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NEW YORK (
) -- As another day ticks by with no compromise in Washington, Jim Cramer told
viewers Friday that some would have expected the markets to be down huge, as they were after the TARP program was passed in 2009 and after the debt ceiling debacle of 2012. So why didn't the markets crash? Cramer said there's no easy answer.
When it comes down to it, Cramer said it's simply easier for Republicans who have pledged not to raise taxes to lower them after we go over the cliff than it is to raise them, even slightly, before hand. That means a budget deal isn't likely until January and investors should plan accordingly.
Fortunately, Cramer said his game plan for next week remains the same: Buy on weakness but only in those sectors that have proven to be strong, including anything housing-related, anything auto-related and anything that sells into a recovering China.
A compromise can be reached, Cramer concluded, but don't expect it before the Super Bowl in late January.
In the "Executive Decision" segment, Cramer once again spoke with Vivek Ranadive, chairman and CEO of
, a stock that got hammered when the company pre-announced weaker than expected sales on Dec. 5. Shares of Tibco are down 19% since Cramer last spoke with Ranadive in July.
Ranadive made no excuses for the miss in the quarter, calling the problem one that clearly lies with him for failure to execute. He said that in many areas, Tibco remained strong, but in some key areas they did not, which is why leadership changes were made and he feels confident the right people are now in place to get the job done.
Ranadive reminded investors that no one else analyzes data in real-time as Tibco does. Whether its making product recommendations when you're ready to buy online or helping the oil and gas industry sort through mountains of data to find the best places to drill, Ranadive said Tibco is up to three years ahead of the competition.
Cramer said Tibco is in a tough business and commended Ranadive for coming on the program and taking the blame. He fell short of recommending Tibco but told investors that it is entirely possible to miss big then come on strong thereafter.
Gambling on MGM
In this uncertain market, investors can bank on a good old-fashioned turnaround story, Cramer told viewers as he featured
, a company that's not beholden to the stalemate in Congress nor the outcome of the fiscal cliff.
Cramer explained that MGM was on death's door in 2008, when the company's new CEO took over and started a relentless march towards fixing its many problems. Like many casino operators, MGM took on far too much debt in the go-go 2000s, only to be hit hard when the recession took hold. But now traffic in Las Vegas in on the mend, rising 3% this year and approaching its 2006 highs.
Cramer was also quick to note there are no plans to build new casinos in the next few years, giving MGM further room to recover.
MGM is in the middle of refinancing much of its high-interest debt at rates between 9% and 13% with far more reasonable terms. The company has already retired $4 billion of debt over the past five years.
Adding icing to the cake, MGM owns 51% of its business in China's Maccau, a privilege that only six operators have been given thus far. MGM has a second casino under construction, which will only further add to its bottom line in the coming years.
Adding it up, Cramer said MGM, a stock he hasn't spoken about in years, is now giving investors three ways to win: a rebound in Vegas, a better balance sheet and a pickup in Maccau.
In the Lightning Round, Cramer was bullish on
Enterprise Products Partners
Cramer was bearish on
If Washington could only solve the fiscal cliff, we could indeed have a pretty strong bull market, said Cramer. That means a stock like
would become an excellent investment.
Cramer explained that Blackstone makes money in a multitude of ways. First, it's a hedge fund that makes a percentage off the amount of money it has under management. On a fiscal cliff resolution, more people are likely to leave bonds, said Cramer, in favor of Blackstone's higher-yielding funds.
Next, Blackstone also buys up troubled companies, fixes them and returns them to the IPO market, a market that would yield higher prices with a booming economy.
Blackstone is also a real estate play, said Cramer, as the company has $54 billion in real estate holdings including Hilton Hotels, another winner if the economy takes off. Shares of Blackstone currently trade at just 7.3 times earnings with a 19% growth rate.
Cramer admitted he hasn't liked the opaque nature of how Blackstone makes its money. But with so many ways to win in a booming economy, the company will surely make a ton for investors one way of another.
No Huddle Offense
In his "No Huddle Offense" segment, Cramer reminded investors that when stocks come under fire, they need to run from, not to, the battlefield. Cases in point:
Cramer said he had previously put both Mellanox and Allscripts into the sell block: Mellanox when the company's CFO "retired" without warning, and Allscripts when the company's fundamentals began declining. The lessons? When management leaves unexpectedly, sell. When the fundamentals are declining, don't bet the farm on a takeover.
Then there's Herbalife, a company Cramer had come to like but changed his mind after colleague Herb Greenberg began raising red flags about the company's sales model. Thursday, an activist investor made formal allegations at the company, sending shares down hard.
The lesson? Don't take unnecessary risks and sell at the first sign of trouble.
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-- Written by Scott Rutt in Washington, D.C.
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At the time of publication, Cramer's Action Alerts PLUS had no position in stocks mentioned.
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