“There is no single piece of data that determines which way the economy is headed,” Jim Cramer said on Monday’s “Mad Money” TV show. He told viewers that investors are making a big mistake if they let today’s unemployment news outweigh all of the other signs of a global recovery. Cramer said the 9.5% unemployment number is bad for the economy, but it doesn’t take away from Apple’s (AAPL) booming iPhone sales, or Chinese unabated demand for commodities. “Unemployment also doesn’t undo the effects of record housing affordability, nor $2.30 a gallon gasoline on the heels of $4 gasoline last year,” he said. Wireless Internet is also booming, helping companies like Qualcomm (QCOM) and Palm (PALM). Cramer thinks we will have a slow recovery, one that won’t produce a lot of jobs or spending, but will produce a lot of profits from huge layoffs and falling commodity prices. He said this is good news for defensive names and high yielders like General Mills (GIS) and YUM! Brands (YUM), both of which he holds in his charitable trust. Cramer believes that the market will stay range-bound between 7,000 and the highs 8,000 for the Dow. He told viewers to stay diversified and own stocks that will do well on a rebound, as well as those that offer a cushion when the indexes dip. Cramer recommended buying defensive stocks that pay a high dividend yield, such as Coca Cola (KO) and Eli Lilly (LLY). He said that firms like UPS (UPS) and United Technologies (UTX) will flourish, but he doesn’t see a bright outlook for UAL Corp (UAUA). Firms with accidentally high yields work here also, like Federal Realty (FRT), Nordic Tanker (NAT) and Illinois Tool Works (ITW). Cramer pointed out that these were the stocks to buy when the Dow hit its lows this morning. 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!

In a new segment called the “Eureka Moment,” Cramer answered the questions: “Where do I invest my retirement savings?” He explained that investing options seem limited right now, and he does not want people to fall for scams that promise 300% returns. So, Cramer came up with a fresh idea that would consist of the U.S. government creating a new 30-year, 5% government bond that’s offered exclusively for IRAs and 40lks. He explained that CD rates are too low right now, and stocks have been too volatile to trust. Due to these circumstances, cautious investors have few places to put their money. Cramer said that by offering investors a safe alternative that will allow them to double their money in just over 14 years, the government would be able to restore investor confidence while being able to fund the issue most important to an economic recovery – job creation. “Until those unemployment numbers come down, nothing really matters,” he said. Cramer asked viewers to call their congressman, call their senators and let the White House know you want these bonds to be issued. “This can be done, and it’s what every investor is really wishing for,” Cramer said. Join the fastest growing community of small cap investors at Stockhideout.com

In the “Mad Mail” segment, a viewer wrote, “My husband and I are in our 50′s and figure now would be a good time to start accumulating some stock for our retirement. Yeah, yeah, yeah, what took us so long? We have decided to have a stable portfolio by buying some dependable stocks, but our additional aim is to start collecting stocks from companies who either make green products or their components. We live in St Louis, so we were going to start by buying a couple hundred shares of Zoltek (ZOLT). Thoughts?” Cramer told this viewer he would not be a buyer of Zoltek for a retirement account. He said he likes companies that are either accidental high-yielders or have a consistent policy of paying a dividend for these types of accounts. 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!

Bullish
Peabody Energy (BTU), Arch Coal (ACI), PPG Industries (PPG), Old National Bancorp (ONB), Walter Industries (WLT), AT&T (T), Verizon (VZ), Boeing (BA) and WR Grace (GRA).
Bearish
Foundation Coal (FCL). Join the fastest growing community of small cap investors at Stockhideout.com

“I don’t want to leave this stock just because the price of crude has come down,” said Jim Cramer about Schlumberger (SLB) on CNBC’s “Stop Trading!” segment on Monday. Cramer mentioned that under $50 SLB has been a pretty good buy. He said the oil-service firm is having a decent quarter and year, and he won’t get bearish on the stock just because crude oil prices have come down. Cramer also likes Transocean (RIG) under $60. Cramer also told viewers to watch Rangold (GOLD) and Agnico-Ealge (AEM) now that the stocks have dropped 6% and 5% respectively on Monday. Cramer has recommended these stocks in the past, but he urged viewers to take profits after GOLD and AEM had moved noticeably higher. He said he wants to be in GOLD at current levels and he would buy AEM at around $47-to-$48 a share. 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!

