"Tonight I'm going to give you some of the best educational supplements," Jim Cramer told "Mad Money" viewers Friday in a show compiled of previously broadcast clips that Cramer felt would help educate people. He said the segments would deal with leaderless markets, volatility and the difference between speculating and investing, all of which would be geared to making money. "First I'll tell you how to deal with a leaderless market," he said. The markets need generals, he explained, adding that the leaders of the last market run-up are all played out. "The generals are dead," Cramer said, and listed Cisco ( CSCO), Dell ( DELL), Microsoft ( MSFT), Intel ( INTL), Broadcom ( BRCM), Marvell Technology ( MRVL) and Google ( GOOG) as examples of previously hot stocks that are now lukewarm. He also added General Motors ( GM) and Wal-Mart ( WMT) as two stocks that may have "lulled us into a false sense of security," but that didn't, in the end, have the right stuff to rescue the market from its latest slide. "We're leaderless, headless and things will get volatile," he said. "It's because we've got no generals. They shot them all." To beat the rudderless market, Cramer suggested that investors stand to benefit by buying stocks of commodity companies, as well as recession stocks. "But, he said "they can't go up at the same time. It's like a seesaw." He recommended Clorox ( CLX) as a good investment in the current environment. "We need a new general. A new secular growth story that we can depend on," he said. "In this situation where the general is dead, you need some recession stocks and some commodity stocks." "Remember where ignorance reigns, cash be king," he said.
Volatility: A Love StoryIn the next segment, he turned to volatility. Volatility can be scary, it can make you feel like you understand nothing about the market, and it can make you feel like the market is positively bipolar, Cramer said.
Speculation RecommendationCramer now turned to speculation and what it means for would be investors. "The market is full of people who are speculating," Jim Cramer told viewers. We've got fools speculating, and they don't know what they are doing, he said. Finisar ( FNSR) has been cut back by 25% because of speculation, Cramer said. You need to know precisely what a company does and what it is levered to, otherwise you should not own its stock, he said. "I love speculating, but you have to do it right," he said. "Speculating is not investing. When you confuse the two, you get annihilated."
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