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The top priority for every investor, though, is to squirrel away enough cash for any significant expenses expected over the next four and half years. The market just can’t be trusted to generate that kind of cash, Cramer said, so it should be set aside now. Sell stocks to do it. Maybe we’ll get a pop next week, giving investors a better exit price. But even if that doesn’t happen, sell and sell now. The short-term outlook’s just too dire to do anything else.
Beyond that investors might consider an all-cash position. Or maybe a mix of gold, Treasurys and municipal bonds. Even short selling works, though Cramer doesn’t usually recommend that on Mad Money. The market is trending downward, after all, so that might be the best way to play stocks.
But these hard times won’t last forever. Stocks will give investors a reason to return, and they’ll want to be in before the market turns up. To survive until then, people should think defensive and diversified with some gold and cash to boot. The companies that last through this recession will be those that provide products or services that consumers and the government absolutely need. Seek those out.
Recession or not, people need to eat, brush their teeth and take medicine. So the usual food and drug plays work. But remember that we’re in a trade-down economy right now, so Wal-Mart [WMT
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], Treehouse Foods [THS
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] and Ralcorp [RAH
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] make better investments than Procter & Gamble [PG
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].
And given President Obama’s new budget proposal, the government will be doing the same kind of belt tightening. That’s why health-care stocks took a hit after he announced his new Medicare plans. Obama, in a sense, cut out the middlemen. Cramer’s worried about who’s next, and he thinks it could be the defense industry, which signals bad news for General Dynamics [GD
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] and Lockheed Martin [LMT
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].
Gold is definitely a good investment right now, whether bullion or ETF, as is oil. Even a bit of short-term trading will generate returns. Investors on top of McDonald’s [MCD
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] move Friday would have made a buck a share, while IBM [IBM
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] jumped a full $4. These kinds of stock pops might continue to provide profitable opportunities.
Admittedly, the market is horrible, Cramer said, but investors should hang in and make money where they can. Buy gold, do some short-term trading, buttress that with some longer-term positions in the companies that make consumer and government essentials. Just make sure the selling’s done in those names. Be patient and wait for that. The downward pressure will come to a stop, and you’ll get your entry point.
Cramer's charitable trust owns Wal-Mart.
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