Mad Money

Cramer’s Iran Awry Portfolio - Part 2


So far in Cramer’s Iran Awry portfolio, we’ve got Abbott Labs and Kinder Morgan Energy Partners. There are two more picks that will make this “just in case” portfolio complete.

The first is Yamana Gold. Any time military action is a possibility, you absolutely need a gold play, Cramer says, because gold tends to soar in wartime. You can own bullion or raw gold, but it isn’t as good as buying a growth gold company - and Yamana is the only true growth gold company out there.

Yamana also just opened a new mine in Brazil that should produce 180,000 to 205,000 ounces of gold this year. And the cost is nothing because, as a byproduct, the mine produces copper, and the two prices added together equal free gold, Cramer says.

If Iran Goes Awry? Pt. 3

If gold goes to $700 on a war with Iran, as Cramer thinks it could, Yamana could make you 10 points. The company trades at only 11 times earnings even though it has spectacular growth. And the growth will keep coming as Yamana prepares to open two more mines in Argentina and Brazil. For all these reasons, Yamana is all but assured to profit on a spike in gold, which is why it’s a great play if there’s military action against Iran and thus a perfect bet for Cramer's doomsday portfolio.

So far for the Iran Awry portfolio you want to be a quarter in Kinder Morgan Energy Partners, a quarter in Abbott Labs, a quarter in Yamana Gold and a quarter in … can you guess? The last piece of the puzzle is cash.

Cash will be king, Cramer says, in the case of an event with Iran. He’s more bullish on the three stocks, but he recommends keeping some cash on hand to feast off the panic that will ensue if tensions get higher. With your wallet full, you can buy stocks on the cheap if Iran goes awry. So while nobody ever made a dime panicking, those who buy the panics sure will.

Having a quarter of your doomsday portfolio liquid can be messed up easily, so Cramer says to make sure to put the cash into the highest-yielding account, even though most brokers would love to sweep it into one with the lowest yield. Make sure to get a minimum of 5% because that’s roughly what the shortest-term treasuries will get you. The highest-yielding sweep account will be the one that keeps the cash king in the event of the apocalypse.

Bottom Line: If you’re a skeptic, like Cramer, you’ve got to anticipate the worst. That’s why he has created the Iran Awry portfolio, which he recommends be split between Abbott Labs, Kinder Morgan Energy Partners, Yamana Gold and cold hard cash to take advantage of any potential panic.

Questions? Comments?