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Bargains in Bonds, Retail and Infrastructure

Over a year ago, back when Cramer was screaming "They Know Nothing" and trying to warn about the impending financial apocalypse, he was incredibly negative, and he was right.

When Cramer brought up selling at least 20% of your portfolio back on September 19th when the Dow was at 11,300, he was right.

When he appeared on the Today Show and said to sell everything you need to help pay for your big outlays over the next five years back on October 6th at Dow 10,000, Cramer was still negative, and still right.

Now, he says "enough is enough".

Prices have fallen so far, so fast., and it seems that everyone has become as gloomy as Jim was when he made those sell calls.

It’s time to once again ask, “Is Cramer too negative”?

Cramer is aware that there are many questions in this environment still. Until today, despite massive intervention, the banking system remained in tatters.

"In spite of all that, we are in much better shape than we were on Friday, and this may be the point where it’s more dangerous and irresponsible to be too negative than it is to make room for a little optimism and start recognizing that good things can and do happen," said Cramer.

Jim is not going to tell you to go buy after a two-day run. He wants to wait for a sell-off.

However, there are finally bargains. He believes that the real value right now is in the bond market. "We’re beginning to see mortgage-backed bonds that at trading at levels where 60% of the mortgages would have to default in order not to make big money. Even the most negative mortgage statistics haven’t crossed 25% defaults. It’s hard to believe that 60% of the people would default on their mortgages, even in the event of a major spike in unemployment.", added Cramer.

He also sees bargains in little stocks like Jones Apparel , which has about $2.40 of cash per share. Cramer acknowledges their debt but regards it as manageable with plenty of wiggle room. Jim hates retail right now, but suggests it might be time to ask if things have gotten too negative there, using as an example the huge 30% move in Jones Apparel on Monday that he believes is a classic short squeeze.

But Jim can’t help but be attracted to stocks like Jones Apparel or Shaw Group that are trading at or near their cash, or the accidental high-yielders either. You should believe in some of the infrastructure stocks given Obama’s big infrastructure plan, like Jacobs Engineering , or Caterpillar with its accidentally high yield.

Cramer also proposed the next stage of a recovery plan. He'd like to see an actual Federal Investment Program, because of how cheap many of these assets are.

"Here’s how they need to do it. We need to have the government basically staff a trading desk to close what’s known as the spread between the prices of these pieces of paper where buyers and sellers converge. These assets are no longer troubled, some are simply now bargains. But the problem is that the buyers and sellers are too far apart. Can you imagine a stock that trades between $30 and $70, where the sellers are asking 70 and the buyers are bidding 30? That’s what many of these bonds that Cramer likes now trade at. If the government would create a two-way market in between it would unlock the market for these bonds, and take whatever spread there is and give the proceeds to the FDIC. Worst case scenario, the government holds this stuff to maturity and makes a fat profit, or at least make it so this stuff isn’t a black hole," proposed Cramer.

Cramer thinks it’s all starting to come together a little.

He's not saying that everything will be alright or that this rally will necessarily last. We might see a retest of last week’s lows. But, Cramer doesn't want to run the risk of being a permabear.



Questions for Cramer? madmoney@cnbc.com

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