Cramer's 'Mad Money' Recap: 2008 Not in the Cards (Final)

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NEW YORK ( TheStreet) -- "No matter how hard I try, I can't say it's 2008," Jim Cramer admitted to his "Mad Money" TV show viewers on Tuesday.

He said while pundit after pundit keeps comparing today's markets to that of 2008, the facts simply don't support it.

Cramer said even on a roller-coaster day like today, when the markets roared up 360 points in just the last hour of trading, today's markets just don't look anything like 2008. He cited a laundry list of examples of things that happened in 2008, that aren't going to happen now.

For example, in 2008, many large U.S. financial institutions got taken out, but today they're flush with cash. Wells Fargo ( WFC) and Morgan Stanley ( MS) traded to just $7 a share. Not likely to happen now, said Cramer.

If it were 2008, the government had to bail out General Motors ( GM) again, along with AIG ( AIG), but these companies are also doing well.

In 2008, there were massive order cancellations at the likes of Caterpillar ( CAT) and Cummins ( CMI), a stock which Cramer owns for his charitable trust, Action Alerts PLUS . Those cancellations aren't evident today.

In just about every sector, from retail, to oils to the financials, stocks would have to be dramatically lower than where they are now. In fact, Cramer said that if it were indeed 2008, the Dow would have to fall another 40% from here.

Cramer said there are so many problems with the 2008 analogy that it simply doesn't make any sense. Companies are better off, he said, and there is a lot of cash out there. He said the markets can surely go lower from here, but not in a fashion that it makes sense to sell everything and buy it back in at a lower level.

Momentum Stocks Lose Luster

In the "Off The Charts" segment, Cramer went head to head with colleague John Roque over the charts of the high-quality growth stocks, the "pretty girl" stocks that the market has been in love with for years.

Stocks like Baidu ( BIDU), Chipotle Mexican Grill ( CMG), Deckers Outdoor ( DECK), Lululemon Athletica ( LULU), Netflix ( NFLX) and Green Mountain Coffee Roasters ( GMCR) all made the list.

According to Roque, an index of the pretty girl stocks shows a 650% return from 2008 through recently. However the index has formed the dreaded head-and-shoulders pattern as of late, a severely negative indicator.

Roque also noted that using a chart of the pretty girls vs. the S&P 500, it's clear that these high-growth names had been outperforming the market handedly, until recently breaking down to underperforming levels. Roque expects a 15% decline in these names from Friday's levels.

Cramer agreed with Roque's analysis that these momentum stocks are the last thing investors want in a turbulent market. He said stocks like Netflix, which is already down 60% from its highs, likely doesn't have much further to fall, but others in the group may still be in for a ride.

Cramer once again recommended high-yielding dividend stocks, ones that offer protection in difficult markets. It's time for the pretty girls to head lower, said Cramer. "It's time to take profits and trim our positions," Cramer concluded.

Freeport 2011 vs. Freeport 2008

Need still another reason why a 2008 scenario is impossible? Cramer said all you need to do is look at Freeport-McMoRan ( FCX), another Action Alerts PLUS name and one that Cramer recommends buying under $30 a share.

Cramer said things are very different at Freeport now than they were in 2008, when shares traded in the single digits. He said that Freeport is not only a different company, it's a much better company. And since the world uses Freeport as a proxy for copper and the health of the global economy, Cramer compared the Freeport of today vs. the Freeport of 2008.

In 2008, Freeport had just $872 million in cash with a whopping $7.5 billion in debt. Compare that to today, when the company sports $4.3 billion in cash and just $3.5 billion in debt. Cramer noted that operating cash flow was just $3.5 billion in 2008, but is $8 billion today. Also, the price of copper fell to just $1.25 a pound in 2008, but remains around $3 a pound today.

Still not convinced? Cramer said that the Freeport of today is in far better shape to handle falling copper prices and with the Chinese likely to resume purchasing large amounts of copper soon, now would not be the time to sell. Cramer said this is one stock that has clearly overreacted to the downside, which is why he's a buyer.

