Tonight’s CNBC “Mad Money” was a repeat of an original episode that aired on Dec. 29, 2006. Enjoy!
Watching from the sidelines will not make you a great investor. Being willing to get in the game and stay in it is the only way to become that investor. It can be hard to keep your head in the game, but there are three “forces” Jim stated that keep people out of stocks, they were: “boredom, bummers and brokers.” Boredom was called a big problem. A recipe for disaster is when the market players are not interested in the stocks they own, and when attention is not being payed unexpected losses will come. If people invest and stay interested they can make a fortune. Speculation was called a cure for boredom as it makes them feel like they are good investors when successful. Speculation can be considered “foolhardy and more immoral than gambling” but Jim has made some of his biggest gains speculating and he called it “good for investors.” He told us that it is “OK and necessary to speculate.” When talking diversification, Jim is referring to it across sectors, and unless you own some high risk stocks you are not really diversified. A few ground rules of speculating were laid out. The first was “never invest retirement money in speculation.” Second “do not ever have more than 20% of non retirement portfolio in speculative stocks.” A tiny bit of money should be put in speculative stocks, “make 1% to 2% of the portfolio if you are that conservative” he said. Speculation is small cap stocks with a market cap of between $250 million to $2 billion. These are usually less expensive per share, selling from $2 to $10 per share. A catalyst should be lurking and often speculative stocks are unprofitable. You should never buy a stock with no revenue or sales, but a stock with accelerated revenue growth. Two ways to go about speculating is to either pick an individual stock with which to speculate or they can speculate on a sector trend buy putting together a basket of stocks. With the whole industry, people should not miss out by buying the one stock from that group that gets left behind. Cast a wide net and spread the risk around. An industry that has been knocked around and beaten up should be sought. Speculating means always trading too. These small stocks will generally move up or down a great deal. You should have an exit strategy too as to not endanger all of your gains. A good investor should be “excited, interested and careful” Jim says. Worse than boredom is losing a lot of money. If Jim were to quit every time he lost money he would have never gotten anywhere. A magic formula against losing money he does not have, but giving up is not the answer. Two rules for damage control were: expect corrections and do not fear them. The S&P was used as an example as a correction when it had a decent run and then fell in May through June of last year. After bottoming the first half of June it came roaring back all the way through December. People who lost money would have been tempted to give up on stocks due to where the market had climbed and giving up would have been a bad idea. Investors need to understand that sometimes stocks go down and keep going down. They need to be psychologically prepared for big corrections like the one that started in May so they’ll develop a “superior attitude” and stay in the game, he said. The next rule is about preventing losses, Cramer continued. One of the best ways to try to avoid losses is to “watch out for multiple contraction,” which means that the market will start paying a lot less for the same amount of earnings, he said. If players see a “marketwide nosedive” or a “big, ugly downturn,” especially one that’s caused by interest rate hikes, they should identify and sell their high-multiple stocks, as they are the only certain types of stocks that are “truly vulnerable” to multiple contraction, Cramer said. As severe multiple contractions usually won’t occur a stock until the company reports earnings, people should sell their high-multiple stocks before the companies report, unless they want “a world of pain,” he advised. Lastly, Cramer urged his viewers to place limit orders instead of market orders. “Limit orders keep you in the driver’s seat, they keep you from being totally ripped off, and they’re really easy to execute, he said. “Please, if you listen to nothing else I say, use limit orders instead of market orders.” Chat and share ideas with the best small cap traders LIVE each day free at Stocknetworkonline.com

Word On The Street
Dylan Ratigan hosted CNBC’s “Fast Money” Tuesday night. He began the show with a discussion of the huge rally in the markets today. He pointed out that the market exploded higher for the following reasons: politicians reintroduced the possibility for a vote this weekend on the bailout plan aimed to unlock the credit markets and the reintroduction of a conversation with the SEC around the way we back bonds related to the housing market and how they are accounted for on the books of the banks. Karen Finerman said the accounting change is helpful in the short term, but she says the new rules are ripe for abuse from corporate management. However, she says some things in the market are trading at irrational prices. Jeff Macke said management can now value these assets at whatever they please with the new rules. Joe Terranova said it doesn’t feel like we were up that much in the market today. He reminded viewers that back in 1987 the government went in and bought S&P futures. “The government might as well just go in and buy the same futures, because at the end of the day they want the market higher,” he added. Guy Adami said strong banks like Wells Fargo (WFC), JPMorgan Chase (JPM) and U.S. Bancorp (USB) are setting up for the biggest rallies they might ever see and nobody is talking about.
