GO
Loading...

Houston, We Have a Bottom

Wednesday, 23 Jan 2008 | 6:39 PM ET
Bottom Dollars
Mad Money host Jim Cramer discusses whether we've finally hit the bottom.

The Dow lost 320 points Wednesday, the day after a 75 basis-point rate cut, and then surged back to close up 299 points. That only happened because the market showed all the signs of a bottom, Cramer said during tonight’s Mad Money.

Stocks are too cheap and oversold, the Fed’s (finally) acting with a sense of urgency and the whole ordeal has been on the front page of The New York Times – all telltale signs for Cramer. So the question now is, what do investors do next?

A new cycle’s starting, the Mad Money host said, and with it comes a changing of the guard. The former leaders – the Medco Healths , John Deeres , Exxon Mobiles , BHP Billitons or Boeings – will be replaced by what was the worst of the worse: banks and retail.

But that’s just how it goes, Cramer said. “Big money says, 'sell the leaders and buy the laggards.' ” That’s how institutional investors think, and that’s how these trends get played out.

But Cramer doesn’t necessarily agree with that. There isn’t a worldwide crash coming that will kill commodities prices, forcing us to cut back on oil and gas, aerospace and defense and construction. Agriculture might still have a ways to fall because its decline started later than other sectors’, but Cramer recommended holding on to the rest through the cycle.

The financials and retailers work, though. They’re inexpensive and a motivated Fed should boost both these industries. Yesterday, Cramer offered TJX as a stock to own, and he’s bullish on CVS Caremark, too. Costco, Guess and J Crew Group all got the thumbs up as well.

“The times may be a’changing, but the stocks remain the same,” Cramer said. “Both the old leadership and the new look like buys now that we’ve come through the panic and bottomed.”

Jim's charitable trust owns CVS Caremark.

Questions for Cramer? madmoney@cnbc.com

Questions, comments, suggestions for the Mad Money website? madcap@cnbc.com

  Price   Change %Change
BHP
---
COST
---
CVS
---
DE
---
GES
---
TJX
---
BA
---
XOM
---

Featured

Contact Mad Money

  • Showtimes

    Monday - Friday 6p ET
  • Jim Cramer is host of CNBC's "Mad Money" and co-anchor of the 9 a.m. ET hour of CNBC's "Squawk on the Street."

Mad Money Features

  • Grab the latest CNBC gear from the NBCUniversal Store!

  • Get a behind-the-scenes look at how Cramer formulates his investment advice. "Inside the Madness" is a column, which features e-mails and more with Cramer and his researcher Nicole Urken.

  • You’ve always wanted to hit the “Hallelujah!” button. Here’s your chance.