"Every time we have a good market, we then get selloffs," Jim Cramer told his
"RealMoney" radio show listeners Friday. "But we get younger fellas who think selloffs should never occur ... or you get another group of people who say this game is rigged.They think selloffs are the end of the world." But selloffs occur routinely, Cramer said, and the way to beat the blues is to be sure that you're selling into strength, particularly when the market is overbought and there is too much optimism. He told listeners to take a little off the table when the market soars and do some buying when it's down in order to get the best prices. "Would you buy something expensive in a store and return it when it's on sale?" he asked listeners. It's the same common sense with the stock market, he said. This is not market-timing, but it's about going against the grain and letting go of even some of your favorite stocks so you have the cash you need to buy them back when they do go down, said Cramer. He used Google ( GOOG) as an example of this strategy, saying that he still believes the stock has a lot of upside. But, he warned, that's an ultimate destination -- not a near-term prediction. He said for investors who unloaded Google when it was flying high 70 points ago, as he recommended, they should start thinking about the fact that they can buy a little bit back now that it's down 40 points. "You need to be in a position where you think selloffs are not dramatic, dangerous or corrupt ... because you have cash on the sidelines," he said.
Lightning RoundCramer was bullish on: Motorola ( MOT), Yahoo! ( YHOO), Goldcorp ( GG), Broadcom ( BRCM), Marvell ( MRVL), Google, Ameritrade ( AMTD), Mirant ( MIR) and Dynegy ( DYN). Cramer was bearish on: Electroglas ( EGLS), TII Network Technologies ( TIII) and Charles River Laboratories ( CRL).
Cramer UnstumpedCramer welcomed to the show Michael Comeau and Will Gabrielski, co-authors of TheStreet.com's
These companies don't have the same amount of analyst coverage, Gabrielski said, making it less efficient to analyze them. But doing more homework could result in finding a good company with great growth.
401(k) Fix-ItIn the 401(k) focus, a listener asked why Cramer recommends ( FCNTX) Fidelity Contrafund , but never talks about ( FNITX) Fidelity Advisor New Insights . Both funds are run by one of Cramer's favorite money managers, Will Danoff, and the listener said in an email that New Insights has performed just was well as Contrafund, and at times done better. Cramer replied that he likes New Insights, which doesn't have as much foreign exposure as Contrafund. But he said that the fee for New Insights is much higher than the fee for Contrafund, so he's inclined to stick with Contrafund. Another caller wanted to know Cramer's forecast for equities in 2006. He said that one of the reasons stocks opened up with a bang this year is because everyone thought oil wouldn't be as big a story in 2006 as it was in 2004 and 2005. He said that he thought it would go to $50, but that he was wrong, Until we adjust to the idea that maybe oil will go to $75 or $80, it will hurt stocks, he said. Cramer also said that we're starting to see the downside of more than a year of Federal Reserve interest rate hikes. He used Citigroup's ( C) quarter as an example, saying that rate hikes were one of the reasons why Citigroup had a hard time in itsr most recent quarterly results. When oil goes down, or when the Fed stops raising interest rates, stocks should get a break, he said. He told anther caller that when looking at a company's growth, he uses an 18-month horizon. This seems like a fair time period because sometimes things take longer than people think, Cramer said. Often a thesis doesn't play out as early as you thought it might, but that doesn't mean the thesis is wrong, he added. As far as Apple ( AAPL) is concerned, Cramer said the stock is falling in part because the whole market got hit on Friday. The company also gave a lot of good news, leaving the market to wonder if it had anything left to give, Cramer said. Then there is the matter of Apple's weak guidance. Cramer said that this could be the company low-balling the numbers so that people get excited about the results when they report on their next quarter. Whether this is the case or not, the announcement got some people worried, and so Apple is feeling pain from this, too. A caller who is new to the stock market wanted to know if she should sell some shares of Volcom ( VLCM) now that she has made 32% on the stock. Cramer said that with the stock at a 52-week high, he would ring the register and lock some of that gain in. He said that if he had 200 shares, he'd take at least 100 off the table, and might even consider cashing it all in.