No specific stock
picks.
See Opening Segment 2,
below...
After this segment, you
can see Jim's Lightning
Round picks
here...
Jim: After
today's historic turn up, a
370-point swing from the bottom
to top that included a bust out
to the upside of the housing and
bank indices courtesy of hedge
funds gone wild with panic...
After all that good stuff, there
is still a tremendous amount of
fear out there, when it comes to
the financials... And it's not
going away.
Today, the fear was all about
the destruction of
Lehman Brothers
(LEH),
AIG
(AIG)
and
Washington Mutual (WM)...
three stocks we have done our
very best to keep you out of...
Heck, we hope that anyone buys
LEH, but hope should never be
part of a wise investor's
equation.
To understand the fear... to
stop fearing fear itself... you
need to familiarize yourself
with the black hole theory of
the market. LEH, AIG, WM... they
are the biggest festering sores
right now... festering today...
They, along with
Citigroup (C),
General Motors
(GM)
and
Ford (F)...
these are the big black holes of
value destruction... with
Downey Financial
(DSL),
Corus Bankshares Inc. (CORS)
and
BankUnited Financial
Corporation (BKUNA)
all bringing up the rear...
They're the source of the
pain... I think one could say
they are the cavities... and,
until (they) drill them, of
course the pain will continue,
and we'll be "not safe"...
A specter is haunting LEH, and
that specter is not the subprime
loans they had in America...
those are already horrible...
but the ones it wrote in
Europe...
When AIG decided to avoid U.S.
subprime loans... when it
stopped insuring, or it least it
claimed it stopped in 2005... it
then went and insured billions
of bad paper in Europe, and
Europe's falling apart... It
turns out they were just simply
going from the frying pan into
the fire...
WM simply cannot absorb the
mortgage losses by itself...
You can't really see what kind
of exposure either LEH or AIG
has in Europe... The disclosure
is totally sketchy, unclear...
something the SEC bizarrely
seems to endorse. We don't know
where the loans are, what the
duration... we don't know the
credit worthiness of the
borrowers...we don't know
anything... but, then again, I
mean the SEC... It dropped the
ball on the short selling rules,
allowing LEH, AIG and WM to be
reduced to pitiful, helpless
giants by relentless hedge fund
naked short selling - without
upticks of course - or, to put
it simply, the SEC tossed these
stocks into a virtual free fire
zone without a plan... and I'm
not talking about what I think
is that bogus plan from LEH
earlier today, although I was
pleased to hear that they're now
trying to sell the company, and
there might be suitors... these
black holes could vanish...
That's right. No more Lehman, no
more AIG, no more Washington
Mutual. The fear created by
these black holes, and our
government's lack of a plan to
deal with them, will cause
tremendous suffering with the
financials... before they can
recover.
Yes, eventually, the other banks
and brokers would benefit from
the demise of LEH or WM but, in
the short term, their stocks
should be punished severely...
and were earlier today, before
the rumors of a
Bank of America (BAC)
bid for LEH.
I think the black holes need to
be filled permanently... their
problems fixed, permanently...
before the market can really
move on... although I still
think we hold the financial
intraday lows of July 15th...
. . . .
.
The Bottom Line!:
Until we see a mortgage resolution
trust end the rate cuts, I think you'd
better hold your nose around the
financials every two to three days,
because the black holes haven't been
filled yet... because the Laissez Faire
attitude of this administration
continues to cost you billions and
billions... maybe trillions... more than
it would have, if they had listened last
August 2007, and had some regulations
and intervention ahead of the chaos.
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Second
Segment
Opening Segment 2
Title:
'Hedge Funds
Gone WILD'
. . . .
.
Featured Stock(s):
No specific stock
picks.
No specific stock
picks.
After this segment, you
can see Jim's Lightning
Round picks
here...
. . . .
.
Jim: This market has
been totally at the mercy...
just the mercy... of hedge funds
gone wild!...
That's the action we saw today
in the hedge funds... those big
pools of crazy capital... that
make billion-dollar bets for and
against the market... they...
panicked!
The funds, many of whom think
exactly alike, thought that we
would have a collapse in the
market, courtesy of
Lehman Brothers
(LEH)
and
Washington Mutual (WM)...
