Jim Cramer's Mad Money - Cox Slow on the Uptick (11/21/08)

by: SA Editor Miriam Metzinger November 22, 2008 | about stocks: CRM / OC    
Miriam Metzinger

SA Editor
Miriam Metzinger

About this author:
Become a Contributor Submit an Article
  • Font Size:
  • Print

Stocks discussed in the in-depth session of Jim Cramer’s Mad Money TV program, Friday November  21.

Cox Was Slow on the Uptick
 
Cramer discussed the difficulty of owning stocks in this rollercoaster market and how to trade despite the volatility. While all assets classes, except for treasuries, have taken a hit Great-Depression style, stocks have suffered the most because selling stocks is the quickest way to make money, and everyone needs cash right now. For the brave investors who want to trade stocks, Cramer suggested buying in increments on the way down and selling on lifts. He reiterated his often-repeated advice to buy recession-resistant stocks which are accidental high-yielders and are trading close to cash.
 
CEO Interview: Owens Corning (OC) Michael Thaman
 

Cramer recommended Owens Corning last spring as a green stock, and since then, green stocks have been savaged due to falling oil prices and hedge fund mania. Owens Corning was at $24 and has been cut in half. However, the company has been doing everything right, is still the leader in all of its businesses including its famous insulation business as well as roofing, asphalt and composite materials. Michael Thaman commented on the discrepancy between Owens Corning’s stock price and performance, particularly in its growing roofing business. He thinks government incentives should be put in place to encourage more energy-efficient construction, including insulation. Although the company has seen declines in wind turbine sales, Thaman is optimistic that growth overseas will compensate for falling demand domestically. Cramer says OC may be a good buy if the hedge funds stop selling and oil prices go up. For those who want to buy in the near future, he would buy when the price falls to $10.

 
Bring Back the Uptick
 

While Cramer has had harsh words for Obama’s Treasury Secretary pick, Tim Geithner, he is willing to give the future Secretary a chance, and hopes he learned from his mistake in letting Lehman Brother’s collapse. The new target for Cramer’s outrage is SEC chairman Chris Cox, and Cramer says if Obama replaced Cox, he could improve the economy dramatically without spending a dime. Cox’s crime was to repeal the uptick rule, a regulation adopted in the 30s to prevent another stock market crash. The uptick rule requires short sellers to wait for a buyer to pay an uptick, or a higher price, before shorting a stock. Without such a delay, short-sellers are able to create the kind of artificial panics like the one that slashed value in Citibank. "I think the shorts played a key role in obliterating this once great American bank,” Cramer said and added the uptick rule is essential “ to bring capitalism, not capital destruction, back to our markets."

 
CEO Interview: Marc Benioff, Salesforce.com (CRM)
 

While Cramer has not been bullish on enterprise software, particularly when Salesforce was at a “pricey” 54, he was impressed by the fact Salesforce reported a better-than-expected quarter and its price fell 2.2%. Salesforce saw earnings, growth, a record number of new customers and an improvement in October sales even as other enterprise software companies were swooning and the consumer was sluggish. Marc Benioff says the secret is his company is “singularly focused on customers” as the best strategy for tough times. Cramer praised Benioff because his company is performing “miraculously” and says when the clouds of the economy finally lift, he might be interested in Salesforce as growth stock.

 
Seeking Alpha publishes a summary of Jim Cramer's stock picks every day including: Mad Money Recap, Lightning Round and his Stop Trading! Picks.

Get Cramer's Picks by email-- it's free and takes only a few seconds to sign up.

Seeking Alpha is not affiliated with Jim Cramer, CNBC or TheStreet.com

Related Articles

This article has 13 comments:

  •  
    Nov 23 09:48 AM
    yes restore the uptick rule ASAP.
    > jack
    Reply | Link to Comment
  •  
    Nov 23 09:54 AM
    Cramer is 100% right about Cox and the uptick rule.

    The market does not care about fundamentals right now, because everybody is scared of the 500 point decline in the last 15 minutes! It is getting ridiculous!

    The market will continue to implode without the uptick rule.
    Reply | Link to Comment
  •  
    Nov 23 11:13 AM
    What was the reason for eliminating the uptick rule? Usually once a law or rule is in place it takes a major issue to get support for change.

    Was the abolition of this rule just the whim of one man, Chris Cox? If so why not have a congressional investigation on why.