Credit Market Chat
Ratigan moved the discussion along to the chaos in the credit markets and how can we move forward until the banks trust each other. Jeff Macke says we can move forward by buying equities because they never get punished by this. He explained that retailers are going to have a weak Christmas due to the issues with consumers getting credit. However, Macke says Wal-Mart (WMT) should do well.
Dollar Take
Ratigan asked the traders about the record gain of the U.S. dollar versus the euro. Terranova said he would be a buyer of the dollar. “The Europeans are behind the curve in trying to fix their credit markets,” he said. Adami reminded viewers that Japan waited too long to fix their credit markets and they fell into a 20-year recession. “The trade for the second half of the year will be long the U.S. dollar,” he added. Macke said he is back long the PowerShares DB US Dollar Index (UUP). Finerman told viewers that she is no longer short the British pound.
Tech Take
Next, the traders talked about the huge move in the Nasdaq and the strange moves in some technology stocks like Google (GOOG). Ratigan said the Nasdaq is where Main Street trades with companies like Research In Motion (RIMM), Apple (AAPL) and Dell Computer (DELL). Terranova pointed out that there was a trade imbalance at the close yesterday for names like Celgene (CELG) due to large redemptions from mutual funds. He says Celgene dropped to $53 a share at the close yesterday and opened back up today at $63 a share. Macke said technically he would rather wait to see if Apple can trade back over $120. Scott Wapner joined the traders to discuss the strange moves in Google (GOOG) shares before the close. He said there was a tremendous amount of volume and volatility in Google before the close. “We saw $80 spikes in the stock and Nasdaq busted some erroneous trades,” he added. He says they determined the closing price for Google today was $400.52 a share and not $341 a share. Adami said this is what happens when you let machines do the work of human beings.
Bailout Perspective
Douglas Cliggott, CIO of Dover Management joined the traders to discuss the proposed bailout plan. He said the bailout plan of $700 billion isn’t a lot of money when compared to the balance sheet of the U.S. financial sector of $62 trillion. “Most big lenders don’t feel they have enough capital and millions of borrowers already have too much debt,” he said. Cliggott says there might be some companies in a position to borrow, but he doesn’t think too many households can. He said viewers shouldn’t try to pick a bottom in financial stocks and if they want to be long anything get into healthcare and consumer staples.
Trader Radar
Shares of Intel (INTC) were among the most actively traded stocks on the Nasdaq today.
Bailout With Barton
Republican Joe Barton of Texas, who voted against the bailout bill, joined the traders to discuss the new plan. He says the marked-to-market accounting for mortgage-backed securities is a problem because people don’t know what their valued at when their bundled. He explained that the exotic nature of these securities makes it hard to have transparency with marked-to-market accounting. “I think the government can provide an insurance mechanism for the people who want to perform the unentanglement of these securities,” he added. Barton says he will vote no again on the bill if it is just a re-warmed version of the Paulson plan.
Tomorrow’s Moves Today
Jon Najarian joined the traders to discuss his move in the markets for tomorrow. He says he owns Goldman Sachs Group (GS), JPMorgan Chase (JPM), Bank Of America (BAC), Citigroup (C) and Morgan Stanley (MS). “I own all of these and I will continue to hold them because I don’t think we have enough of a rip yet to sell them,” he added. Najarian also said he is watching Fifth Third Bancorp (FITB) and KeyCorp (KEY) along with the entire regional banking sector. He says these stocks should be very interesting. Najarian also highlighted some unusual call options activity in Noble (NE), Jabil Circuit (JBL) and UnitedHealth Group (UNH). Terranvoa said he likes First Horizon (FHN), State Street (STT) and BB&T (BBT) going into tomorrow. Adami said he likes Intel (INTC). Macke said he likes the U.S. dollar and Wal-Mart (WMT).
POPS&DROPS
POPS- Intel (INTC) jumped 8% after Piper Jaffray upgraded the stock to a buy rating. Macke said just trust the new price and go with it. JPMorgan Chase (JPM) traded up 13%. Thomson Reuter’s data showed that JPM was the world’s top underwriter of stocks and bonds for the third quarter. Terranova said this stock is something you want to own in your portfolio for the long-term. Dr Pepper Snapple Group (DPS) popped 9%. Finerman explained that Snapple is going to be replacing Wrigley (WWY) in the S&P 500. Sovereign Bancorp (SOV) soared 69% after the stock caught a few upgrades and the company replaced its CEO. Adami said he wouldn’t go rushing into this stock. EZCORP (EZPW) ripped 7% higher. Macke said tough times call for tough “pawnage.” Schlumberger (SLB) added 5%. Terranova said with oil at $100 people still need to use Schlumberger’s equipment to find out. He says the oil story isn’t over.
