Cramer Still Vacant on Financials, For Obvious Reasons

On today’s STOP TRADING on CNBC, Jim Cramer discussed the myriad of financial-related stocks and anything tied to housing as an area he’d still stay away from.  In fact he said he’d sell most of these on any strength until this fallout from the derivative mess is behind us.  On MasterCard (NYSE:MA), Cramer said that down $18.00 feels like an overreaction, but even then he didn’t seem overly confident and probably would want to stay away.

Unfortunately, this financial sector malaise has created a dirth of issues, and it has made us make entire changes to our BAIT SHOP methodology and put many ‘stock picks’ for newsletter subscribers on hold.  Sure, as these get cheaper they get more attractive.  But I’ve gone through this before, and this is all happening ahead of any serious economic slowdown.  It is too hard to fight the tape right now and it will be hard calling any exact bottom on almost any of these financial stocks.  Today on CNBC where Charlie Gasparino even noted that Bear Stearns is getting to a level that it could in theory be thought of as a buyout candidate, but right now until the dust settles it is unlikely that any such offer would be made by anyone.  I even noted it a month ago as the potential candidate in the sector that ‘could’ get a buy, but all that hidden value inside the company has turned into ‘hidden liability’ in the recent weeks.  The lawsuits haven’t even really started and the waves of downward earnings estimates haven’t come from Wall Street itself.  Until that happens, this tape is just too hard to fight regardless of fairly recent and longer-term opinions.

Jon C. Ogg
August 1, 2007

Jon Ogg can be reached at [email protected]; he does not own securities in the companies he covers.