Here are Jim Cramer's top thoughts on some of the biggest stories of the week.
Jim Cramer: Here's Why I Ranted at the Fed 10 Years Ago
Yep, 10 years ago Thursday, when I came out on the set for my regular Stop Trading segment, I was incensed and, by TV terms, I "lost it," screaming that the Fed seemed clueless to what was really happening in the country, that people would soon lose their jobs by the thousands, and their homes by the millions.
Look, if it hasn't dawned on you now, I am a passionate guy, and my passion got the better of me that day, because I had so many friends "in the business" and they were desperate to try to stop the Armageddon that was happening.
They needed help from the Fed in the form of immediate rate relief and loans in order to stay afloat, because the mortgage default data they were seeing was so different from what the Fed was saying. The data was terrible. The Fed? Sanguine, worried about inflation, not the Great Depression-like deflation that was about to hit home.
It was very hard to reconcile.
But, looking back 10 years after I screamed vicious things about respected Fed officials like then chairman Ben Bernanke and Bill Poole -- a very nice man who happened to be the head of the St. Louis Fed -- it's coming clear to me. These men and women didn't have any real-world contacts with people in the trenches on Wall Street as I did. They were like World War I armchair generals 100 years ago, who sat back in French chateaus, "Paths of Glory"-like, sending hundreds of soldiers to their deaths, clueless to what was happening in no man's land just a few miles away.
They didn't know the battlefield.
I, on the other hand, simply by dint of friendship with those who had worked their way up the ranks, knew plenty of hard-boiled, ice-water veined execs -- the "my people" in the rant. And my people were scared of what was happening in the mortgage market, an emotion I wasn't used to hearing from them. They were scared for their jobs, their homes. Yep, the contagion had reached the highest levels, yet the Fed was clueless. "My people" were right.
The Fed was wrong.
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The afternoon of the rant I was on a conference call with a major bank, and they had seen the identical pattern. And then, right before I walked on set, a top dog at a major subprime house called to plead with me: say something on air about how bad things really are; get them to cut rates and cut rates quickly, open the discount window to firms in trouble like his. I said I'd try, but I doubt they would take me seriously.
And that's what got me ranting. Of course, it turned out the Fed wasn't listening at all. They were laughing at me, as the transcripts of the Fed meeting held a couple of days later eventually showed. They were worried about inflation -- they should have been worried about deflation that comes from defaults. They couldn't see or feel the palpable desperation out there as I could.
Looking back, I still can't believe how they could be so wrong; it seemed so obvious. But it wasn't obvious if you were in the chateau, the ivory Fed tower, so to speak, knowing none of the people I knew.
The good news, the Fed seems to have a better grip on things these days. Many times since then there have been people urging the Fed to be tough and tighten hard, but Bernanke and then Janet Yellen had learned their lesson. We'd be back in a recession if they had.
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The bad news? I am still seeing loans being made that they should intervene on, this time by reckless lenders in the subprime auto industry, offering nothing down against vehicles that are rapidly becoming obsolete because of technology and are losing value just like houses back in 2007. It's not as bad yet, but it will be.
I've calmed since then. Ranting didn't get the job done. I failed. But a decade later, I can look myself in the mirror knowing that, unlike so many others, at least I tried.Action Alerts PLUS, which Cramer co-manages as a charitable trust, has no positions in the stocks mentioned.
Jim Cramer: These 10 Stocks Are Survivors
It played out as we said. We shook out the weak hands on Day One of the selloff, people gravitated to safer stocks on day two while other stocks still got hammered, and then yesterday, day three, we had the final regurgitation of the hottest stocks and today we get a calm and quiet rally.
Of course, during the decline the bears came out of the woodwork to explain why they were so right to hate the market and you are a loser if you own stocks. We had the requisite old, graybeard hedge fund managers trash the market with their monthly letters. We had stentorian voices calling for caution and we had jeremiads all over the web about FANG.
That's how it always works.
Here's my advice. You again have been put through the mill, which always causes so many people to bail from good stocks, and I have two pieces of advice.
First, if the past three days made you feel like you have just been through an industrial-strength Whirlpool washing machine, now that we have rallied, you should start selling tomorrow. Raise cash. You are doing it into strength and you aren't panicking. Congratulations for getting through the rip, but next time, whether it be for a failed vote to raise the debt ceiling or a defeat of tax reform or a North Korean heart-stopper, you have some cash and are not dreading the selloff, but you are ready for it.
As I said in my recent show about suitability, you may not be made for equities if you wanted to panic and had to strap yourself to the mast to avoid plunging into the abyss when you see people -- not held accountable, mind you -- who said this selloff would be really consequential, the real deal. Then they come on or write a week later as if they said nothing wrong.
