NEW YORK (
) -- Jim Cramer fills his blog on
every day with his up-to-the-minute reactions to what's happening in the market and his legendary ahead-of-the-crowd ideas. This week he blogged on:
- why the Libyan situation changed his take on the market;
- why the Middle East crisis will not give natural gas its deserved moment; and
- a promising energy pair trade.
for information on
, where you can see all the blogs, including Jim Cramer's -- and reader comments -- in real time.
Libya Changes Everything
Posted at 1:16 p.m. EST on Wednesday, Feb. 23.
No, it isn't right. As I said earlier today and yesterday, I just don't like this market at all. I don't want to own high-growth stocks. I do not want to own companies that are big energy consumers. I don't want to own retailers.
I am willing to take advantage of stocks that are being tossed asunder --
. But I also recognize that things have changed radically in 48 hours, and "misses" even in the face of huge backlogs, like Fluor, are punished in a way that was unheard of before Libya.
I do not like this market.
I know that there are people who say, "But Jim, you
Well, I cannot defend these right here, because they aren't going to work now. I would only defend them if I were a dogmatic fool. This is not the market for these stocks.
One thing I know is that if you overstay your welcome in the bull camp, then you are going to cost people a lot of money. It is much better to accept the anger of those who think I somehow betrayed them because I have grown more cautious than to just go down with the ship.
There will be another price and another time when things will be better. I have said repeatedly that a much higher oil price is the Achilles heel of this market. We are there. I cannot decide that my Achilles heel theory, which I arrived at in calmer times, should be ignored because people bought stocks and don't want to sell them.
Then I could never ever turn negative. That would make me a hack and a fool.
I don't know if Gadhafi is going to try to blow up every oil well, blow up all of his people, blow up the country. Nobody else knows, either.
So I should just stand there and buy Chipotle?
Give it a rest.
The market changed.
I have to change with it, too.
Or I become of no value. Remember, I have the right to turn, if only because I been bullish, some would say recklessly bullish, for a very, very long time. I am way up from when I told people to buy.
Way, way up
I want to walk away for now.
A better time, a better price awaits us.
One last thought. As I said this morning, the market would open up, and I wanted people to sell into it.
I could not have been more clear.
So, let's wait. If you didn't sell some, sell some.
If you are going to sit there and tell me, "How could you?" then I point you to the market in 2000, when people were furious that I said to sell in March 2000. Furious.
I never forgot that. Because it was right, and I was hated for it.
But the Nasdaq was at 5000.
Looks like a good call.
We are not looking at
Nothing like that.
I am simply saying that I can't buy anything down here unless it is gold or is something down
from its high.
At the time of publication, Cramer was long AAPL, DE and FLR.
Natural Gas Will Go Begging Once Again
Posted at 1:48 p.m. EST on Thursday, Feb. 24.
This time it's for real. That's what we keep hearing about the transformation of the natural-gas stocks from duds to studs.
The remarkable rally in the big Marcellus plays,
in particular -- the company that says it invented Marcellus -- but also in companies like
Cabot Oil & Gas
, isn't just because the Chinese, Australians, Indians, Spanish and French want in. It's because the need for natural gas has become obvious with the Libyan turmoil.
I have been a huge backer of natural gas, and I think the stocks are too cheap, mostly because of potential takeovers and restructurings, but also because of reserve growth in a business where many oil companies offer stagnant production increases. All you have to do is look at the wealth creation at
and you know that.
I also think that its price stability vs. oil is such a wonder that someone has to take notice in Washington. The spirits are running high for a deal or some sort of subsidy, as anyone can tell from the step-up in the two levered plays,
, both of which would be the biggest beneficiaries of a subsidy for nat-gas trucks. Do not forget that 25% of imported oil goes to trucks, and a switch to natural-gas trucks would easily become a reality.
But here's the rub. I don't think it will happen. As obvious as it is to Wall Street, it is totally off the minds of the oblivious Congress and President. In fact, the prevailing wisdom from the Department of Energy is to not believe the natural gas abundance story. The DOE has been saying, "Don't get hooked on a dirty fuel that could be in short supply and run out after a ton of money has been spent to subsidize its use."
