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"We've finally run out of sellers in this market," Jim Cramer told viewers of his "Mad Money" TV show Friday.
He called the day's market action the most bullish he's seen since the market bottomed on Nov. 21, and told investors what they should be doing next.
"Today should have been a short seller's paradise," said Cramer. With news of the biggest hedge fund scandal ever coming to light and the failure of a congressional auto bailout package, Cramer said the markets were set for a horrible open, yet powered higher throughout the day.
"What we saw today was a lot more than just the auto bailout," said Cramer. This is a market where everyone who wants to sell has finally sold, he said. And after a day like today, where the market rallied even amongst the bad news, hedge funds will have to change their bias.
Cramer said investors need to stick with the strategies he's been featuring. That means ainly investing in only companies with high yields, those trading at or near their cash values and those with recession resistant businesses.
"The bears are starting to hum a new tune," Cramer concluded.
Cramer: Oil's Floored
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On the heels of the Bernard Madoff hedge fund scandal, Cramer told investors that they can no longer count on the Securities and Exchange Commission to protect them.
The SEC, he said, was investigating Madoff, yet found nothing. "No one cares about your money more than you," he reminded viewers before outlining the warning signs they should look for in order to protect themselves.
Cramer said that if investors cannot figure out how a money manager is making their returns, it's time to get out. In the case of Madoff, Cramer said even his seasoned staffed were unclear where Madoff's profits were coming from after looking at the funds statements and filings.
Cramer also reminded viewers that if returns are too good to be true, they are. He said that Madoff's "profits" were way too consistent to be real. "Nobody is that consistent for that many quarters in a row."
Cramer told viewers to also look into how a fund is structured. Accountants, he said, should always report to the investors, he said, and not management. Firms should also have separate brokerages, not inside brokerages as Madoff had. It's way too easy to hide losses that way, he said.
Finally, Cramer said Madoff's fee structure should have also been a red flag. Hedge funds typically have a 2% management fee and take 20% of the profits, he said, but in the case of Madoff, fees were based on trading. Never trust a fund who gets paid to trade, he said.
Cramer's bottom line: Investors need to do their homework and research who's managing their money.
For this segment, Cramer said there just might be a lot of money to be made in the most beaten down of technology stocks. He offered up three companies which he said are ready for a serious rebound.
Cramer said semiconductor maker
is at the top of his speculation list.
The company recently reported disappointing earnings and fell a staggering 20% in a single day.
Cramer said the point to note is that after such a huge loss, not a single analyst downgraded the name. "The estimates have already been cut," he said, with all of the bad news already priced into the stock.
Second was telco equipment maker
Cramer said Tellabs is currently trading just about its cash value and has no debt on its balance sheet. The company supplies telcos and cable companies with equipment to increase bandwidth and Cramer said "we need more bandwidth."
He said there is almost no downside in the stock, but the potential for sizable upside.
Third was mobile chipmaker and former Cramer favorite
He said Skyworks is a play on the increasing popularity of smartphones, and with earnings estimates slashed to just 16 cents a share for 2009, all of the bad news is already baked into these shares as well.
In this segment, Cramer told a viewer that wildcat driller
no longer works in this market. "When that group is hot, they're hot, but now they're cold as ice," he said.
Cramer was bullish on
Advanced Micro Devices
He was bearish on
Las Vegas Sands
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At the time of publication, Cramer was not long on any stock.
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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