TheCramerReport.com's Mad Money Recap - January 18, 2008 (Predicts 2,000 point market drop)

thecramerreport.com ^ | January 18, 2008

[khnyny]

Cramer started Friday's show with his "Game Plan", but this segment focused on a Game Plan for the Fed and government instead of the stock market. Cramer doesn't like the stimulus packages being discussed in the White House and Congress, so he offered his own plan. He says that the reason stocks are dropping is that there is a fear that bond insurers will go out of business in the next few days or weeks because they are out of cash. They have $500 billion in potential claims, and they don't have enough money to pay out the claims. If the companies can't pay, Cramer thinks the market could drop a couple thousand points, no one will be able to borrow any money, and banks could be taken down with the insurers. Cramer's plan is to have the government buy the toxic mortgage insurance, sell off the good parts, and pay off the remainder at a discount like 50 cents on the dollar. This will give everyone certainty so that banks and other people can go about their business, and will cost at most $250 billion, which is about the same amount of money Congress is talking about passing ou to individuals.

Cramer then took some phone calls. The first caller asked if we are anywhere near the bottom, and Cramer said that he thinks we are near a bottom, as long as the insurance issues are taken care of. The next caller asked if it's time to look at blue chip financial stocks, and Cramer said that it's better to look at beaten down tech and healthcare stocks because of the mortgage insurance issues he outlined above.

[Ken H]

You can figure the return on the S&P 500 with dividends reinvested for any time period from 1970-2003:

S&P 500 Total Return

[CutePuppy]

Cramer... where do I start?

http://www.nypost.com/seven/01182008/business/mad_jim_cramer_loses_golden_50k_bet_44498.htm

‘MAD’ JIM CRAMER LOSES GOLDEN $50K BET
By ZACHERY KOUWE

January 18, 2008 — Should stock jockey Jim Cramer be locked up for aiding and abetting the subprime market meltdown?

The host of CNBC’s “Mad Money” now owes $50,000 after losing one of the worst wagers of his entire career to rival trading wiz Eric Bolling.

Cramer, who favors the phrase “Boo Ya,” made an on-air bet with Bolling about a year ago that financial services would be the hottest sector of 2007.

Bolling, a former trader at the New York Mercantile Exchange, placed his money on oil and gold.

Investors who took Cramer’s advice would have taken a 30 percent hit to their portfolios as the stocks of financial titans such as Citigroup and Merrill Lynch got hammered by the mortgage crisis.

On the other hand, investors savvy enough to follow Bolling’s bet on gold and oil would have hit the jackpot, as the hot commodities jumped over 60 percent in the same period.

Cramer, through a spokesman, blamed his loss on Federal Reserve Chairman Ben Bernanke’s failure to cut interest rates more aggressively.

“The bet turned on Jim Cramer emphatically calling for the Fed to ease rates. The Fed didn’t follow Jim’s advice, and as a result he’ll be happy to write a check to the charity of Eric’s choice,” a spokesman said.