Investors can buy almost any bank for the next week, Cramer said, as this group emerges from the black hole into which the credit crisis had pulled it. In fact, he called this a once in a lifetime move in the financials.
What’s happening? The stress tests, that’s what. The Treasury Department released its test results, and this sector is on much more solid footing than anyone had thought. Turns out Armageddon is no longer an option. Banks won’t be nationalized. The worst-case scenario that the most ferocious of bears warned against is off the table. With confidence restored, Wall Street is rushing back into these stocks.
Sure, the feds said at least a couple of banks needed to raise capital in order to survive another downturn, should that happen at all: Bank of America , Wells Fargo, Morgan Stanley, Citigroupand six others. But there will be equity offerings to generate the cash. Wells and Morgan Stanley already held theirs on Friday.
Wells Fargo’s offering was a big hit, as money managers started buying shares at $22 a piece and kept going right up to $28. Cramer urged investors to do the same with Bank of America and any other companies that are selling shares to meet the Treasury’s capital requirements.
Friday marked the close of yet another week of gains, something we’ve seen consistently since early March. In addition to the banks, the oils were up today as well. Tech, the other leader in this market, also had a good day, with the Nasdaq closing 1.3% higher. We will continue to see this kind of action, Cramer said, as long as skeptics refuse to believe in this rally.
Also, this is why Mad Money urges viewers to stay in the game. Those who are frightened out of the market – probably because they believe the short sellers who predicted bank nationalization, massive inflation, another Great Depression and on and on – miss moves like the one we saw on Friday.
The lesson here? The next time the market turns down and you want to quit – don’t.
Cramer's charitable trust owns Morgan Stanley and Wells Fargo.
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