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The daily battle between the bulls and the bears has been taken to a new level Jim Cramer told the viewers of his "Mad Money" TV show Thursday.
He said there is a literal tug of war in the markets, with investors loving stocks as an asset class, while at the same time hating individual stocks.
Individual stocks are simply too risky, said Cramer. With most companies having reported what will likely be their last good quarter, Cramer predicted only pain ahead for most stocks. That's why investors are turning to safer alternatives.
There's only one way investors can invest in markets while not investing in individual stocks, and that's with the S&P futures, a basket that invests in all of the S&P500 names. This is exactly what large pension and mutual funds are doing, said Cramer.
Cramer confirmed that much of Tuesday's rally was caused by a state-run pension fund, which is obligated to invest the monies they receive, investing heavily in the S&P futures.
to illustrate the tug of war in the markets.
U.S. Steel, said Cramer, should have gone lower after the company reported its earnings and received downgrades from analysts. Yet the stock held its own, as the futures markets continued buying into U.S. Steel, along with the rest of the S&P index.
Cramer called the disconnect between the fundamentals and the futures mind boggling. He predicted the trend would likely continue through the rest of the year, or until investors finally gain confidence in individual names.
Cramer: Analysts Got Comcast Wrong
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Another Look at Gold
Cramer talked with Sean Boyd, CEO of
to find out why gold hasn't been the safe haven he had predicted.
Since Cramer recommended Agnico at $68 a share, the shares have tumbled 58% to $28. "I got this one wrong," he said.
He said that in order for gold to work in this environment, there must be inflation, and not the rampant deflation seen in commodities and home values.
Cramer said the decline in gold and gold stocks has further been accelerated by the credit crisis, with more jewelry stores pairing back inventory due to credit concerns.
Boyd, though, painted a different picture. He said Agnico is just beginning to ramp up production and is still on target to raise output by 23%.
He said he company will open five new mines between 2008 and 2010, with the first of those due to start operations this quarter. Boyd's confident the investments will pay off because Agnico factored in much lower gold prices when it decided to invest in the new mines.
When asked about the company's dividend, Boyd said Agnico has paid a modest one for the past 23 years. He noted the difficulties in paying such a dividend in such a capital intensive business.
Cramer said he likes Agnico's story and the outlook for gold, but admits he may have been a full two quarters ahead of the ramp-up in gold stocks.
In Wal-Mart's Cross Hairs
In the Thursday "Sell Block" segment, Cramer added
to the list, saying the company could now be in the cross hairs of retail giant
, a stock which he owns for his charitable trust
Action Alerts PLUS.
"When Wal-Mart decides to compete in a category, the competitor gets smoked," Cramer said. He cited the company's recent conference call, where it was briefly mentioned that Wal-Mart could be expanding its pet supply and pet car offerings.
Cramer said Wal-Mart has a long history of moving into product categories and decimating its competition.
When the company moved into organic foods,
, felt the pinch.
It happened again when it expanded its electronics offerings, with both
And drug stores are now feeling the pain as Wal-Mart rolls out phase three of its prescription drug plan.
"Anyone in Wal-Mart's cross hairs is in trouble," said Cramer. He said Petsmart cannot compete, despite its 1100 stores and 13% market share in the pet supply business.
The issue, he argued, is the company's supply chain, which involves many layers that Wal-Mart can simply eliminate to save costs.
He predicted only harder and harder times for Petsmart.
In this segment, Cramer told a viewer that younger investors should have a mix of growth stocks and some conservative stocks in their portfolios.
Cramer told a second viewer that he's still behind
Johnson & Johnson
, despite recent negative comments from analysts.
Cramer was bullish on
He was bearish on
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At the time of publication, Cramer was long Wal-Mart, Abbott Laboratories.
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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