This episode of “Mad Money” last aired on Nov. 28, 2008.
Finding Stock Buying Opportunities
On Friday’s “Mad Money” TV show, Jim Cramer continued filling viewers in on the methods of his madness all the little tricks and tools he uses to pick stocks, to know when to buy and sell, and generally to be a great investor. He started off by giving people a “rainy day” tip for when the market is having a really bad, down day. “What you need to be looking for after a down day is buying opportunities,” Cramer said. “There is no better opportunity to buy than when you find a stock that’s been upgraded by some analyst on a down day.” Usually when a stock gets upgraded, it jumps higher immediately, he said. But not when that upgrade comes out on a bad day for the market. “On those days, a stock that gets upgraded isn’t going higher. In fact, there’s a good chance it will go lower depending on how awful the action is,” Cramer said. “And there is your opportunity the day after the selloff, when things have calmed down and are less negative,” he said. Another method to his madness, Cramer said, has to do with how he determines if an individual stock is truly undervalued. “People like to throw around terms like over- or undervalued,” but Cramer said he has his own rule of thumb for figuring it out. “If a stock has a price-to-earnings multiple — remember E (the earnings) times M (the multiple) equals P (the price) — that’s lower than its growth rate, then that stock is cheap,” Cramer said. “If a company has 10% growth but trades at eight times earnings, this rule says it’s cheap. If it has 10% growth and trades at 10 times earnings, it’s still dirt cheap. However, a stock with 10% growth and a 20 multiple is a stock that market players should take profits in, he said. Any stock with a multiple that’s more than twice its growth rate is too expensive. At the same time, Cramer warned viewers that like any of his methods, this one is a rough approximation. “It’s useful, but it’s not always right,” he said. “A lot of times a stock will get cheap, based on its earnings estimates, because those estimates need to be cut.” “Plenty of inexpensive-looking stocks are actually quite pricey if the fundamentals are declining, and the earnings are going to miss the estimates,” Cramer explained. “It’s the same at the top of the price range, but less dangerous: A stock that’s trading with a multiple that’s twice its growth rate looks expensive, but if its earnings need to be revised higher, its multiple will come down, and it has more room to run,” he said. While the market is “too dynamic” for there to be any hard and fast rules to define how the growth affects a stock’s price, there are some important points that come out of the connection, he continued. “The most important is that stocks with accelerating growth, be it sales growth or earnings growth, are worth more than stocks with decelerating growth.”
Sell A Stock On Slow Growth
Wall Street doesn’t like decelerating growth, and growth funds tend to lighten up their positions when they see growth decelerating. “When you see the growth start to slow, you should sell,” Cramer said. “Even if you think the stock goes higher after the decline brought about by the deceleration, you should still sell beforehand and buy back shares later to sidestep the pain,” he said. The next method Cramer talked about was buying with “wide scales” on the way down. This method, he explained, is what he used at his hedge fund to buy declining stocks that he thought were nearing their bottoms. Because it’s “nearly impossible” to call an actual bottom in an individual stock, “the smart move is to buy incrementally on the way down,” Cramer said. With wide scales, people buy larger and larger positions as the stock goes lower, and “when it’s so low you can hardly believe how poorly the stock is trading, you double down,” he said. But, he said, “be sure to leave yourself room, because when the stock bottoms, you’re going to want to pour your money in.” While it’s nearly impossible to call an actual bottom in a stock, there are signs that can help people know when the time is right to really “bulk up” a position, Cramer said.
When To Double Down On Stocks
First, most, if not all, of the analysts who follow the stock have to downgrade it to sell, even though it’s already been through a “sickening” decline. Also, when a company gets hit with bad news or a negative rumor and the stock doesn’t actually go down, it’s a great sign that the stock has bottomed and that it’s time to double down, he stated. Plus, significant insider buying after a huge decline is a “sure sign” that people should buy more. At the same time, Cramer warned viewers that these things are difficult to bet on and that they don’t always happen at the bottom. “That’s why my best advice is still that you shouldn’t try to call bottoms in individual stocks,” he said. “Instead just use wide scales as the stock falls, buying in larger and larger increments as the stock declines,” he said. Furthermore, Cramer urged viewers to look for broken stocks, not broken companies. “When we get hit with a decline of sufficient magnitude, almost everything gets knocked down, every stock gets punished,” he said. “But not every stock deserves the beating.” People tend to assume that when a stock gets knocked down, the company deserves it, but this is wrong. “Plenty of great companies are unfairly sold off by investors who simply don’t get it,” Cramer said. This is why investors must do their homework, he stressed. “It’s not hard to tell the difference between a damaged stock and damaged goods if you’ve listened to the conference calls and read all the findings.” Suppose “the market is getting hammered and Cramer’s nowhere to be seen,” he said. At this time, the “discipline” or method that will let people take advantage of all the stocks that the market’s breaking in spite of the fact that they belong to great companies is “the shopping list.” “While the selloff is happening, you put together a shopping list of stocks you like that are going down,” Cramer said. “These are the stocks you’ve done the homework on and know belong to strong companies.” Keep an eye on these stocks as they decline, he advised. But “don’t look for the biggest decliners and assume they’re the cheapest and that they should be bought,” Cramer said. “Most of those companies are damaged goods, and you don’t want to waste your time.” In addition, don’t put alleged “blue chip” names on the shopping list under the assumption that they couldn’t possibly be broken companies, he pleaded. “There’s no such thing as a blue chip,” Cramer said. Once people have done their homework on the stocks, differentiating between the broken stocks and the broken companies, and feel the bottom is close, “that’s when you start putting on your positions in your unbroken shopping list names,” he said. Finally, “always try to sell into strength,” Cramer said, but not all at once. “Sell part of your position now, but wait for some strength before you unload the rest,” he said. However, if the wait is too long and either there’s no strength or you have evidence the stock will only go lower, then you can sell. 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!