tv Mad Money CNBC March 24, 2010 4:00am-5:00am EDT
i'm jim cramer, and welcome to my world. >> you need to get in the game. >> firms are going to go out of business, and he's nuts! they're nuts! they know nothing! >> i always like to say there's a bull market somewhere. and i promise -- "mad money." you can't afford to miss it. hey, i'm cramer. welcome to "mad money." welcome to cramerica. other people want to make friends. i'm just trying to help you make some money. my job is not just to entertain you but to educate you. so call me at 1-800-743-cnbc. where is that darn bearish parade of horribles when the short sellers need it? what happened to the bull killers?
the things that were supposed to slaughter this market. >> the house of pain. >> where did they go? we have to ask ourselves that as the market climbs still higher today. the dow going up -- ♪ hallelujah -- another 103 huge points, taking us back to levels we haven't seen since the big declines of 2008. oh, the s&p was right there too. roared ahead almost 3/4 of a point. frankly, that's incredible given the amazing run we've already had. it's been a total rampage. it's turned furious grizzlies into lovable pandas. and ferocious black bears into house pets. worthy of being koala bears. just think, a few weeks ago it
seemed like so many things were going the bears' way. let's tick them off. commercial real estate, it was supposed to collapse. housing prices, weren't they supposed to take another big step down? the chinese bubble, it was supposed to be bursting. the first quarter was supposed to be a down quarter for tech, always has been. the health care bill, wasn't it meant to annihilate us? the banks were supposed to get squeezed by financial reform. and the consumer was allegedly tapped out allegedly and left for dead because employment hadn't improved. people were still filing a huge number of unemployment claims. here, though, as we round the turn into the end of the first quarter, a remarkable quarter, the horrible parade has simply refused to come together. commercial real estate, right now every day new firms are being created to buy distressed commercial real estate. meanwhile, the stocks at the publicly traded real estate
investment trusts are so strong, hitting 52-week highs almost every day, that they are feasting on down and out properties for a song. plus, there's so little new construction so prices are all on the increase. we've heard from publicly traded real estate investment trust managers over and over again that rents have stabilized. in many areas they've risen. vacancies are so low. housing prices keep stabilizing. and as we learned from kb homes today, a gigantic home builder, which posted its first rising backlog in four years, that california, which is one-fifth of the country, has now turned. i cannot stress to you how important the turn in california's proven. the chinese asset bubble, hey, as we saw today from the new agreements that china is stuck with, that they're going to stick with for iron, that they have to pay. they're paying up for everything just to turn as much raw product into finished goods as possible. we know that the mineral
companies are ready for the next leg. vale, bhp, freeport, all stocks that were so heavily shorted because of the imminent popping of the chinese bubble have instead gotten a glorious second wind along with bucyrus, along with joy global, along with caterpillar as the iron agreement looks like a struggle that the producers will win. at last, at last someone's beaten china. remember, they have to build more steel. so they need more coking coal. metallurgical coal. remember met coal? and that's walter energy, wlt. you should still be buying wlt despite today's $5 run. it's that big. it's that big for the china steel industry. tech? we're getting ample signs that tech actually accelerated in the first quarter. you know that that will be the first time i've seen that since 1999.
that's right. 11 years since i've seen this. we went from intel and sandisk to cree, rf micro, signaling things are much better. getting stronger through the quarter. xilinx, microsoft, oracle, which reports at the end of the week, they're all making the same noises. you know i think oracle's a buy ahead of the quarter. and of course biggest of all, apple. it's about to launch the most important product, not just in apple's history, but perhaps in tech's history. the ipad. the tech short sellers are experiencing a level of pain that cannot be sustained. you just can't take it. i've been there. >> the house of pain. >> i've shorted so many stocks when i ran a hedge fund. i talk about it in -- oh, i've got the -- i've got the japanese version there. but i talk about it in "confessions of a street addict." i just couldn't take it anymore. i'm telling you, they can't take it anymore especially after apple's $3.61 romp to new highs today. health care, what can i say? spend first, pay later, and spend a lot.
