This article was originally published March 3Click here for an archive of Jim Cramer's Mad Money recaps.
"When it comes to investing, hope is never supposed to be part of the equation," Jim Cramer told the viewers of his "Mad Money" TV show Tuesday. He said hope is just a crutch that gets in the way of making the right decisions. But in today's market, he said, it might be worth at least taking a look at what investors are hopeful for.
7. Oil is done going down and could finally be putting in a bottom. 8. Housing is now more affordable than ever. The housing bottom may come, as Cramer predicted, this summer. 9. There are companies with great dividends. Cramer said there are still companies out there that are raising their dividends, sporting great 4%- to 5%- yields. 10. Only once everyone who wants to sell has sold, can the markets truly hit their bottoms. Cramer said as grim as things might seem, there are actually a few real reasons to put on the rose glasses. He said he feels the market could trend higher in short term.
Cramer's been on record recommending gold in recent weeks, noting he's still a fan of the SPDR Gold Shares ( GLD) and miner Agnico-Eagle Mines ( AEM), but said there's also a case to be made for silver as well. Silver is currently trading at the largest discount to gold in the last 13 years, but Cramer said he expects that trend to end soon. At current levels, one ounce of gold would buy 72 ounces of silver, when historically it should buy only 52 ounces. Like gold, Cramer said there are many ways to play silver such as the metal itself, coins, stocks and the iShares Silver Trust ( SLV).
A Silver LiningInvestors looking for a silver lining in their portfolios should look at, well, silver, said Cramer. He said in order to Obama-proof their portfolios, investors should have 20% of their portfolios in precious metals.
No matter how investors decide to take advantage of the oversold condition of silver, Cramer cautioned that both silver and gold are still trending lower, so he'd buy in stages as it declines. "Never chase, just bid," he said.
Battle of the DiscountersIn this "Off the Charts" segment, Cramer pitted the charts of discounters Big Lots ( BIG) and Family Dollar ( FDO) against one another to see which trade down play is the one to own in our slowing economy. According to Cramer, there can be only one winner in this space and he knows which one it is. In looking at the charts, Big Lots appears to be the winner, he said, adding the stock's most recent low is part of a bottoming process indicating strength. Cramer said with the 50-day moving average catching up to the share price, there appears to be more aggressive buying and less selling on the dips. Family Dollar's chart, on the other hand, shows a triangle pattern, with every recent attempt to break out being met with increased selling pressure. This pattern, said Cramer, indicates supply is too plentiful and the stock will likely languish before falling back to lower levels. On the basis of fundamentals, Cramer said he'd be a seller of Big Lots, and a buyer of Family Dollar. Big Lots, he explained, has a close-out business model, and with just about every retailer now closing out inventory to stay alive, he doesn't see how Big Lots' model makes sense any longer.
Family Dollar however, is posting solid growth and making operational improvements to perform even better. Cramer said Family Dollar is a clear winner in his book.