Prepare to Sell Monday - Cramer's Mad Money (9/19/08)

by: SA Editor Joan Wickham September 22, 2008 | about stocks: AIG / APA / CLNE / CLX / FNM / FRE / GIS / GS / K / KFT / PNRA / RAH / SVU / TGT / THS / USB / WFC / ZION    

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Stocks discussed in the in-depth session of Jim Cramer’s Mad Money TV program, Friday, September 19.

After the Rally

"The important take-away from today is not Treasury Secretary Henry Paulson or Securities and Exchange Commission Chairman Christopher Cox" but that rallies are for selling, Jim Cramer told viewers. Cramer said the astonishing 779-point rally over the past two days can only mean one thing: sell. He advised viewers to spend this weekend evaluating their portfolios so that they are ready to sell their bad stocks on Monday and take profits in the winners. Cramer returned to a selling strategy he's used many times. He said to rank every stock in a portfolio from one to four.

  1. The stocks you'd buy right now.
  2. Those you'd buy on a pull-back.
  3. Those you'd sell into strength.
  4. The losers you need to sell right away.

After ranking all the stocks in your portfolio, Cramer advised selling 20% of your portfolio on Monday. He said that there should not be many stocks still ranked "one," after the huge rally the past two days.

Where to Take Profits - Wells Fargo (WFC), US Bancorp (USB), Zion's Bancorp (ZION), Target (TGT), Clorox (CLX), Apache (APA)

Cramer recommended taking profits in stocks like Wells Fargo, which he recommended on July 21 at $27 a share, but is now trading at a 52-week high of $39.50. He also recommended taking profits in US Bancorp and Zion's Bancorp. Cramer told viewers to consider selling stocks in other sectors such as natural gas, technology and retail that have been up huge since Wednesday. For example, Target is a good candidate to trim, he said. As for things to buy, Cramer said he likes Clorox should report a good quarter and be a good defensive play. Cramer recommended dumping a natural gas stock as well. Apache was up Friday despite natural gas being down. Tech stocks that seem to be struggling this quarter should probably get cut, too.

Pulling Back From the Abyss - Freddie Mac (FRE), Fannie Mae (FNM) and American International Group (AIG)

"Our financial system is built on confidence," Cramer told viewers, as he tried to explain in plain English what the federal government's recent actions really mean to the markets. Cramer said had the government not taken the actions it did, consumers next week may have found their bank's local ATM machines out of cash. He credited Paulson for single handedly preventing a run on our banking system. Until this week's actions, Cramer said the government's takeover of Freddie Mac, Fannie Mae and American International Group had done nothing to restore confidence in the markets and had managed to spend $900 billion of taxpayer's money. However, he said the government is now trying to do everything, from buyouts to trusts to regulations, to restore stability. Cramer said it took a decade to recover from the Great Depression but Paulson's actions will usher a much quicker recovery, despite the size of the current market collapse. The only downside, he said, will likely be just a few hedge fund failures. As for the pricetag of the bailout, Cramer said the government should not suffer as much as some believe. He said many of the mortgages now owned by the government hold value, and it's possible to still reward responsible borrowers while punishing the reckless. Cramer called this "coherent plan" and the best thing the U.S. government has done for the American taxpayers in a long time.

Play with Food - Ralcorp Holdings (RAH), General Mills (GIS), Treehouse Brands (THS), Kellogg (K), Supervalu (SVU), Kraft (KFT)

Despite the market's huge rally, Cramer said there are still some stocks worth buying. On that note, he recommended private label food maker Ralcorp Holdings. Cramer said the discounter, which competes against General Mills, should do well for consumers who are trading down to cheaper products during harder economic times. Ralcorp sells its cereals at about a 20% discount to Kellogg and a 36% discount to General Mills. He said Ralcorp reminded him of Treehouse Brands which he said is up $18 since he recommended it on Aug. 18, 2007 at $24 a share. Forty-nine percent of sales come from private-label food, and lately outlets like Safeway and Supervalu have been trying to increase their generics sales. That means these supermarkets are spending money to advertising and boost Ralcorp’s products. Ralcorp’s also made a move in branded foods. The company bought Post cereals – Honey Bunches of Oats, Grapenuts and Raisin Bran – from Kraft. Now branded products are about 32% of Ralcorp’s sales and the Post buyout took margins to 16% from 11%. Cramer said he liked the mix in this economy, adding that no matter how bad things get there will always be people who won’t buy private label. But he said the real catalyst for the company is the falling costs of commodities, which should flow right to the bottom line of the company. He also sees Ralcorp as a potential acquirer if consolidation in the industry occurs.

