Jim Cramer's 'Mad Money' Recap: Figuring Out the Fed

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NEW YORK ( TheStreet) -- "Never play poker with a man named Ben," Jim Cramer quipped to "Mad Money" viewers Wednesday after Federal Reserve Chairman Ben Benanke surprised Wall Street by announcing no tapering to the Fed's bond-buying activities.

How could so many smart investors on Wall Street get it wrong? Cramer said it's because the Fed chief completely changed direction since his last comments. The facts changed since Bernanke last spoke which meant Ben needed to change his mind.

Cramer said Bernanke has proven to be highly adaptable in an ever-changing market, and over the last few weeks many things have changed. First, the housing market has slowed significantly as interest rates spiked. Second, those rates spiked a lot higher than anyone expected they would. Then there are the many companies, especially those in retail, that have announced that things are getting worse, not better, going into the second half of the year. Finally, there's Washington, which Bernanke admitted today, can only have a negative impact on the economy.

In essence, Cramer said the markets tapered themselves, which meant the Fed had no choice but to stay its current course. That makes for a binary market, with domestic companies meeting estimates that are too high, while those companies that export to the rest of the world having estimates that will be far too low.

Just as Bernanke adapted to changing conditions, so, too, must investors, Cramer concluded,. The markets are shaping up to have a very interesting fourth quarter.

Executive Decision: Don Wood

In the "Executive Decision" segment, Cramer spoke with Don Wood, president and CEO of Federal Realty Trust ( FRT), the shopping center real estate investment trust that's seen its shares rise just1% for 2013 as investors fled high-yielding stocks and returned to fixed-income investments. Shares of Federal Realty currently yield 3%.

Wood said that since the lows of 2008, not only has the economy been getting better but so has Federal Realty. He said his company has been replacing bankrupt tenants with newer, more relevant ones paying far more for their leases, which is evident by a 22% increase in overall lease rates and a continued uptick in occupancy rates.

Additionally, Wood was very excited by his company's core portfolio, which has plenty of development opportunities available on its existing properties. Federal Realty is spending $500 million on new mixed-use developments that make sense for today's shoppers. Afterwards, Wood said, Federal Realty will spend an additional $500 million on a second round of development that's just as exciting.

In addition to the work Federal Realty is doing, Wood also gave credit to retailers, which have only been getting smarter since 2008 by cutting costs, increasing margins and reducing the size of their footprints to match the new world we live in.

Cramer said investors looking for a REIT should look no further than Federal Realty, which remains one of the best in show.

Yet More Anointed Stocks

For the next installment of his "Anointed Stocks" series of red-hot stocks that will continue their run into the end of the year, Cramer turned the spotlight onto the financials, mainly the top five best performing stocks of E*Trade Financial ( ETFC), Lincoln National ( LNC), Genworth Financial ( GNW), Assurant ( AIZ) and Charles Schwab ( SCHW).

Cramer said that both E*Trade and Schwab are benefiting from a pickup in trading volumes and have the added benefit of doing even better as short-term interest rates rise. In fact, a 1% increase in rates equates to a 50-cents-a-share earnings bump of Schwab, and those increases will be coming sooner or later, said Cramer.

Turning to the top three insurers, Cramer said that Lincoln National derives 40% of its earnings from investment spreads, and will also prosper as interest rates normalize. Meanwhile, now is the right time to buy Genworth, said Cramer, as this mortgage insurer can only rise from its current lowered levels. And Assurant remains a forward-thinking insurer with a solid track record of delivering on its promises.

Cramer reiterated that as the year draws to a close, fund managers will be piling into all of these names so they can show their shareholders that they too own the best performing names. He said that any of these five stocks will make great investments going into the end of the year.

Lightning Round

In the Lightning Round, Cramer was bullish on Himax Technologies ( HIMX), Valeant Pharmaceuticals ( VRX), Applied Materials ( AMAT), Hubbell ( HUB.B), MGM Resorts ( MGM), Las Vegas Sands ( LVS), Wynn Resorts ( WYNN), Dryships ( DRYS), Diana Shipping ( DSX) and Verizon ( VZ).

Cramer was bearish on Melco PBL Entertainment ( MPEL) and NQ Mobile ( NQ).

Am I Diversified?

In the "Am I Diversified?" segment, Cramer spoke with callers and responded to tweets sent via Twitter to @JimCramer to see if investors' portfolios have what it takes for today's markets.

The first portfolio included: McDonald's ( MCD), Apple ( AAPL), Starbucks ( SBUX), Walt Disney ( DIS) and Citigroup ( C).

Cramer said he'd have to sell McDonald's and add a drug stock like Bristol-Myers Squibb ( BMY) in order to call this portfolio diversified.

The second portfolio's top holdings included: Wal-Mart ( WMT), Bank of America ( BAC), Exxon Mobil ( XOM), Johnson & Johnson ( JNJ) and Intel ( INTC).

Cramer called this mix of stocks "perfection."

The third portfolio had: Seadrill ( SDRL), Michael Kors ( KORS), Qualcomm ( QCOM), HSBC ( HBC) and Starbucks as its top five stocks.

Cramer blessed this portfolio as properly diversified.

The fourth portfolio's top stocks were: Lockheed Martin ( LMT), Microsoft ( MSFT),Intel, Cisco ( CSCO) and Wells Fargo ( WFC).

Cramer identified three of a kind with Cisco, Microsoft and Intel and suggested adding a drug stock and a healthcare name to replace Intel and Microsoft.

No Huddle Offense

In his "No Huddle Offense" segment, Cramer weighed in on whether two new iPhones are enough to move the needle for Apple, a stock he owns for his charitable trust, Action Alerts PLUS.

Cramer said that for most companies, new products do little to move share prices. But in the case of Apple, expectations may now have finally gotten low enough where a surprise jump in sales may make a difference.

Cramer also clarified that while he likes the company and its products, he's been critical of Apple of late because expectations got ahead of anything the company could possibly deliver. That's the game you play as a publicly traded company, especially in a market that only cares about growth.

But with the arrival of the new iPhones, Cramer said he's looking for a strong finish to what so far has been an abysmal year for Apple's stock.

To watch replays of Cramer's video segments, visit the Mad Money page on CNBC.

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

To email Scott about this article, click here: Scott Rutt

Follow Scott on Twitter @ScottRutt or get updates on Facebook, ScottRuttDC

At the time of publication, Cramer's Action Alerts PLUS had a position in AAPL, AMAT, CSCO, JNJ and WFC.

Jim Cramer, host of the CNBC television program "Mad Money," is a Markets Commentator for TheStreet.com, Inc., and CNBC, and a director and co-founder of TheStreet.com. All opinions expressed by Mr. Cramer on "Mad Money" are his own and do not reflect the opinions of TheStreet.com 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 TheStreet.com, 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 TheStreet.com 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 TheStreet.com. 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 TheStreet.com, 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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