Final Trade
Macke told viewers to trim some gains. Adami likes U.S. Bancorp (USB). Finerman picked the Oil Service HOLDRs (OIH). Terannova went with Amgen (AMGN). Get the scoop on tomorrow’s hottest trade ideas – TODAY! BeaconEquity.com PREMIER PICKS have an amazing track record. Join this select group and ride the profit wave!

Jim Cramer added Bob Steel, president and CEO of Wachovia (WB) to his infamous “Wall of Shame” list. He mentioned that Steel told Mad Money fans two weeks ago that out of $500 billion in loans on the banks’ balance sheet, ony 10 billion were bad. However, reports have now shown that the bank has $42 billion in bad loans. “We got bagged,” said Cramer, “and I let you down.” Cramer said he doesn’t think that Steel lied on the show. He explained that Steel went off of the company’s financials which showed very few bad loans. Also, Steel had bought $16 million worth of WB stock and wasn’t hedged with options. Cramer said he was more mad at himself for letting his viewrs down. He put trust in Steel who he says he ‘s know as a successful financier for 25 years. “I let you down,” Cramer said. Since the bailout plan was a failure, Cramer explained that Wachovia had no choice but to sell its bad assets. With Washington Mutual’s bad loans valued by JP Morgan (JPM) lower than Wachovia’s loans, “Wachovia was toast,” he said. Join the fastest growing community of small cap investors at Stockhideout.com

Bullish
AeroVironment (AVAV).
Bearish
Genentech (DNA), Visa (V), Mastercard (MA), Sony (SNE), Jacobs Engineering (JEC), The Blackstone Group (BX) , Fortress Investments (FIG) and Harley Davidson (HOG). Chat and share ideas with the best small cap traders LIVE each day free at Stocknetworkonline.com

Word On The Street
Dylan Ratigan hosted CNBC’s “Fast Money” Monday night. He started the show off with a discussion of the stock market crash and what caused it. He pointed out that the Dow saw its largest point loss ever and the S&P 500 had its biggest one day loss since the crash of 1987. Ratigan explained how the market fell as the no votes came in for the $700 billion bailout plan in Congress. Jeff Macke says collective as a society we lost over $1 trillion in market cap today. Pete Najarian said this market is as tough as he has ever seen.
Safe Havens
Ratigan asked the traders for their opinions on safe havens during this rough trading environment. Guy Adami says gold might not be the safe haven that everyone thinks it is. He says playing gold as trade against fear just isn’t working. However, he says if you’re playing gold as an investment that is fine. Macke said people are going into cash and we are getting old fashion runs on the bank. He says the bank stocks are going down because people are removing their money. Ratigan pointed out big declines in bank stocks today in names like State Street (STT), Regions Financial (RF), Fifth Third Bancorp (FITB) and Sovereign Bancorp (SOV).
Bailout Talk
Ratigan asked the traders what their level of confidence is that something will get done in Washington with the bailout plan. Karen Finerman said she is mildly optimistic and she says the reaction to the vote should send a message to Congress that the deal must get done. Macke said the selling accelerated because we don’t know the rules. “I have no confidence in buying stocks in this environment because they are actively making up the rules,” He added. CNBC’s Steven Liesman joined the “Fast Money” traders to discuss the next move for Congress. Liesman says McCain’s comments about going “back to the drawing board” made the hair on the back of his neck stand up. He explained that as far as he knows there is nothing with any support on the “drawing board” to go back too. Liesman says the injection of $600 billion this morning from the Federal Reserve was done to show the Fed will come in and provide whatever liquidity is needed to banks right now. “The next step here is the Fed could become the clearing place or the “counterparty” for the banking system,” he added. Liesman mentioned that the Fed seems to be creating a club with J.P. Morgan (JPM), Goldman Sachs Group (GS), Bank Of America (BAC), Morgan Stanley (MS) and Citigroup (C). He said the Fed will provide liquidity to these five institutions to the end and not let them fail.
Deep Economic Thinking
Mike Darda, chief economist of MKM Partners joined the traders to discuss the outlook for the economy. He says the consumer recession is already here and it’s going to get worse. “The credit markets and the equity markets are telling us it will get worse before it gets better,” he said. Darda explained that by looking at long-term corporate bond yields this downtown will be deeper, but it won’t be the “Great Depression.” He says this recession will also be twice as long as the last one. “The longer these credit markets stay dislocated we are going to go down deeper into the recession,” he added. Get the scoop on tomorrow’s hottest trade ideas – TODAY! BeaconEquity.com PREMIER PICKS have an amazing track record. Join this select group and ride the profit wave!

