Stop Trading!: Is Worst Over for Financials?
The way some money managers are talking it looks like the worst of the storm may have passed for the financials. Legendary short seller Jim Chanos has shifted some of his focus away from the battered group and is now looking at commodities. Metropolitan West Asset Management’s Tad Rivelle told “Street Signs” that his firm is looking to fixed-income securities from JPMorgan Chase, Bank of America and Citigroup . Cramer, too, has recommended a few stocks from the sector.
Cramer agreed with Rivelle that Bank of America and JPMorgan Chase were good companies, and the Mad Money host has been telling viewers to buy these stocks – not the preferreds – on any weakness. Cramer’s bullish on Wachovia and BB&T as well.
Investors who want to buy preferreds should consider the PGF exchange-traded fund, Cramer said. Buying an individual preferred is a bad idea as most have gone down in value since those of Fannie Mae and Freddie Mac were crushed as part of the government bailout. Cramer watches the PGF as an overall sing of financial help, he said, because preferred stock usually goes down before any sizable negative event.
Cramer recognized the volatility of this market, saying, “It’s very hard to have any conviction.” But held firm in his belief that some investing strategies are working right now.
When gas prices were high, analysts worried about attendance at Disney’s theme parks. But it turned out the numbers never dropped. Now that those prices are declining again, Cramer’s expecting for this division to see some healthy growth. He did mention being concerned about whether or not cutbacks in flights to Orlando would affect Disney’s business, but regardless Disney is traditionally seen as a stock that does well when gas prices come down.
Ultra Petroleum is enjoying a “monster move,” Cramer said, and this stock is usually forecasts good news for its peers, such as Cimarex Energy. The problem, though, is that “this group is wildly in the hands of hedge funds. It’s not for regular, everyday people.” In fact, anything commodity related is largely being affected by these funds, he said. It’s better to buy a Kimberly-Clark or UPS if you want to play lower energy costs. Cramer believes that these commodity stocks have turned again, but with all the hedge fund involvement, “it’s not an opportunity if you can’t trade.”
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