Mad Mail - Clean Energy (CLNE), Panera Bread (PNRA), Clean Energy (CLNE), Goldman Sachs (GS)

The wife of investor Boone Pickens called him regarding the large sale of Clean Energy. According to Pickens, it was her stock, not his. She plans to use the money to support an animal-rights initiative on the California ballot in November.
Goldman Sachs is not in the Sell Block although he acknowledges the negative pressure the firm, and the stock, is under. I didn’t sell. Remember, in the piece I said, “I don’t believe the market in this.” But the market’s telling me to sell Goldman. I’m not listening.”

Seeking Alpha publishes a summary of Jim Cramer's stock picks every day including: Mad Money Recap, Lightning Round and Stop Trading!

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Seeking Alpha is not affiliated with Jim Cramer, CNBC or TheStreet.com

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This article has 60 comments:

  •  
    Sep 19 11:08 PM
    Responding to anything that this clown says is stupid, but I will. Basically, he is saying to time markets, guess what, no one can do that, since no one has mastered the art to guess the investor behavior. This time is no different, and the news could be very well received and if you came down with the market, your best bet now is to stick around and not get out or you could lose a 10% gain which could be coming in the next week or so...
    Reply | Link to Comment
  •  
    Sep 19 11:25 PM
    Cramer?? can we still trust this guy?
    let we take look backward what did Cramer say about the Bear on march...

    www.youtube.com/watch?...

    huh.....and I wonder why the CNBC still keep him..
    Reply | Link to Comment
  •  
    Sep 19 11:37 PM
    seeking alpha's coverage of cramer seems to be very biased and misleading. For example, the author Joan Wickham talks about 1 correct prediction (wells fargo), but doesn't talk about all his incorrect predictions ( such as last weeks very wrong predictions about oil stocks).
    Reply | Link to Comment
  •  
    Sep 19 11:39 PM
    I listen to Cramer and read his stuff as one piece of info. He had a video today on TheStreet.com in which he said sell this rally it is "artificial."... Then on "Closing Bell" he said everyone is badmouthing the current rescue plan, everyone is calling it "artificial,"... and we should give it a chance to work. I guess he was talking to himself. I will credit him with this: I was seriously considering taking a position in GE, and I read Cramer saying "buy GE now." I did take that position yesterday. It looks good on paper right now, but it may disappear just as quickly.
    Reply | Link to Comment
  •  
    Sep 20 12:01 AM
    how can you think like a mad man . tell me the government have giving the go ahead. the bailout is not free the government is going to make a lot of money plus interest guy!!! listen buy buy buy let make money with the government the only loser is the people who who own a million shares in a companies who went down down and down. will you listen to a mad man?mr cramer lost . i do not listen to a mad man. penny stock guys buy a company that will not go broke. bank ,fnm aig , fre fitb bac,sti jpm and wb if you want to be rich. so let bu/y our BMW< CTS,cad. MKS <LIN and Jaquar. ford. figure it out the misspell words. i am not going to follow a mad man . i think he has lost a lot of money. he the mads man will never recover
    Reply | Link to Comment
  •  
    Sep 20 12:06 AM
    This guy is like a fart in a whirlwind. If you follow his all of his advice you will lose money trying to time the market.
    Reply | Link to Comment
  •  
    Sep 20 01:16 AM
    He knows a lot, but his is the hedge fund style. Those who can do, and those who blew up give advice columns. The ones who are still in the game, are getting disembowled in this market. The guys frantic, arrogant, and a complete manic depressive. This is a bad call for the average investor.
    Reply | Link to Comment
  •  
    Sep 20 04:46 AM
    Listening to him is like playing a slot-machine in the casino.
    You might win something if you are lucky.
    Reply | Link to Comment
  •  
    Sep 20 06:38 AM
    Cramer = entertainment with some.... I repeat some, valueable lessons in short term investing
    Reply | Link to Comment
  •  
    Sep 20 09:07 AM
    He ain't got no Mother.
    Reply | Link to Comment
  •  
    Sep 20 09:26 AM
    i'm not saying mr. cramer is right or wrong, but i will say this for him. he ALWAYS says to do YOUR due diligence BEFORE you buy ANY stock. if you're losing $ because YOU failed to do this, don't blame someone else. that's what's wrong with our "democratic" society. everyone's always looking to blame someone else. EVERYONE and EVERYTHING fails at some point. i don't think the gov't should continue to get involved in public companies. the USA is headed right down the path to socialism. have we the american public become that blind? do YOUR research folks, or pay someone to do it for you.
    Reply | Link to Comment
  •  
    Sep 20 09:36 AM

