schools really should be using their endowments to lower tuitions and make college more affordable, they've again chosen to raise rates.
Cramer said he's tired of schools putting their endowments first, and education second. These schools use every opportunity they can to raise tuitions, he said, but never give back a dime to the students and families who need it. Cramer said he'd think twice before donating to any endowment.
Cramer was bullish on
United States Steel
Research In Motion
He was bearish on
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At the time of publication, Cramer was not long on any stock.
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