Jim Cramer's 'Mad Money' Recap: A Pivotal Year for Markets

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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.

Lessons Learned

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

For the final installment of his "Stocking Stuffers" series, Cramer focused on two more stocks in his charitable trust, Action Alerts PLUS, Johnson & Johnson (JNJ) and TJX Companies (TJX).

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.

Lightning Round

In the Lightning Round, Cramer was bullish on Ventas (VTR), Rite Aid (RAD) and AMC Entertaiment (AMC).

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.

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 JNJ, NKE, RHT and TJX.

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."

None of the information contained in "Mad Money" constitutes a recommendation by Mr. Cramer, TheStreet.com or CNBC that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. You must make your own independent decisions regarding any security, portfolio of securities, transaction, or investment strategy mentioned on the program. Mr. Cramer's past results are not necessarily indicative of future performance. Neither Mr. Cramer, nor TheStreet.com, nor CNBC guarantees any specific outcome or profit, and you should be aware of the real risk of loss in following any strategy or investments discussed on the program. The strategy or investments discussed may fluctuate in price or value and you may get back less than you invested. Before acting on any information contained in the program, you should consider whether it is suitable for your particular circumstances and strongly consider seeking advice from your own financial or investment adviser.

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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