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Fear At Work - Cramer's Stop Trading (9/17/08)

by: SA Editor Joan Wickham September 17, 2008 | about stocks: GS / MS / WM    

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Joan Wickham

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Recap of Jim Cramer's comments on Stop Trading! Wednesday September 17.

Muddling Through Tough Times - Washington Mutual (WM)

"This is really a Franklin Delano Roosevelt moment," Jim Cramer said. "We're only fearing fear itself." As bad as this market is, we’ve gotten through tough times before. That was Cramer’s message Wednesday. He rattled off a list of solutions that brought us through Black Monday in 1987, the savings-and-loan debacle of 1990 and the failure of Long Term Capital Management in 1998. Coordinated worldwide interest-rate cuts. Cramer thinks Europe could make such a move and that would provide the U.S. Federal Reserve with the cover it needs to rethink its decision yesterday to leave rates unchanged. He encouraged viewers to consider several potential factors that could be positive influences on the market, including the coordination of worldwide interest cuts, huge Chinese stimulus plans, a waving of the private equity rules and the SEC's waving of rules on buybacks. A big foreign investor could help. Think of how Prince Alaweed’s investment in Citigroup turned the market around in 1990. “They have so much money in the Middle East if they wanted to come in and buy any of these they could,” Cramer said. Waive the private-equity rules that prevent a company like TPG from buying at least a big part of Washington Mutual. The Securities and Exchange Commission should waive the rule limiting the extent of buybacks a company can make. Also, it should reinstate at least a trial of the uptick rule. In 1987, the market pulled out of the hole it was in when companies put in motion major buybacks and the Federal Reserve announced that all the liquidity that companies needed would be available. Something similar would help now. "I am only trying to bring out things that could go right, because I've heard all day what could go wrong," he said.

Beating Up Brokers – Morgan Stanley (MS), Goldman Sachs (GS)

Cramer also mentioned that the action in Morgan Stanley and Goldman Sachs is fear at work and not an honest look at the two companies’ fundamentals. Morgan Stanley CEO John Mack’s statement that fear, rumors and short selling are hurting his firm is his way of urging investors to buy the stock, Cramer said. "I tell you that September calls on these positions will be rewarded for very little capital," he said.

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This article has 4 comments:

  •  
    Sep 17 04:54 PM
    In a related development, Cramer reiterated that "the bottom is in". He added that its just higher than where we are right now. He said that LEH is a "buy, buy, buy" since if it was cheap at $12 then its super cheap at $0.12. Back up the truck - its cheaper than wall paper.
    Reply
  •  
    Sep 17 06:51 PM
    Not too long ago Mr. Cramer predicted that the market had bottomed. I would advise evryone to take anything he or anyone else on national television has to say with "a grain of salt". Trust your own instincts and do not listen to these jokers. Remember, they are on television to make money for themselves and thier networks. Do not be deceived.
    Reply
  •  
    Sep 17 06:59 PM
    Dear Mr. Cramer is talking about the times we have gotten through before; he doesn't mention the solutions were always Band-Aids®. He should include Johnson & Johnson, JNJ, in his discussion. I don't know if a Band-Aid® will work this time, but sooner, or later, the chickens will come home to roost. This may be that time.
    Reply
  •  
    Sep 17 11:21 PM
    I quite literally salivate looking at that chart of JNJ.
    Reply
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