Cramer's Predictions: The Rest of '09
While media coverage may be reflective, Cramer said Friday, investors need to be predictive. Instead of simply reading today’s headlines, they need to figure out what the headlines will be six months from now. That’s the strategy he employed as a hedge fund manager, and he tries to teach viewers how it’s done on Mad Money.
This is how Wall Street operates – looking forward – and the approach is evident in the latest wave of research, which, as we approach July 1, has focused more and more on the second half of the year. Never to be left out, Cramer used part of today’s show to offer his own predictions for the third and fourth quarters.
First, foreclosures should peak, housing should bottom, and the biggest winners will be the banks. When the credit crisis was at its worse and homeowners were defaulting on their loans, their foreclosed homes weighed heavily on banks’ balance sheets. But as prices stabilize, and possibly even rise, those homes can be sold, fetching a decent market rate. That puts financials like Wells Fargo [WFC 23.87 0.07 (+0.29%) ], which Cramer told viewers to consider buying, in great position for a rebound.
California, Florida, Nevada and Arizona comprise 50% of the US housing market, and they were the hardest-hit areas during the downturn. But over the past three months, prices in all four states have stabilized, and sales picked up significantly. That, too, is another reason to like certain banks, though Cramer thinks it also bodes well for NVR [NVR 499.08 -10.67 (-2.09%) ]. This real-estate firm operates in the Washington, D.C. area, and it’s a play on increased hiring by the federal government. Cramer expects “huge upside surprises” from NVR, though he cautioned viewers to use limit orders when buying – NVR sells for $500 a share.
The news out of trucking these days shows manufacturing near an all-time low, which is why the Street has shunned stocks like Paccar [PCAR 31.54 -0.69 (-2.14%) ]. But Cramer said that’s all the more reason to like it. PCAR holds $4.65 in cash, has paid out $3.5 billion in dividends over the past 10 years, and he thinks the stock is “about to roar.” He predicted this $31 name would reach $40 in a month.
Other themes worth watching in the second half of 2009: smartphones, which will benefit Apple [AAPL 142.44 2.58 (+1.84%) ] and its iPhone component makers; health care, now that President Obama’s proposed legislation looks less damaging than expected to the companies involved; and natural gas, because it’s so cheap.
Now, if you read today’s headlines, none of these picks would seem to make sense. But Cramer’s more concerned with the future. And while that poses some risks, those risks are an inherent part of investing. It’s just a question of how you manage them.
“If you want to make money,” Cramer said, “you need to take a chance. Sometimes you will be wrong, but if you never try…you'll never be right.”
The news over the last 3 months has improved. The is the result of what the Fed did at the end of last year. Over the past 3 months they have tightened and long rates have spiked. That has not been reflected yet in the numbers for that last part of the year. As I look out over the next 6 months I see nothing that indicates any kind of a recovery. If the market does not get the recovery they are looking for we blow out the lows.
The recovery is a bad guess and the boys are pushing it. It has been my experience that the economy will recover and they will tell you that it isn't. That is the way it is done. Cramer works for the boys and I wanted to document these comments now so you can look back at them at the end of the year. By the way trying to call a turn in a major trend is not the way a hedge fund manager makes money. That is a bald face lie.
The beat goes on ...Mikey
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