Making Guilt by Association Pay

When a stock taints a group, check out the ones who are suffering but haven't done anything wrong.
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So Providian (PVN) gets whacked, down 17 points, on some San Francisco district attorney inquiry. Can you take a blind shot at it because that seems like a hugely overdone move?

Normally yes, but this time the stock had just been juiced as a Net play the day before so who knows what to do? Who knows what kind of money is in that stock? I felt it was too risky.

To me, the safer plays are the collaterally damaged plays. You could have bought

Capital One Financial

(COF) - Get Report

down a dollar today, and made a quick four points. Right now I am studying whether to buy

MBNA

(KRB)

, another excellent company tarnished by the collateral damage.

Often I find that when a stock taints a group, the best bet is not the tarnished stock but the ones who haven't done anything wrong and got indicted by the market in some sort of guilt-by-association thing.

COF was down six yesterday, so that made sense, given the company's strong fundamentals. KRB recently held a meeting and said things are doing quite fine. Now COF, up 4 as I write, is too hard, even though it splits in a fortnight.

KRB lacks the pizazz of COF, but I would suspect that in a few days, with a flat bond market, it works its way back to pre-Providian blowup levels.

James J. Cramer is manager of a hedge fund and co-founder of TheStreet.com. At time of publication, his fund had no positions in any stocks mentioned. His fund often buys and sells securities that are the subject of his columns, both before and after the columns are published, and the positions that his fund takes may change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Cramer's writings provide insights into the dynamics of money management and are not a solicitation for transactions. While he cannot provide investment advice or recommendations, he invites you to comment on his column at

letters@thestreet.com.