    What was his thinking in changing the status quo? Is it possible he's on the take to short selling hedge funds?

    What about all the reports of the shorting or phantom stock? Why is this not being investigated by congress?

    Overstock.com's CEO Patrick Byrne is no fool but you would think so if you Google him. Instead read what he has to say about Naked short selling on his DeepCapture.com blog.
    Reply | Link to Comment
  •  
    Nov 23 11:16 AM
    the deletion of the uptick rule allowed the decimation of the gold and oil stocks, which helps obscure the rampant printing of new dollars.

    by the time the deflation myth proves to be wildly off base, it will be too late for the average investor to protect themselves.

    which is what Cox and his friends fully intended >> confiscation of the peasants' carefully horded cash
    Reply | Link to Comment
  •  
    Nov 23 11:20 AM
    laughing...naked short selling. yet another little item on the Cox resume of shame. thru out his tenure, the SEC has turned a blind eye to naked short selling in the precious metals sector. we have companies now with assets valued at pennies on the dollar.....

    and there are miners on the verge of going out of business. one of the mining papers reported last week on a small canadian miner shutting off production and literally putting an entire town out of work. Meanwhile, the mine they were working? Several hundred million dollars worth of gold & copper. The stock? Now selling for .27 cents.

    There was method to this madness. You can't tell the public that Helicopter Ben's presses are harmless if the canaries in the gold mine are singing their little hearts out.
    Reply | Link to Comment
  •  
    Nov 23 11:25 AM
    Cox is the poster boy for Bush-style cronyism. Affable, glad handing incompetence. Core Reaganesque belief that government is the problem and that the worse government screws up the better its failure serves to promote this same brain dead ideology.

    Never again allow these fools anywhere near a government office.
    Reply | Link to Comment
  •  
    Nov 23 11:56 AM
    I strongly agree with Jim Cramer. So long as SEC Chairman Cox does not bring the uptick rule back, market cannot come back.Sen. McCain should have fired him.
    Reply | Link to Comment
  •  
    Nov 23 03:36 PM
    Cramer is 100% correct with short selling creating panic in a stock. Citigroups price plunge would have never happened with the uptick rule. Short sellers can destroy share prices of any company thats earnings are questionable (financials,tech,etc.)... People see the price plunge and immediately think something is wrong. They sell and ask questions later. You will have people leaving the market to never return. All analysts agree Citigroup should be much higher.
    Reply | Link to Comment
  •  
    Nov 23 03:37 PM
    Cramer is 100% correct on the uptick but why hasn't Cox reacted weeks ago when this slide started. Is he too being "lobbying" like Congress to lean to special interest groups rather than the U.S. public to whom he is responsible ? ? ?
    If we don't have proper regulation, proper overseeing, and proper enforcement, then the nation is doomed for sure.
    Ditto for management compensation, particularly options, of which the stockholder watchdogs, ie directors, are part of the scam.
    Reply | Link to Comment
  •  
    Nov 23 05:00 PM
    Jim Cramer is absolutely correct. Bring back the up-tick rule. The concentration of stock ownership in a relatively few financial institutions, in conjunction with the removal of the up-tick rule is an invitation to artificially manipulate a companies stock price. It was originally put in place to prevent the effects of concentrated short selling in 1937. History repeats itself…. will some people never learn?
    Reply | Link to Comment
  •  
    Nov 23 05:45 PM
    Nothing new. It has been obvious for sometime that Commissioner Cox is an empty suit buffoon.
    Reply | Link to Comment
  •  
    Nov 23 06:27 PM
    Bush can fire the SOB now. No need to wait for Barry to -maybe- do it. Fire COX now. And send uncle Ben with him. Yeah, I split an infinitive. So sue me. <G>
    Reply | Link to Comment
  •  
    Nov 23 08:42 PM
    Patrick Byrne should be commended for the grief he endured due to naked short selling. It's amazing that he and Overstock survived. Investors are on the losing end and until the uptick rule is reinstated, we really don't stand a chance of success. I hope Barack Obama makes the replacement of Chris Cox one of his highest priorities.
    Reply | Link to Comment
More Comments on OC »
Top Rated Comment Streams:

Numbers are net rating-

See all Top 100 »
More by SA Editor Miriam Metzinger

Investment Resources
Money Management
Research
Seeking Alpha provides these ads as a service to its leading contributors
Articles on related themes
Long Ideas
Cramer's Picks
Today's Market
Bonds