Because of that erroneous reasoning and the power of the coal and utilities lobbies -- which hate anything that would put natural gas more in the mainstream -- nobody wants to champion the stuff for trucks, or for power, either, even as both would be a huge boost for U.S. energy self-sufficiency.
Sure, it is time. Sure, it makes sense for energy independence after this oil spike. It deserves its due just to be able to have cleaner air and fewer dollars paid to countries that are unstable or promote instability in the Middle East. But, alas, "deserves" has nothing to do with it.
I like the stocks because they are cheap vs. what foreigners perceive is the future. But not because what Washington thinks. That's a sucker's game, and if you are buying these stocks thinking that something is different this time, I think you will be sorely mistaken.
At the time of publication, Cramer had no positions in stocks mentioned.
A Pair-Trade for Energy's Tumultuous Times
Posted at 5:26 p.m. EST on Friday, Feb. 25.
, go long
. That's what I am thinking here. Let me explain.
If you think, as I do, that there is a possibility that the Saudis can overwhelm the world with oil and make it so the price of crude takes a header, then you want to be short an oil company. But you don't want to be short one that is going to do a restructuring, a la
, or that can be taken over.
On the other side of the ledger, you want to be long a natural gas company with the ratio of oil to natural gas being 25 to 1, an outrageous differential that can't be ignored. I think that natural gas has to rally from its three-month low on all of this chatter of energy independence, and oil is at a two-year high that could be unsustainable without more Libyan civil war or a Bahrain overthrow, which is looking less likely.
Plus, Exxon is up 17% since the year started and 35% year over year, while Southwestern is only up 3% this year and is
10% year over year. Southwestern was one of the 10 worst-performing stocks in the
last year, even as it is one of the best-run natural-gas companies I follow. (If you want to know why, please read our note from this morning about the greatness of this company's quarter and its ability to grow reserves dramatically.)
Now, one more reason to do the paired trade. Last weekend,
paid more than $4 billion for
Fayetteville shale holdings. After the numbers I saw last night from Southwestern, which is
dominant Fayetteville shale play
, you could argue that using the BHP-Chesapeake ratio, Southwestern could be worth as much as four times its current value on a takeout.
Of course, no company gets that kind of purchase price. No acquirer would tolerate such a perceived overpay.
But, and this is a big but, when Steve Mueller, the CEO of Southwestern, was on "Mad Money" not long ago, he stated point blank that he would not stand in the way of creating shareholder value, including embracing a takeover.
Exxon Mobil, overvalued, not a lot of production growth, levered to a commodity that could be in free fall, with no takeover prospect ever.
Southwestern, undervalued, a ton of production growth, levered to a commodity that has already been in free fall and could stabilize or go higher, with takeover prospects likely.
I would do this trade until the cows came home.
At the time of publication, Cramer was long SWN.
Jim Cramer, founder of TheStreet.com, writes daily market commentary for TheStreet.com's RealMoney and runs the charitable trust portfolio,
. He also participates in video segments on TheStreet.com TV and serves as host of CNBC's "Mad Money" television program.
Mr. Cramer graduated magna cum laude from Harvard College, where he was president of The Harvard Crimson. He worked as a journalist at the Tallahassee Democrat and the Los Angeles Herald Examiner, covering everything from sports to homicide before moving to New York to help start American Lawyer magazine. After a three-year stint, Mr. Cramer entered Harvard Law School and received his J.D. in 1984. Instead of practicing law, however, he joined Goldman Sachs, where he worked in sales and trading. In 1987, he left Goldman to start his own hedge fund. While he worked at his fund, Mr. Cramer helped start Smart Money for Dow Jones and then, in 1996, he founded TheStreet.com, of which he is chairman and where he has served as a columnist and contributor since. In 2000, Mr. Cramer retired from active money management to embrace media full time, including radio and television.
Mr. Cramer is the author of "
," "You Got Screwed," "Jim Cramer's Real Money," "Jim Cramer's Mad Money," "Jim Cramer's Stay Mad for Life" and, most recently, "Jim Cramer's Getting Back to Even." He has written for Time magazine and New York magazine and has been featured on CBS' 60 Minutes, NBC's Nightly News with Brian Williams, Meet the Press, Today, The Tonight Show, Late Night and MSNBC's Morning Joe.