Now it looks like a disastrous
scenario has turned heavenly...
house of pleasure... and the
bears have morphed into bulls...
and we rallied our darn fool
heads off.
When you see that kind of crazy
reversal - a 340-swing in the
Dow - you have to be thinking
it's hedge fund managers gone
wild!...
We've been living in a bizarre
world... where stock prices have
more to do with the inner
workings of hedge funds gone
wild... they buy, they sell,
they short... than with the
performance of the actual
companies they're supposed to be
trading. There is a Gossamer
thin connection between the
stocks and the companies. This
is what has turned off so many
people... why volume is way
down... why the public has been
leaving our market left and
right... because the only way to
really win has been by gaming
the hedge funds gone wild,
rather than by paying attention
to the fundamentals...
What does it say about the
market, when you had a day like
yesterday, where the commodity
stocks recover... not because
commodity prices go up... oil
and natural gas were both down
yesterday... but simply because
the hedge funds are done
selling... What does it say
about today, when oil and gas
are down, and the oil stocks
rallied?...
How about this?...
What does it say about a market
when copper has one of its
biggest rallies in a long time,
but
Freeport-McMoRan (FCX*)
- one of the largest copper
companies in the world, but one
that has the misfortune to be
heavily rented, I won't say
owned, by hedge funds - was down
big, despite the up day?...
What does it say when you come
in, and
Lehman Brothers
(LEH)
is down bad and
Washington Mutual (WM)
might be going belly up... we
open down and then we rally
furiously...
You know what it says...
It says that the hedge funds
have turned the stock market
into an ultimate fight club gone
wild...
Alright, there has been no push
back by any of the companies
whose stocks have been play
things of the hedge funds... at
least not until today...
Some companies... at least two
of them...
Joy Global (JOYG)...
joyous Global... and
CSX Corp. (CSX)...
have finally, at last, started
to fight back!...
Don't get me wrong. We're still
very much in a market that's
been turned upside down on a
daily basis but, at last, we
have companies... well, let's
just say... some companies that
are saying "I'm as mad as hell,
and I'm not going to take this
anymore!"...
Look at JOYG... in my opinion,
the best mining equipment play
in the world... It only has one
serious competitor,
Bucyrus
(BUCY),
and it is the major coal mining
equipment player in China, a
country that seems like it's
opening up a new coal-fired
plant every other day... and
will be doing so for years...
JOYG's stock has been slapped
around by these hedge funds,
like a red-headed stepchild...
Yes, they're tossing around
these stocks... and JOYG, as of
yesterday, it had been cut in
half, from $90 to $44 and
change... So you know what it
did today?... It announced that
it's buying back two-fifths of
its capitalization... that's
right, two-fifths of the
company!... A $2 billion buyback
for a $5 billion company, and
it's going to do it between now
and 2011... Take that shorts!...
Take that sellers!...
Look, you could argue that JOYG
is slowly taking itself private,
or you could say that JOYG is
mad as hell!...
Now, the fact that JOYG is only
up 12% today shows you that
we're still in the nasty grip of
the hedge funds gone wild, hedge
funds that are crazier than I
am... These guys saw that
buyback and they yawned... but
at least JOYG is taking action.
Here is a great company's stock
that got pummeled on September
3rd, falling from $61 to $53,
after it announced a quarter
with 139% increase in orders.
But it missed earnings by 7
cents, and that was after the
stock had already been nearly
cut in half from its
52-week-high of $90 in record
time...
Even after announcing its
buyback, the stock is down 23.7%
from where it was after the
quarter. Now we brought on
Michael Sutherlin, JOYG's CEO on
that day... that horrid day for
JOYG's existence... and you
could tell he was furious about
how his stock was being
treated...
I think Sutherlin knows that
he's in a hated sector. He knows
that his biggest enemies are the
hedge fund shareholders that
were once his friends, that will
sell at the drop of the hat, or
they have to sell because of
redemptions... so he's taking
matters into his own hands, and
buying back so much stock, it
seems like he slowly wants to
take the company private... Do
you know that, if his stock got
cut in half again, Sutherlin
will have almost bought back
every single share by 2011,
given the $2 billion he's
spending on the buyback...
I still wouldn't necessarily buy
it up here. You know, I don't
like to buy stocks up $3 or
$4... Not until the reign of the
mad hedge funds is over... but,
then again, this stock is a mere
6 points off its 52-week low. I
believe the company is in great
shape and the buyback is really,
just frankly, staggering!
