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NEW YORK (TheStreet) -- For the first time this millennium, we have a true bull market, Jim Cramer declared on "Mad Money" Friday. After completing the best week in over five months, Cramer said there's a lot more brewing in the markets than just a Santa Claus rally.
Cramer called 2013 a pivotal year for the markets, one where a switch was made from just making up lost ground to one that's truly making forward progress. There are still many cynics, and many investors may not even remember the last true bull markets in the 1980s and 1990s. But the signs are all around us.
Every bull market needs five things:
1. Issues Resolved Positively -- Despite all the worry, the big issues from Washington to Cyprus all seem to be working out OK after all.
2. Bountiful Profits -- Profits are the cornerstone of every bull market, and companies are making money hand over fist.
3. Companies Creating Value -- Mergers, acquisitions, spinoffs, breakups, dividends: Companies are doing all they can to unlock value.
4. Improving Job Market -- More economic activity leads to more spending, which leads to more jobs.
5. No Inflation -- Skeptics may be worried about inflation, but so far there's none to be found.
Not since 2000 have the markets had all five of these signs pulling in its favor, Cramer concluded -- not until now.
There are two lessons every investor must learn, Cramer told viewers: Don't buy too soon and don't wait too long to sell. Waiting too long to sell is perhaps the worse of the two, he said, explaining the two "false floors" that investors often think will save their falling stocks.
Big buybacks often lull investors into a false sense of security, said Cramer, but most buybacks won't protect a stock from a big market downturn nor falling earnings. The problem with many buyback programs is that any shares purchased are offset by the issuing of more options for executives. Rarely does a company make well-informed purchases, Cramer continued, with many companies overpaying for their own shares at the highs, leaving little to no money to spend at the lows.
The second false floor is the notion of "too cheap to sell." Cramer said even he has fallen victim to this flawed thinking. In reality, cheap stocks can always get cheaper and stocks that find themselves at new lows typically deserve to be there. If investors find themselves thinking that a stock is "too cheap to sell now," that should immediately be a red flag in their minds.
Avoid these pitfalls and your portfolio will thank you, Cramer concluded.
Stocking Stuffers Finale
Cramer said Johnson & Johnson is actually three companies in one -- pharmaceuticals, consumer products and diagnostics. Like many companies with multiple divisions, breaking up J&J would unlock a ton of value. But even as a combined entity, J&J is still up 31% for the year.
Johnson & Johnson is a master as cost containment and also has a ton of new products in the pipeline. Trading at just 158 times earnings, Cramer said he'd be a buying under $90 a share.
TJX is the parent of TJ Maxx, Marshall's and Home Goods, three retail chains with 2,600 stores in the U.S. with more in Canada and Europe. Cramer said the growth opportunities at TJX make it very appealing and Home Goods in particular is excelling with high single-digit same-store sales growth.
TJX also has other things investors should crave: consistent earnings, a stock buyback and a dividend raised 15 years in a row. Valuation remains the only concern for this stock, which sits just off its 52-week high. At 19 times earnings, Cramer said he'd use any market weakness to buy, buy, buy.
Cramer was bearish on Petrobras (PBR).
Executive Decision: Marty Mucci
For his "Executive Decision" segment, Cramer spoke with Marty Mucci, president and CEO of Paychex (PAYX), the payroll processor that delivered a penny-a-share earnings beat on a 7.2% rise in revenue on Wednesday. Shares of Paychex are up 13% since Cramer last checked in at the beginning of October.
Mucci said he's happy with the progress the economy is making, with growth accelerating, consumer confidence coming back, lending opening up and housing recovering. He said Paychex has been able to get in front of a lot of new clients and all of his company's offerings, including 401(k) plans and human resources outsourcing, are showing improvement.
Paychex also benefits as interest rates rise, something Mucci said is going "nowhere but up" for the foreseeable future.
When asked about the company's cloud offerings, Mucci said many of Paychex' clients are already in the cloud, using their software as a service, or SaaS, offerings. The key to Paychex, he said, is innovative technology combined with great service.
Cramer said the run in Paychex is only getting started as this company continues to drive value for investors.
No Huddle Offense
In his "No Huddle Offense" segment, Cramer reminded viewers that the stock market is all about managing expectations. That's how a stock like Nike (NKE), an Action Alerts PLUS holding, could deliver a terrific quarter but still see its shares slide. Investors were looking for the company to shoot the lights out, but that didn't happen.
Meanwhile, Red Hat (RHT), another Action Alerts PLUS name, was able to surprise analysts and saw its shares rise. Then there was Tibco Software (TIBX), which saw its shares fall 10% as investors looked for consistency, but didn't quite get it.
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-- Written by Scott Rutt in Washington, D.C.
To email Scott about this article, click here: Scott Rutt