It's hard to confuse Jim Cramer when it comes to Wall Street, but he told his
"RealMoney" radio show listeners on Friday that recent stock market action has him stumped, because people are buying stocks that are up huge.
"Every morning, the market opens nicely and comes crashing down," he said, and that means someone is taking a beating.
There are markets when you literally have to buy the opening every day because the early trading is always bad, he said, using the 1990s as an example. That's when the Japanese were constantly dumping U.S. stocks as the country struggled with what Cramer called "the greatest bear market of all time."
Europe was also weak at the time because of Russia, he said, so every day it made sense to put money to work at the open.
Moreover, he said, there are openings that are mixed and investors pick and choose.
But this stock market "does not reward you for buying stocks up in the morning," Cramer said.
"You've got to fade this market, which means you've got to bet against it (in the morning)," he said.
In addition to accepting opening prices, investors are also using market orders instead of limit orders.
So, what do you do if you do fall in love with a stock? Curb that instinct to buy at the open, Cramer said. He said he would wait until 10 a.m. ET before taking any action, and then he would only buy one-quarter of the order he wants.
You want 200 shares of
( MOT)? Cramer said he'd buy 50 to preserve his capital.
Almost every day, Cramer said, he sees opportunities to buy stocks at a discount because sloppy sellers come in and unload companies they should hold on to.
"They are all stocks I would buy, and there happens to be someone leaning on them now, really beating them down," he said. "That's your opportunity."
Among this group, he named
Cramer was bullish on:
Cramer was bearish on
Cramer welcomed Dave Peltier, a co-author of
Stocks Under $10 newsletter, who said that the stocks that stumped Cramer on
Thursday's radio show are in the doghouse.
( HYTM) is a sizable company, but it only makes about $1 million a year in revenue as it burns through about $30 million a year, Peltier said.
More importantly, the company's alcohol and drug addiction treatment is licensed, but has not received FDA approval and it's not certain that the treatment works.
Hythiam was formed in a reverse merger, created from a trucking firm called Alaska Freightways -- another bad sign, he said.
( GTF), Peltier said it's another company that needs to raise some capital since it pulls in $1 million a year in revenue but spends $10 million a year.
The company makes a topical ointment for wounds that won't heal and is filing for FDA approval for its use in diabetic foot ulcers. That didn't sound like that big of a market to Peltier, but he said that approval would allow the company to materially grow its business. The caveat is that FDA approval usually takes about a year.
Cramer put Peltier on the spot about a company that the
Stocks Under $10
gang has recommended in defiance of many analysts:
American Italian Pasta
Peltier acknowledged that the stock has a lot of risks. The company hasn't put out financials for a couple of quarters now, but he said it could be only a few months before it turns its business around.
Cramer also offered some guidance on Google, which received a $600 price target from a Piper Jaffray analyst.
Once it goes above $500, he said, it's time to take some money off the table "because bulls make money, bears make money and pigs get slaughtered."
He then took some time to answer a 401(k) question. A listener remembered that Cramer had recommended buying
because the biotech was a part of the Fidelity Contrafund's holdings. He wanted to know if Cramer thought it would be a good idea to play a single stock in his retirement portfolio or if he should buy the fund itself.
Cramer said that mad money should be used for trading, and that includes buying Gilead as a trade. He agreed with the listener that it's best to have a professional manage his retirement stream.
Another caller said he wants to get more aggressive. Cramer's reply was that if he had a base amount of money to work with and if his retirement was set -- basically if he's in a position where he can afford to lose money -- then it would be okay to be a concentrated investor.
But if those bases are not covered, Cramer said, then there's too much risk and diversification is the way to go.
Cramer said he would stay away from
( RZ), but that he would stick with drilling company
Reiterating his view that offshore drilling companies will be some of the top performers of 2006, he said he would own
( SII) and
And for coal plays, he said he would rather have
Fording Canadian Coal Trust
At the time of publication, Cramer was long Boeing, Motorola, Microsoft and Sears.
James J. Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. Outside contributing columnists for TheStreet.com and RealMoney.com, including Cramer, may, from time to time, write about stocks in which they have a position. In such cases, appropriate disclosure is made. To see his personal portfolio and find out what trades Cramer will make before he makes them, sign up for
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