    Wall Street and Banks are in a systemic, planned collapse. There may be some manufactured 'sucker blips' to instill false confidence, but there are no fundamentals existing to prevent a total wipeout.

    Though precious metal prices have been manipulated ad nauseum, tangible assets are the only safe-haven.
    Reply | Link to Comment
  •  
    Sep 20 09:58 AM
    Cramer is WRONG about as much as he is right.
    He is entertainment and nothing more. If you did what he did you may well end up out of $$ and out of all your hold positions.
    Reply | Link to Comment
  •  
    Sep 20 09:58 AM
    Go back and look at his record. If you followed his advice over the last year you would be on the street with a tin cup. One of the financial analyist, Friday said we the tax payer just made 15 million?
    Reply | Link to Comment
  •  
    Sep 20 10:05 AM
    Mr. Cramer may be smarter than he appears...but I just can't take seriously anyone who screams, uses rediculous sound effects, and generally acts like an idiot. For me, investing is a very serious business...not entertainment.
    Reply | Link to Comment
  •  
    Sep 20 10:09 AM
    I agree Cramer is a bit manic--aren't the majority of his peers also!!
    I am sick and tired of doing my due dilegence and still not being able to accurately assess what the heck is going on in the markets--We, the average people are being USED as pawns and I thank Cramer for making some noise and pointng out who needs to be held accountable! #1-we need to be accountable for ourselves-If you think the hedge funds, brokers and ceo's are looking out for us peon investors--get a clue! #2 The higher powers that be, in the stock market, financial industry, etc., need to be monitored--with power comes the ability to manipulate these markets--which is exactly what is being done--this is a great opportunity for foreign governments to step when during our crisis and gain control, financially, of the Unites State. Is it so far fetched to believe that not only did 911 occur, but that 7 yrs later, in September, FNM, Shearson Leaman and the financial institutions are in complete dissarray-we even sold record amounts of gold to these foreign countries when our gold prices where at their lowest!!! People do not panic--which is why I believe Cramer is trying to give credit to feds for doing what they can but be very careful!
    Reply | Link to Comment
  •  
    Sep 20 10:11 AM
    Igonre Cramer, he simply is a populist bubble maker. He has a new knee jerk idea everyday.

    However I am bearish on markets - after these market manipulating moves by the govt. - I have lost all confidence in the markets. Will sell out all my remanining positions - long/short - get into gold, CDs, Mmkts.
    Reply | Link to Comment
  •  
    Sep 20 10:14 AM
    I certainly can't see Alpha as being biased after wading through all the news of the week. I kinda liked the coverage on Cramer which is unusual for me because I have always believed Cramer get paid to PUMP & DUMP and causes some good companies to get hurt unscessarily. BMY and WM are just two for example. It took me two days to sort out what the CEO from Morgan Standly said about WM, " I thought I was in a candy store" now I think that was classic. Obviously he saw the depository going on there and was impressed. If I see this wrong somebody please correct me.
    Reply | Link to Comment
  •  
    Sep 20 10:28 AM
    If you take his advice and sell out of this artificial rally, do yourself a favor and buy the one thing that the Govt. does not want you to own - Gold.

    Buy some before the our dollar is so devalued that it won't be worth anything. Buy some before all the other countries in the world start to wonder what the heck is happening here and decide to unload their risk factor and replace it with something that holds value
    When a broke country that just spent over a trillion dollars in commitments over a 2 month period runs printing presses 24/7 to bail themselves out - you know that the mother of all crisis is coming.
    Reply | Link to Comment
  •  
    Sep 20 10:29 AM
    I get tired of the 'booyah' stuff, but Cramer does have some good pointers here and there. I have definitely learned some things from him.