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So, you are free to sell. No one ever got hurt taking a profit.
My second point: If you think you missed the three-day sale, I have some ideas for you. I have 10 stocks that got hammered or should have been up much more but weren't because of the turmoil we just went through. These are battle-tested in that they just reported. Can't beat that.
I am doing them in alphabetical order.
- Constellation Brands (STZ - Get Report) . These guys reported a monster quarter, by far the best of the beverage companies, but the numbers were overshadowed by a whole slew of stories about a more cutthroat beer market. In the meantime, suddenly everyone likes Boston Beer (SAM - Get Report) because of its huge upside surprise. Give me a break. Modelo, Corona and Pacifico are killing it.
- FedEx (FDX - Get Report) . What the heck? You got a darned good quarter and this stock is down from $218 to $206? That's insane. Sure, people don't like the chart. Yes, the stock had run. But these guys are the kings of e-commerce. There was a hacking story that got a lot of people confused at the same time they reported. A great opportunity.
- You want insanity? Intel (INTC - Get Report) reported a terrific quarter, raised numbers, closing on the MobilEye (MBLY) deal early, and it's going to become a lot more like the winner stocks in the sector. No, I am not going to rename my dog Intel after deeming him Nvidia. However, the risk/reward here's pretty darned sweet, and the price-to-earnings multiple should be higher given the Internet of Things -- not personal computers -- orientation even as it is simply incredible how much money they are still making on a market that declines very fast.
- 3M (MMM - Get Report) simply wasn't as bad as the stock says. In fact, this company had terrific organic growth and will continue to do so and you are being given a gift here to buy the stock. I will go a step further: CEO Inge Thulin delivered another really solid quarter, but the stock had run as if it would be a blowout. That's not the 3M way. This stock remains a core portfolio holding.
- How about Oracle (ORCL - Get Report) ? That was a monster quarter, the best in years. The enterprise resources planning cloud business is on fire and the Safra Catz/Mark Hurd/Larry Ellison tandem are delivering. Why isn't this stock at $55 and not $50? Beats the heck out of me.
- Stanley Black & Decker (SWK - Get Report) reported a dynamite quarter but it reported in the grips of one of those Amazonian Reigns of Terror when anything retail was dead meat. I believe SWK's numbers allow you to come right back to it down here, at $139, down from $148.
- No one cared about the very boring Texas Instruments (TXN - Get Report) call, but this is the Internet of Things auto parts semiconductor company, and even though auto sales are weak, these guys didn't see it. There is absolutely no hair on this company and it generates cash, uses what it needs to stay on top and then returns it in the form of aggressive buybacks and dividends. This company used to be boom-bust. Now it is just boom.
- I know that both Verizon (VZ - Get Report) and AT&T (T - Get Report) gave you good numbers. So did Sprint (S - Get Report) . But the best quarter came from the T-Mobile (TMUS - Get Report) , the un-carrier, and I think it's been forgotten already. Plus, we have to remember that every phone company and cable company seems in play. This stock's no different.
- How in heck is the stock of Visa (V - Get Report) still hanging out where it reported when it delivered a fantastic set of numbers and is so clearly on its game doing terrific things? Sure, I know the stock ran, but CEO Al Kelly is taking this company that was whipped into shape by Charlie Scharf to another level. He's client-centric, tireless and an all-around ambassador for the empire that is Visa. Loads of cash, too. They've bought back 500 million shares in the last five years. I like that pace!
- Finally, here's one that has run but I don't care because I love income: Verizon. This company stopped hemorrhaging customers, and while it needs to spend more to be able to handle all the new cellphone users it signed up, I think you could have growth and yield. The stock is still down 8% and interest rates don't look like they are going up big any time soon.
Yes, the Dow Jones is setting records. Yes, we have to acknowledge that the market's been sizzling. However, I give you these 10 because they have been hammered or haven't been rewarded with higher prices as they should have.
Usual rules: First buy may not be your last buy. But opportunity is still knocking with these stocks even as so many others are right back to where they started after the churn down that was supposed to shake you out, but let's hope you didn't do what people seemed to want to instill -- a level of panic that just keeps you from making good money every single time.
Action Alerts PLUS, which Cramer co-manages as a charitable trust, has no positions in the stocks mentioned.
Originally published Aug. 1 at 2:56 p.m. EST.
Jim Cramer fills his blog on RealMoney every day with his up-to-the-minute reactions to what's happening in the market and his legendary ahead-of-the-crowd ideas. This week he blogged on:
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