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NEW YORK ( TheStreet) -- A new school of thought has entered the stock market, Jim Cramer told "Mad Money" viewers Monday. This new contingent feels that going over the fiscal cliff wouldn't be all that bad. The only problem is, that line of thinking is dead wrong. Cramer said these newfound market optimists believe job losses won't come for months after going over the cliff, giving those in Washington more time to hammer out a deal, one that will most likely be retroactive to Jan 1. The optimists also think a rise in capital gains and dividend taxes won't affect that many investors because only 14% now have taxable investment accounts, down from 24% in years past. But Cramer disagreed with these rosy outlooks, saying that without a budget deal by Jan. 1, company executives will have no choice but to lower earnings estimates starting on Jan. 2, a move that will send the stock market sharply lower. With the economy surely headed into a recession, these same executives will be under immense pressure to start laying off staff soon as opposed to later. But there are other reasons to worry, said Cramer, including the alternative minimum tax, which would snare up to 30 million unknowing Americans when they least expect it. Finally, he said a deal is seemingly less likely with both Republicans and Democrats feeling they have the upper hand. There is no room for compromise when you believe the American voters are behind you, he said. While the irony of the situation is that the "fiscal cliff"resulting from federal law was designed to be so horrible that it would force lawmakers to compromise, it now appears Congress may do just the opposite. That's why Cramer said investors need to stay flexible and be prepared for "deal or no deal," which may happen at any time.
Do Your HomeworkInvestors don't need to constantly search for new ideas, Cramer told viewers, especially if their old ideas are still working. That's why Cramer continues to recommend doing homework, circling back to the stocks already in your portfolios to see if they're still worth owning.
That's why Cramer took a second look at his "If you can't beat 'em, join 'em," series of stocks he debuted in October. Back then, Cramer said these market winners would be mutual fund favorites through the end of the year. Since then, the market plunged, then recovered and is currently down 3% from its October levels. Amazon.com ( AMZN) was Cramer's first pick in October and he said the company still has the same terrific story. The move to online retail continues and Amazon is assured to be at the front of the pack. Google ( GOOG) was next on the list. Cramer said this company was crushed after it reported in October as it struggles to migrate from desktop to mobile advertising. He said he likes Google a little less than he did before. As for Visa ( V) and MasterCard ( MA), both stocks have had slight gains since October. Cramer said these companies are plays on the worldwide switch from paying with paper to plastic and he still likes them both. Finally, there's Sherwin-Williams ( SHW), a stock that sold off after a good quarter in October but also one that rebounded after Hurricane Sandy provided a huge number of homes and businesses that will need repainting.
More Stocks for ReviewContinuing with his growth stock review, Cramer looked at five more stocks he recommended in October. Cramer said Ulta Salon ( ULTA) took a big hit when its CFO resigned in October, but since then has delivered an 8.8% pop in same store sales. The company is still growing like a weed and Cramer said he's still a fan. Then there's Tractor Supply ( TSCO), a stock that fell from $98 to $89 a share. Cramer said he blew this one as expectations had gotten too high and even a beat-and-raise quarter was not enough to take the stock higher. He said it makes a lot more sense to own Tractor Supply at these lower levels, but Home Depot ( HD) is probably a better bet. In the biotech space, Cramer said he still likes Gilead Sciences ( GILD), which popped 8.8% since his recommendation, and Alexion Pharmaceuticals ( ALXN), which has fallen 14%. He said the stories at both companies are still intact and he's sticking with both, even with Alexion down big.
Finally, there's Diageo ( DEO), another Cramer favorite. Shares have risen 14% since October and Cramer said this company continues to deliver for shareholders.