Feb 06 2008
Super Fat Money Tuesday
The market called in sick today. The DOW was DOA for $370 (3%) while the NASDAQ is down $73 or 3%. What does Mad Money’s Jim Cramer have to say about this?
“The market went down because it went up so much in the last three weeks. The market has a fever and the only cure is [not more cow bells, but] more Fed rate cuts.”
Once again, we need more rate cuts. We just had two rate cuts of 3/4 and 1/2 basis points. Can we just let it go into recession already? We all know it’s coming, but these rate cuts are just delaying the inevitable. While in the mean time day traders can pocket a 1000 point gain in three weeks.
So what is left? Cramer says early cycle stocks means good dividend yielding stocks. In his book, Stay Mad for Life he mentions that good dividend paying stocks can cushion a fall and will look like a better alternative than bonds as yields go south. Bank stocks, the worst hit and the first to recover, as Cramer mentioned earlier this year, are yielding 3%-4%. Are they a good buy then? Well, as the interest rates go down, banks start to print money. One such player, a Cramer Fav, is NLY-Annaly Capital (up 5% today). It’s stock took the chair lift up the mountain this year as everybody else was skiing downhill.
So where to go? Colorado? How about Brazil?
Cramer’s Call of the Day: RIO - Companhia Vale do Rio Doce ($29.69)
- Producer and exporter of iron ore (#1 in world) and nickel (#2 in world)
- Ventures in the aluminum, coal, energy and steel businesses
- Brazil gushes oil with jobs galore
- Goldman Sachs raise price target to $46
- China’s(GDP up11%) demand for coal raises coal prices