the legislation's brilliant like that. you see, we will not be crushed by new taxes until 2011. and in the meantime, every health care company imaginable will see a giant uptick in orders from all the hospitals and all the doctors who are now handling all these new patients. it's a remarkable sleight of hand that is driving the bears nutty. the consumer, here's something i check daily. i'm hearing that there's an extraordinary burst of spending going on in the months of february and march. those usually aren't big months for retail. why? perhaps the squatters in millions of homes who aren't paying mortgages, a theory that jpmorgan put out this morning. they're shopping like mad at the malls. they don't have to pay their mortgages. well, maybe it's in part because the layoffs have peaked and the rich haven't felt the tax increases yet. think of it. just this week everything from dollar tree to saks, from big lots to nordstrom's, keeps hitting new highs. financial reform. now, here's a return to the government of, for, and by the
corporation. we got so used to that under president bush, president obama changed it, we thought. the money and interest have coalesced, and they've used their influence to make this bill a giant win for the publicly traded banks, which are rebuilding capital anyway. i saw all of their bonds flying this week. that is a precursor to a monster run. see, the fees that are going to be charged the banks, the assessments in these bills, they're not big. there are no new rules that matter to earnings per share. the banks won't be breaking up. and the democrats' fit of peak at bankers in the wake of scott brown's massachusetts win, the so-called volcker rule, well, maybe it's more of just a guideline and it's certainly a thing of the past. the best of all, congress spent so much time doing health care, it's now so tied up on the positive of financial reform that it looks like washington's going to take a real vacation from the front pages of "the wall street jls" of the world. that means earnings, which will
be spectacular and start in less than three weeks can once again step into the spotlight. why does all this matter so much? because hedge funds coming into this month had made major bets, incorporating all these bearish themes that have now gone up in smoke. and they didn't see the other bull markets that are starting to stampede, like the one in aerospace i've introduced you to, or fertilizers or yesterday's show-up at the shoe bull market. no, they only saw the litany of horribles, and they decided they had to bet against all of these sectors. and these negative hedge funds now have no place to hide. here's the real killer. all this bear destruction has come when employment has not yet picked up. can you imagine what happens if it does? can you imagine the bears turning into bulls as their last remaining hope goes away. what the heck happened here? i think the bears diluted themselves. they thought that the world was coming to an end. and they were so excited and
enthusiastic that they took dramatic action, shorting all the groups i've just mentioned. there was a time before we had hedge funds galore when the good news would be yawned about, give us an incremental move. but when you have so many hundreds of billions of dollars in funds, making bets against the market, shorting the market, they themselves can cause a bullish stampede when they're proven wrong. here's the bottom line. the parade of horribles that seem to be inevitable to the yogis and booboos a few weeks ago has turned out to be a parade of positives. an almost macy's-like display of happiness in the stock pages. and the hedge funds who shorted stocks heavily are now providing the fuel for this rally as they desperately buy to cover short positions that have turned against them for certain and show no signs of going back to the bears' dens any time soon. and to think, how much money could they have saved if they had simply hibernated like their real cousins?
hibernated for the winter. and not surfaced perhaps until a couple of weeks after spring. let's start with jim in florida, please. jim. >> caller: hey, jim, love the show. >> thank you, jim. >> caller: the stock symbol cls. what is your six-month price target, and is it a china play? >> yeah, well, it's most distinctly a china play. and here just so you know we're talking about cliffs natural resources, a stock we recommended in an "off the charts" segment in the mid 20s. it didn't work, and now suddenly it's caught fire. why is that? because the world is short iron. there isn't enough. iron's only available in a very, very few places. cliffs has got it. this stock had been knocked down severely by hedge funds gone wild. remember that at the end of 2008? and it is on fire. my price target. it's very difficult. but it's totally conceivable that this stock could go back to levels that it saw before the great crisis. and, by the way, that would put
it maybe -- i mean, maybe this thing could go up another 30, 40 points before it gets so overvalued that i have to change my mind. let's go to richard in california, please. richard. >> caller: boo-yah, jim! >> boo-yah, richard. how are you? >> caller: cramer, you are the best. the best of the best. >> thank you. >> caller: i loved your fifth anniversary show. loved it. >> we had a good time. thank you very much. we're still talking about it here. i really appreciate that. kind words. >> caller: must tell you that i never thought i'd be trading stocks at this age. i'm not going to tell you how old i am. but i'm having fun. >> well, good for you. you know what, fun can be a component. there are many people who think this shouldn't be fun, that it's about money. my take is unless i make it fun you will turn it over to other people, and they will not do as well as you. i've got to keep you interested in your money. how can i help, sir?
