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Can You Buy the Big Banks?

During Friday’s Mad Mail, Dan asked Cramer why we seem to be getting so many warnings about the big banks, like Citigroup and Bank of America, and asked the Mad Money host for his call.

“They’re headed higher,” Cramer said of these stocks, though they are suffering a bit of short-term pressure right now. For Citi specifically, it’s the US government’s continued selling of its massive stake in the bank. But for the group as a whole, it’s things like the appointment of Elizabeth Warren to advise on the creation of the Consumer Protection Agency. “These people are not good for banks,” Cramer said. But, he continued, “All bad things will pass. The banks are a buy.”

Nick in Connecticut worried about an analyst downgrade of Cramer fave Salesforce.com , a stock he’d just bought this week. Is there still upside for CRM, he wondered? Cramer chalked it up to mere profit-taking, especially given the run that Salesforce has had. He recommended buying a quarter of a position now, and then buying more if and when the stock comes down. “That’s how you handle a stock that is up 50% in a very short period of time,” Cramer said.

Lois in Boston took Cramer’s rule to never use limit orders one step further, asking him whether that meant she should never use stop-loss orders either. Why? Because just as market orders hurt investors during the “flash crash” of May 6, a similar decline could trigger those stop-loss orders, allowing them to be executed as market orders, again hurting investors. “Precisely,” Cramer said, calling stop-loss orders “a very big mistake.”

James kept his question simple: What’s up with Harley-Davidson ? There’s speculation over a potential takeover, but he couldn’t imagine people playing over $25,000 for a motorcycle in this economic environment. Cramer agreed, saying there most likely wouldn’t be any takeover. And while HOG may be a great American company, he said, “that doesn’t mean it can be a great American stock.”

Jeffrey in Florida said that Nucor hasn’t been performing as well as he’d like, and he wanted to add another stock to his portfolio: Home Depot . What was Cramer’s take? Buy them both. Nucor is “terrific long term,” and HD works both long and short term. “Home Depot should be bought right now,” he said.

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