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The Financial Rebound Bets: Merrill, Citi

Originally published on Jan. 2 at 9:37 a.m. EST

"Who's left to sell them?" Of course, today that question is applied exclusively to the financial stocks.

The problem is that during a whole week off I heard this question not once, not twice, but three times: Who's left to sell them?

I am using a 1990 model, one that I hoped was going to vanish when the Fed cut a half-point off its target interest rate. But it's now squarely back on the table because the Fed then switched to an incrementalist view that even now has people puzzling over whether the Fed isn't "done" cutting rates. That's the worry here, despite myriad articles that say the time is right.

I am not in that camp, but then again, it doesn't really matter. The issue is that there is such a camp at all!

Why does 1990 answer the "Who is left to sell?" question, which is also an investing theme, and potentially the brilliant one of 2008?

Because the answer in 1990 was "no one," yet it didn't matter. It didn't matter because the banks' very solvency was in question. By this point in 1990, beginning with this quarter, we were starting to put the "other real estate owned" statistics into the earnings report analyses because we wanted to know which banks were going to run short of capital. We didn't do it because we were worried about the dividends; we did it because we were worried about solvency!

The two stocks that make the most sense to buy if you are not worried about solvency are Countrywide ( CFC) and Washington Mutual ( WM), the former because of its considerable servicing business and the latter because of its deposit base.

Don't forget that Merrill Lynch ( MER), under the bizarre tutelage of Stan O'Neal, was in talks to buy Countrywide in the $40s a year ago to get that servicing and origination business. And the Europeans have always been hungry for a big deposit base. I am sure that ING or Santander is thinking of kicking the tires on a WaMu.

If I really wanted to make a rebound bet on the financials, I'd go with Merrill Lynch with brokers, as a bet on John Thain, Nelson Chai and its deposit base, and I would bet on Citigroup ( C), because Vikram Pandit can dismantle so many of the silly acquisitions of Chuck Prince -- man, can you believe how bad that guy really was? I feel good about my endless hectoring of that amateur -- and it too has a fabulous, best-in-world deposit base. I know that the writeoffs and the dividend cut loom, but that's why the stock ticked down at $28 on Monday.

None of this matters if you are thinking, like me, that 2008 will be an extension of 1990. If you really felt that bullish, you would be thinking about retail stocks, which in many cases have been cut in half even if the merchant is a good one. That just makes more sense; balance sheets are good, the comparisons easy, the cold weather most definitely upon us. Unless you think that gasoline is instantly going to $5 -- and that's not farfetched, unfortunately -- this is the group to buy.

So remember, all of those who ask "Who's left to sell?," you may represent more of a consensus than you think!

Random musings: There are lots of great predictions and lists for 2008 on the site. I call your attention to Bob Marcin , all-year-stalwart for the site, and as always, the redoubtable Doug Kass , who will, no doubt, be cribbed from for the rest of the quarter! He is at total variance with the call to think about -- let alone buy! -- the retailers. He's looking for a real hammering of that already hammered group. ... Can you believe that France is right back at 'em with a good return already this year! The SOX index is pathetic, one of the worst in the non-financials out there.

At the time of publication, Cramer was long Citigroup.

Bear Director's Sale Smells

Originally published on Jan. 2 at 5:37 p.m. EST

Sorry, I am taking this sale of 50,000 shares of Bear Stearns ( BSC) by a director, Paul Novelly, personally.

I am sure there are reasons. I am sure they are "valid." But here is a broker at its 52-week low, virtually cut in half, and the guy sells? What does that say? What does it mean?

To me it means, Look out, things aren't getting better, don't be fooled. This is just plain terrible.

Brokerage stock sales by directors aren't like sales from other directors of other companies. Any director of a brokerage stock knows about appearances -- optics, as they are called. Any director on the board of Bear knows that after the pasting that Bear shareholders have had, the only thing we want to see on the tape is buying!

In fact, of the many things that Jimmy Cayne hasn't done right is that this is a signal that he doesn't even have sway over the board. I can just see Jimmy now telling me I don't know what I am talking about and Paul's reasons, confidentially, have to do with blah, blah, blah.

To heck with it. I would lend Paul the money personally in order not to see this sale.

This is just revolting. I have been thinking that Merrill Lynch ( MER) works because of John Thain, that Dick Fuld has gotten his company through a jam, that Morgan Stanley ( MS) is one firing away from doing the right thing -- hint, hint -- and that Goldman's ( GS) just an outright buy.

But Bear? I feel like joining Novelly, who, I am sure, has the best reason in the world to sell.

Which reminds me of that great line from Tommy Lee Jones in The Fugitive: "I don't care." He should not have sold.

At the time of publication, Cramer was long Goldman Sachs.

MON's a Star, in Two Bull Markets

Originally published on Jan. 3 at 10:17 a.m. EST

Why does Monsanto ( MON) elude people? Why do people not understand that we have a policy in this country and that policy makes Monsanto the Schlumberger ( SLB) of its group? Why can't people grasp that there is a worldwide food shortage and Monsanto is the answer for that, too?

Why are people continually shocked about how good this stock is? It is in the sweet spot of not one but two bull markets: the oil and gas shortage and the food shortage.

Every time one of these stocks reports, you get an amazing reaction: Agrium ( AGU), Mosiac ( MOS), Deere ( DE), Syngenta ( SYT) and Bunge ( BG) go up. Every time. It is amazing to me that there is this kind of "you have to be kidding, this can't be that good" impact.

I think some of this is a legacy from people thinking that Monsanto is a chemical stock, like a Dow ( DOW) or a DuPont ( DD). This is more of a biotech stock than a chemical stock.

The reaction to this company's earnings report today shows me that there is just still a lack of recognition of the ag bull market and a sense that the commodity prices for food have peaked.

Just the opposite. That's what this rally in ag, the endless rally, is about.

Random musings: One of the reasons I dislike this market so much is that a CVS ( CVS) can have a weak month at its drug stores, raise the lower end of its guidance anyway -- because of Caremark, which is Medco ( MHS) and Express Scripts ( ESRX) and not just drug stores -- and then just be annihilated. This stock is down a gigantic amount. I own it for Action Alerts PLUS and I am itching to buy it, as I told readers earlier this morning, when it goes below my $36 cost basis, which, at this velocity I believe will definitely happen.

At the time of publication, Cramer was long CVS Caremark.

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Jim 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 Action Alerts PLUS. Watch Cramer on "Mad Money" weeknights on CNBC. To order Cramer's newest book -- "Jim Cramer's Stay Mad for Life: Get Rich, Stay Rich (Make Your Kids Even Richer)," click here. Click here to order "Mad Money: Watch TV, Get Rich," click here to order "Real Money: Sane Investing in an Insane World," click here to get "You Got Screwed!" and click here for Cramer's autobiography, "Confessions of a Street Addict." While he cannot provide personalized investment advice or recommendations, he appreciates your feedback and invites you to send comments by clicking here.

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