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Trading the Hurricane?

Wednesday, 27 Aug 2008 | 3:23 PM ET

Cramer started Wednesday’s Stop Trading! by reiterating his call that trading the potential for Tropical Storm Gustav to ravage the Gulf of Mexico is a bad idea.

“Weather’s a powerful story,” he said, but forecasters would rather ere on the side of caution, saying the storm will definitely hit New Orleans so people can prepare, and that might give traders the wrong idea.

“I think these stocks have had a run,” Cramer said the oil companies operating in the Gulf of Mexico. “I’d be very careful.”

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Mad Money's Jim Cramer shares his stock picks with CNBC's Erin Burnett.

“If we do not have a direct hit of the platforms,” he continued, “then you could see oil down $8, $9 on Tuesday,” since Monday is Labor Day and the markets are closed. “Are you prepared for that?”

Cramer said that as much as he likes these oil and natural gas stocks, he’s urging caution. These Gustav-related weather reports are ramping them up, and that’s a dangerous place for an investor if the Gulf doesn’t get a direct hit.

The Wall Street Journal is saying the infrastructure trade is done, but Cramer disagreed, saying that the newspaper has a history of making similar “party’s over” calls.

“If the party’s always over, why is Flour up so big?” Cramer asked, adding Shaw Group and Foster Wheeler as outperformers as well. “Did these guys just not get the word that the party’s over?”

Cramer said this type of negative story usually follows a trail of experts already declaring the same thing. So when the Journal or another paper jumps on board, it often times signals that the worst is over and it’s time to buy.

Also pulling from today’s New York Times, Quanta Services is the play if you want to invest in a company that helps to bring alternative energy to market. As the Times story says, a major problem right now is that our present energy grid system can’t handle these new wind turbines and solar panels, or these new alternative sources aren’t yet connected to the grid. Quanta’s business is making that happen.






Jim’s charitable trust owns Foster Wheeler and Quanta Services.

Questions for Cramer? madmoney@cnbc.com

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

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