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Mad Mail: When Do I Buy In?

I have watched almost every Mad Money episode over the last four years and would like to thank you and your staff for all that you do. I heard your reasoning for Sears Holdings' recent price action on “Street Signs” the other day, but can you justify its valuation? Earnings have been trending lower for a few years now, there seems to be little potential for growth, and they have increasingly negative free cash flows. I can't get my head around it. Am I missing something, or are all the SHLD longs crazy? --Asif

Cramer says: “First, Asif, there’s a tremendous short position in it, including a lot of naked shorting, which this new SEC’s going to get rid of. Second, remember, despite all those revenues it is only a $6 billion company. So the market cap’s very small. I still believe that Eddie Lampert will pull it off. But because of the housing crisis I chose not to ride it down for people. But I will say this: If you think that housing’s going to come back and come back strong like I do, then owning Sears stock wouldn’t be such a bad idea. And the balance sheet’s not nearly as bad as you think and their credit line is solid.”

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Jim: While the market has been impressive as of late, that leaves a big question for those of us who were burned in the dramatic decline and who haven't participated in this most recent rally. I know you say that we shouldn't chase and we should wait for pullbacks, but at what point do we jump in - especially considering pullbacks are now rarely occurring? Where do we latecomers start? --Lee

Cramer says: “Traditionally in a bull market, Lee, you wait until a 3% to 5% pullback to start, and a 5% to 8% pullback to be all in. I’m using bull market rules because we are in a bull market.”

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Jim: Have you seen the video to MIA's "Paper Planes"? I feel a lot dumber after having experienced it, so maybe you can help me. Will Terex continue to wallow, or is there a chance for some gains? Thank you and keep up the great work! –Mark

Cramer says: “No, I don’t like Terex. I don’t like the balance sheet. I don’t like Manitowoc. I care about balance sheets here, which is also why I said I don’t trust Hartford [Financial Services Group] , I don’t trust Lincoln National. When the balance sheet’s in question and when we’re not out of a recession yet, these companies can still go lower. So, no thank you Terex. It’s just too dicey. Why not own Caterpillar? If you want dice, CAT could always cut its dividend. I would buy more.”





Cramer's charitable trust owns Caterpillar.

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