On a Roll

In the "Executive Decision" segment, Cramer once again sat down with Jim Whitehurst, president and CEO of Red Hat ( RHT), a company that delivered a three-cent-a-share earnings beat on Sept. 21 with accelerating revenue growth of 28%.

Whitehurst said that while many people are concerned with the government and financial sectors, as well as all things Europe, these are three areas where Red Hat is seeing growth. He reminded viewers that Red Hat has a significantly lower price point than all its peers, which is why Red Hat accounts for 20% of all server operating systems but only 3% of all revenues.

Whitehurst also commented on his company's recent acquisition of Gluster, a data storage company. He said that Gluster's technology helps turn hundreds and even thousands of separate disk drives into one virtual drive that can be accessed by cloud computing solutions, another hot area at the moment.

While some have criticized the deal as dilutive to margins, Whitehurst explained that Red Hat had to write down all current revenues from Gluster and is starting from scratch.

Finally, when asked about how Red Hat was able to close 25 out of 25 major deals this quarter and see a 150% increase in revenues from those deals, Whitehurst said that once clients start using Red Hat's subscription model, then often expand the amount of services they use. He said no prices were increased to achieve those results.

Cramer said that Red Hat remains one of his favorite tech stories.

Lightning Round

Cramer was bullish on Kinder Morgan Energy Partners ( KMP), Chesapeake Energy ( CHK), Edwards Lifesciences ( EW), Skyworks Solutions ( SWKS), International Business Machines ( IBM) and EMC ( EMC).

He was bearish on Sprint Nextel ( S), ( CRM), Toll Brothers ( TOL), Cree ( CREE) and Manulife Financial ( MFC).

Two Types of Selling

In his "No Huddle Offense" segment, Cramer said there are two types of selling in this market. The first is selling by short selling, while the second is hedge fund selling.

Cramer said that in the case of Caterpiller ( CAT), the stock is in no man's land, where short sellers take the stock lower day by day, despite the company's assertions that earnings are fine. He said with only a 2.5% dividend, Caterpillar still isn't seeing any real dividend protection.

The other type of selling is the kind seen in the financials, the kind where hedge funds are liquidating positions, sending this group lower no matter what. Cramer said this machine-gun fire is too hard to game, which is why he continues to steer clear of the entire banking sector.

--Written by Scott Rutt in Washington, D.C.

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At the time of publication, Cramer was long Cummins, Freeport McMoRan.

Jim Cramer, host of the CNBC television program "Mad Money," is a Markets Commentator for, Inc., and CNBC, and a director and co-founder of All opinions expressed by Mr. Cramer on "Mad Money" are his own and do not reflect the opinions of or its affiliates, or CNBC, NBC UNIVERSAL or their parent company or affiliates. Mr. Cramer's opinions are based upon information he considers to be reliable, but neither, nor CNBC, nor either of their affiliates and/or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. Mr. Cramer's statements are based on his opinions at the time statements are made, and are subject to change without notice. No part of Mr. Cramer's compensation from CNBC or is related to the specific opinions expressed by him on "Mad Money."

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Some of the stocks mentioned by Mr. Cramer on "Mad Money" are held in Mr. Cramer's Action Alerts PLUS Portfolio. When that is the case, appropriate disclosure is made on the program and in the "Mad Money" recap available on The Action Alerts PLUS Portfolio contains all of Mr. Cramer's personal investments in publicly-traded equity securities only, and does not include any mutual fund holdings or other institutionally managed assets, private equity investments, or his holdings in, Inc. Since March 2005, the Action Alerts PLUS Portfolio has been held by a Trust, the realized profits from which have been pledged to charity. Mr. Cramer retains full investment discretion with respect to all securities contained in the Trust. Mr. Cramer is subject to certain trading restrictions, and must hold all securities in the Action Alerts PLUS Portfolio for at least one month, and is not permitted to buy or sell any security he has spoken about on television or on his radio program for five days following the broadcast.

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