Bank Notes

Cramer’s got something on his mind that’s totally taboo and off limits – something no market commentator ever talks about. Cramer thinks the market is in the middle of seeing a real revaluation of stock values. He thinks we’re experiencing the beginning of a massive move higher, and he wants to focus on the role of the banks in all this.

Back seven weeks ago, when the rise of the machines caused a huge multi-day sell-off, everyone was running around saying the sky was falling. But Cramer said he thought the sell-off was an indication that the secular stocks were already bottoming – and they would account for the first third of the market bottom and the banks would be the second third of the bottom.

Well, Cramer says welcome to the second third. You can see it in strong numbers from Wachovia and Citigroup , as well as Fremont General and First Accredited Home Lending – which ended up bailing themselves out by selling their residential mortgages despite the subprime meltdown which doesn’t look like it’s as hideous as everyone once thought, Cramer says.

If Cramer’s right, he wants you to find a way to play this move because it could be part of an even bigger move; one propelled by the general cheapness of stocks and the ease with which companies can be taken private. You’re going to want a stock that’s levered to the strength in the financials and what Cramer believes is the impending revaluation of all stocks much higher. Goldman Sachs , the world’s banker, is Cramer’s pick.

It could turn out that Cramer’s wrong to be so bullish here. Maybe we don’t see stock values skyrocket over the next three or four years, which would take Goldman much higher. It could be that we’re just seeing the financials bounce right now, and Goldman, as a cheap and high quality member of that group, is a great buy for those reasons alone. Either way, it works, he says.

Bottom line: Cramer called this move two months ago when everyone else was being a pessimist. If you’re going to be negative, don’t assume that means you’re being careful – but you don’t have to be rationally exuberant either to like the banks or Goldman Sachs in particular.

Jim's charitable trust owns Goldman Sachs.

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