    It would be crazy to follow him blindly and he repeatedly warns viewers not to do that. He doesn't seem to have any problem saying "I was wrong."

    I am starting to suspect that the people that hate him watch him more than his fans do (like Howard Stern).
    Reply | Link to Comment
  •  
    Sep 20 10:30 AM
    Cramer also appeared on NBC nightly news Friday explaining to the viewing public and an aghast Brian Williams how we narrowly avoided "Depression the Sequel". Now he's saying sell sell sell while pumping the likes of THS and RAH. Wasn't THS the company he referred to as an investment bank disguised as a food company? Shouldn't his logic also apply to COTT the world's largest private label company (beverages) that happens to be down almost 90% in the past 12 months.
    Reply | Link to Comment
  •  
    Sep 20 10:36 AM
    Its socialism to do "due diligence " and invest on fundamentals and then have the gov come along a change the rules in the middle of the game.
    Reply | Link to Comment
  •  
    Sep 20 10:38 AM
    -cramer is a broker who sounds exactly like a broker trying to sell his firms new IPO -screaming on the television that you must buy this or that -he probably picks from hats each morning what his stocks will be to buy sell and hold -the guy is clueless with hype and confidence which makes him seem like he knows what he is talking about . Another overpaid telemarketer. he is right on one thing sell monday take profits cut losses .then take that money and sit it in physical gold until this roller coaster plays out .
    Reply | Link to Comment
  •  
    Sep 20 10:49 AM
    Our Government had no choice but to bail out AIG. We were on the verge of a world wide fiasco. All we needed was for foreign investors to dump our bonds and interest rates shoot up. The Fed Reserve did its job How else could we quickly hook up a liquidity system so fast.?
    Cramer is colorful, smart and very perceptive. I usualy agree with him but I think he wrong on his call for Monday to sell. There is great deal of value out there where good fundamentals are in place. Remember think befoe you follow the crowd.
    Reply | Link to Comment
  •  
    Sep 20 11:13 AM
    I've read every one of Jim's tips on investing (not calls on specific companies, just market smarts) and I keep them in the back of my mind, whenever I'm trading. I've never bought any of the companies, which he's recommended, but often, I've agreed with his opinions. Monday? Sell the market? Not a very responsible thing to say, right now... I'll go short on Cramer, this time, if I can do that!
    Reply | Link to Comment
  •  
    Sep 20 11:58 AM
    Cramer tells it the way he sees it. You believe or not, and he is wrong some of the time but so is everyone else. Look at our esteemed treasury, fed and SEC officials. If you watch the other shows like Cramer, you see more biased comments and opinions, and you follow them also at your peril. There is no easy way.
    Reply | Link to Comment
  •  
    Sep 20 12:12 PM
    i personally enjoy the show simply because being a new investor, his manic leaps from stock to stock introduces me to more and more of the markets, sectors, and major competitiors of the names i already know.
    Reply | Link to Comment
  •  
    Sep 20 12:39 PM
    Do not follow the crowd. Its best to shut off your ear from all these noises and make your own informed decision.
    Reply | Link to Comment
  •  
    Sep 20 02:03 PM
    If he's so wrong all the time, how come so many of you are watching? kmca has the right idea. One can learn a lot from this show.
    Reply | Link to Comment
  •  
    Sep 20 03:19 PM
    KELLY,
    It's a cute mental image and you're not the only one that says it, but please refrain from using images of "printing money" to forward your thesis of inflation, or whatever other point you're trying to make.

    Only idiots still think that most money is printed. Nearly all currency is now electronic. Yes, the Fed can/has been "making" money, but printed is an annoying, outdated term. We live in the year 2008... act like it.
    Reply | Link to Comment
  •  
    Sep 20 03:51 PM
    btw...
    I think he is prepare to buy in on Monday...
    so, that's why he try to tell us sold on Monday.... haa.
    Reply | Link to Comment
  •  
    Sep 20 04:49 PM
    Cramer is an entertainer. Don't buy on his recommendations anymore than throwing a dart. A week ago Friday he said the market was ready to take off, it did! A couple of weeks ago he said Apple was ready to break out, but don't buy all at once, I didn't. Apple has continued to drop ever since his prediction, over 50 points in spite on new market announcements. These are only a few of his "calls"
    Reply | Link to Comment
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