Word On The Street
Dylan Ratigan hosted CNBC’s “Fast Money” Friday night. He kicked the show off with a discussion of the proposed bailout of the housing and banking system. Joe Terranova told viewers to forget about the bailout. “I bought the SPDR Trust (SPY) on Wednesday because the short sellers are piling in since they can’t short the financial stocks,” he said. Terranova says when the short ban comes off on October 2 the S&P 500 will pop. Tim Seymour said he loved how the S&P 500 traded today in the face of bad news. “Technically we have room to run here, past 1220 or maybe up to 1260,” he added. Jeff Macke says he doesn’t want to be long this market because they are making up rules as we go along. Karen Finerman said she really didn’t do a lot today in the markets.
Bailout Talk
Republican Adam Putnam of Florida joined the traders to discuss the bailout plan. He said negotiations are ongoing and there is some momentum towards a hybrid of what Paulson proposed and what the republicans are proposing. He says the goal is to have a completed deal before the markets open on Monday. “The five core principles of the deal will be: tax payers will benefit from the upside of the assets, more accountability and oversight from Congress, no golden parachutes for executives and doing more for Main Street,” he said.
Wachovia Merger?
Andrew Ross Sorkin, a reporter for the New York Times joined the traders to discuss breaking news that Wachovia (WB) is in merger talks with Spain’s Banco Santander, Wells Fargo (WFC) and Citigroup (C). Sorkin said Wachovia is worried that if a bailout bill doesn’t happen they will have to start looking for alternatives. “Wachovia wanted to know who was around the hoop this weekend in case things started to look like things weren’t going the right way. In an ideal world Wachovia CEO Bob Steel would love keep the good stuff and hope the bill bails out the bad stuff,” he added. Ratigan asked Sorkin if any transaction would result in the loss of Wachovia’s equity. Sorkin says he doesn’t want to cause a run on the stock and the firm is well-capitalized at this momentum. “The banks will keep falling, so buckle up,” Macke added. Terranova reminded viewers that Wachovia paid $24 billion for the pioneer of option arms. Ratigan told viewers that he saw a huge crowd around the post for JPMorgan Chase (JPM) on the NYSE that was buying the stock. Finerman says the money is flowing into JPMorgan. Macke advised viewers to sell into the 10% rally in JPM
Free Market Solutions
Jon Najarian joined the traders to discuss some market-based solutions for the bailout plan. Najarian says a system exists right now that we can use to get a price discovery system for mortgage-backed securities. “The problem here isn’t just leverage, its transparency and the fact that mortgage-based securities weren’t marked-to-market until the eleventh hour,” he said. He says if the mortgage-backed securities were brought to an exchange we would have a continuous marked-to-market process, the Federal Reserve could be a clearing firm and we could unify the amount of risk we have around the world.
Stifel Financial
Ron Kruszewski, the CEO of Stifel Financial (SF) joined the traders to discuss the bailout plan. He said the bailout is a restructuring and not a bailout because everyone was involved in this. “As people deleverage coupled with the fact that financial institutions will now become bank holdings companies, we will be better able to compete,” he added. He pointed out that on average Stifel leverages three-to-one and has averaged an 18% return on equity. “Our industry is going to shrink because we will not have the leverage we had before,” he said.
Bailout Progress
Democrat Chuck Schumer of New York joined the traders to discuss the progress of the bailout. He said right now Congress is at a bit of an impasse. “The Democrats have an offer to the House Republicans that they wouldn’t object to putting their insurance provision into the packages as an option,” he said. He says the Democrats don’t believe the insurance provision will work. “The problem is the government will have a downside and no upside, plus it’s very difficult to actually accomplish,” he added. However, he says if it would bring the House Republicans to the table they are willing to put it into the package. Get the scoop on tomorrow’s hottest trade ideas – TODAY! BeaconEquity.com PREMIER PICKS have an amazing track record. Join this select group and ride the profit wave!

“We’re so worried about the purity of the bill that we don’t realize that right in front of us, the FDIC is anointing a few banks and making them kings and giving them the deals of their lifetime,” Jim Cramer said on Friday’s “Stop Trading!” show. “They are going to own the world unless we pass the bill,” Cramer said. He explained that the delay with the bill is allowing JPMorgan Chase (JPM), Wells Fargo (WFC), PNC Financial (PNC) and U.S. Bancrop snap up collapsing banks like Washington Mutual (WM) and gain market share. Cramer says the limit for the FDIC insurance needs to be raised to $1 million. If that doesn’t happen, he says we will have a series of super banks, and people will pull their money out of all the other banks. The super banks “are going to own the world unless we pass that bill,” he said. Chat and share ideas with the best small cap traders LIVE each day free at Stocknetworkonline.com