The other company that's
fighting back is Cramer-fave,
railroad play,
CSX Corp. (CSX)...
It just pre-announced a much
better-than-expected quarter
today. Now, remember, CSX...
This is the company where two
hedge fund jokers... these two
misguided hedge funds targeted
the CEO, Michael Ward, and tried
to get him fired, because they
thought he was doing a bad job
of unlocking value. I mean,
luckily, the hedge fund lost its
proxy fight, and Ward kept his
job, streamlined the company and
announced great results.
The stock was up 5.85 points
today, 10.7%... but it's a
testament to the insanity, the
utter sanity of the hedge funds
that are running this market,
that Ward was targeted to begin
with... I think this guy runs
the best-performing rail and,
believe me, the credit for its
performance is all his. Because,
before he took over, CSX was run
by John Snow who, after doing a
"heck" of a job at the Treasury
Department, is now helping to
destroy value at Cerberus...
That man would walk a mile for a
camera...
. . . .
.
The Bottom Line!:
This market is still under the
control of hedge funds gone wild...
but finally some companies are pushing
back. It may not mean much for the
stocks yet, but it will when the rabid
money managers finally finish selling.
And you can see, with swings like today
in the overall market, I don't want you
to think there are happy days here
again... I do want you to think
that the hedge funds were leaning the
wrong way going into this morning,
because of
Lehman Brothers
(LEH)
and
Washington Mutual (WM)...
and then they just went wild to the
upside. They panicked... they
panicked and bought on the first whiff
of good news.
■
Stock Snapshots - Includes
all stocks mentioned above
■
Jim
Cramer's
rating on
this stock
STOCK
SYMBOL
Closing
price
that
day
Opening
price
next
day
Full Company
Name/Comments
(see comments above for
each)
na
na
na
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he would buy the stock or,
at the very least, not sell
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think it is indicated by his
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Please read his comments to
decide for yourself.
Thumbs down -
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based on his comments
We do our best to interpret
Jim's opinion on stocks, as
we think it is indicated by
his comments during the
show. Please read his
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Back up the truck -
indicated by Jim, when he
says the stock is so good,
that he would do a
'mon-back' on the stock...
In other words, this is the
sound someone would say to a
truck driver, "Come on
back... " as he is "backing
up the truck" to load up on
his cargo. Translation
for buying stocks:
This recommendation by Jim
indicates that, after you do
your own
homework on the stock,
you should feel comfortable
loading up on it, as it is
in a good position to be
bought at this point.
Stumped. - Of the
2,000+ stocks that Jim
Cramer has in his head, for
which he has an informed
opinion, he sometimes comes
across a caller with a stock
he does not know well enough
to opine on... He then
indicates he is stumped and
will have to come back to
it, after he does some
homework of his own on
the stock. This
usually occurs during the
Lightning Round, when Jim
does not know in advance who
is calling, or what their
stock question is about.
Definitions of key phrases
used by Jim, known as
"Cramerisms":
Definition: 'Pull the
trigger' is Jim's phrase for making
the decision at that point to trade -
either to 'buy' or
to 'sell' (although he
usually uses the phrase for
buying), as if to say you
should feel comfortable
enough to make the final
decision without looking
back...
Definition: 'Ring
the Register' is Jim's phrase for
selling a stock, and making
it a final sale, that you
should not look back on.
Put it behind you.
Definition:'Let It Come In' indicates how you
may wait for it to pull back, or have the
stock price come down briefly, as your
chance (after letting it come in) to buy
the rest of your position (i.e., total
number of shares you own in that stock).
Definition:'backing it up'
or 'doing a 'mon-back' is Jim's
phrase for the metaphor of backing up a
truck to load up on a stock by buying
it. 'Mon-back is short for the
imaginary worker saying, 'Come on
back...' as the truck is backing up to
receive its load... Notice that we use
the little truck icon to indicate where
Jim has mentioned this.
Translation for buying
stocks: This
recommendation by Jim
indicates that, after you do
your own
homework on the stock,
you should feel comfortable
loading up on it, as it is
in a good position to be
bought at this point.
See more
"Cramerisms" & other
financial phrases
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