Mad Mail: Why Diversify?
Hey Jim: Loved your segment the other night on CEEMEA (Central and Eastern Europe, Middle East, and Africa). It seems to me that Caterpillar is an obvious play on CEEMEA, but you didn’t mention it. Am I missing something? --Steven
Cramer says: “It is a big CEEMEA player, and they actually mentioned it on their conference call. But everyone’s decided that Caterpillar’s levered to just U.S. housing, so I’ve kind of given up trying to preach that one, because no one believes that it’s anything other than a play on Lennar and Toll.”
Dear Jim: If I had the power, I'd crown you the thinking woman's sex symbol…However, I disagree over your "Am I Diversified?" segment. I believe your rule that "everyone" should diversify their stocks over a variety of sectors is fine for those who subscribe to the lazy man's style of investing - such as those who think their fairy godmother's going to crawl under the covers with them in the middle of the night, rub their little tummies and whisper sweet nothings regarding what stocks to buy and sell - but it doesn't apply to those of us who actually roll up our sleeves and do the down and dirty due diligence. I currently have about 65% of my stock portfolio in tech (breathe, baby, breathe). That's right, 65% of my stock investments are tied up in Google, eBay, Intel and Sun Micro - and I wouldn't have it any other way. I think your analogy that the whole tech sector - or any one sector for that matter - could crash without warning, is bordering on hypochondria. Relax. I have my eye on the ball, and if I don't like what I'm seeing, I'll have no problem pulling out of my techs. --Cathleen
Cramer says: “I started a radio show in 2001. It was one of the greatest moments ever to sell short in tech. And I would have people call me, and they would have your portfolio. And they lost fortunes and they didn’t listen to me. I don’t do this because I’m trying to be a naysayer or being a prude, so to speak. Why I did it is because I saw so many people wiped out during that period that I can’t get away from it…there’s no way I’m going to walk away from that.”
Dear Jim: Could you please clarify why EMC is a good way to play the VMware? VMware has exploded since the IPO and EMC is up less than 10%. When will the market start looking at EMC owning most of VMware and increase the share price of EMC? --Mike
Cramer says: “You have to look at the Cypress Semi situation. Just go look at that. You’ll see they offered a solar stock, the stock went up big, and eventually it benefited CY. It’s just a cheaper way to play it. It’s less risky than VMware. I own EMC for my charitable trust. I’m not walking away from it. I’d like to buy some more.”
Jim’s charitable trust owns Caterpillar and EMC.
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