Stop Trading!: Commodities Crash Comparable to Dot-Com Bubble
The recent commodities crash rivals that of the Nasdaq’s decline after the dot-com bubble burst, Cramer said during Thursday’s Stop Trading!.
“Except for those companies were phony,” Cramer said. “These are actually real companies,” and they’re being hit regardless of how strong their core business is.
Cramer blamed the drop in commodities on hedge-fund redemptions. Clients want their money back, and hedge funds are scrambling to raise it.
Big mutual funds like Fidelity and T. Rowe Price wouldn’t sell if their holdings were dropping this fast, so they can’t be blamed.
“When you see really high-quality American companies down 60%, 70% in three weeks, that’s not Fidelity banging them out,” Cramer said. “They just don’t do that. It’s people who have to bang them out.”
With investors looking for any kind of return they can find in this market, Cramer recommend DuPont and McDonald’s for their dividends. The former does have exposure to the troubled agriculture and housing sectors, but DuPont is a “very well-run company.” MCD just raised its dividend, and Cramer doubts CEO Jim Skinner would do that if he planned to cut the payout in the near future.
BP is also worth considering, Cramer said. Dropping oil prices make this stock a “real wildcard,” but there are virtually no other big oil-services names that offer dividends. So investors have to start looking for these opportunities.
NYSE Euronext, the bane of Cramer’s charitable trust for much of 2007, might be cheap enough to buy again. CEO Duncan Niederauer seems to have solidified the stock with a dividend yield offering and a buyback.
“If that stock goes back to its 52-week low,” Cramer said, “I’m going to say buy it.”
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