>> caller: brocade. what are they doing to it? i like it at these prices. >> i don't know. brocade has been left behind, sir. i think they had an opportunity to sell themselves. they didn't take it. this is one of those situations where i and my charitable trust, actionalertsplus.com, have taken aggressive action against brocade by buying the stock of cisco, which is clearly the winner in this segment. cisco, 52-week high, joining so many tech companies on the new high list. the dow up 103 points. i think the parade of horribles is over, and the bears have gone back, back to their frustrating level where they wished they were in hibernation. they missed their opportunity. many of them are still short. so there's many more good days ahead. "mad money" will be right back. >> coming up, after a period of weakness, the ipo market is starting to heat up. cramer shows you how to separate the good offers from the bad on an all new "know your ipo." and later, news has this tech titan on the run. but are the technicals telling a different story? cramer's going "off the charts" to find out. all coming up on "mad money."
you know how i feel about buying initial public offerings in the after-market. for the most part they can be overvalued and too hot from the get-go unless you are lucky enough to be in on the offering. and that means you have to take a pass. i feel that way about the deal i mentioned last night, maxlinear, one i expect to be ultra hot. i did it last night so perhaps you can still get some stock this morning from the underwriters. i think it's going to go to a super premium, well over where it's available in the deal when it opens tomorrow. that's why i gave it to you yesterday. i knew there was no sense in trying to do it for tonight.
that's how i also feel about calix networks. the company's similar to maxlinear. that's a broadband access equipmentmaker that will allow some of your favorite regional telecommunications companies, the ones you always call about in the "lightning round," the ones with really high yields, to deliver all sorts of services, both broadband and both broadband and non-broadband over a single network. the deal, which is supposed to open for trading tomorrow, is tight as a drum, meaning there is no stock to be had at this late date. so you can't get in on the offering price. and once again, we don't want you overpaying after it opens for trading at what looks to be much higher than where the deal is going to be priced for those lucky enough to get in on it. but something that i really get a kick out of is there's another deal that's coming tomorrow. and the word on this one is it's not so tight, not in such great demand. a sentiment which will at last allow you to get in at a reasonable price, even if you're not getting stock on the deal from the underwriters. so even though i always preach never to buy on what is known as the after-market, i'm going to make an exception tonight. i'm hearing that this deal is so
lukewarm, so under the radar screen that there is a chance, a chance you can buy, even if you're not on the deal and still get a reasonable price. that's right. if you miss the ipo price, this one could still be worth buying. the underwriting, it's called first interstate bank system. and it happens to be the first new banking ipo since july of 2007. that was right before the big cataclysm occurred. first interstate operates in montana, wyoming, and south dakota. those are solid areas. low employment. unemployment. it's got $5.8 billion in deposits, 4.5 billion in loans, 72 branches in what i regard as the most solvent area of the country. when i used to run my hedge fund, i had a proclivity for bank stocks, something i learned from reading the great investment books by peter lynch, who is perhaps the most successful mutual fund manager of all time. lynch always contended that if you could buy a bank at book value, you're basically buying it for the cash it has on its balance sheet.
so you were getting a steal. now, book value's a little more suspect these days from when lynch ruled the roost because there are so many bad loans on the books of so many banks and there's so much dilution, some people feel that book values for all banks right now are overstated. but still i think that this bank, because it has a stated $16 book value, stated, not tangible, stated, can make sense to buy even if it opens at the high end of what is supposed to be a $14 to $16 range when it went to bed. that's because first interstate has a far better nonperforming loan rate, meaning it's a much better more carefully run bank than others in its sector. plus, it will start with a dividend of 45 cents a year, which even if the stock opens at the top end of the range still gives us a yield of 3%. again, much better than the vast majority of the banks out there. but you know most have sliced their yields or eliminated them. best of all, this bank will have the money and the heft to be able to start scooping up the assets of troubled banks in its region, as it has no history of screwing up and has plenty,
plenty of room to grow. it's almost as if the underwriting gods have given us a clean, fresh chance to play in the consolidation game that is going to sweep this country, and its name is first interstate. the bottom line? we know that deals like calix and maxlinear, the two smoking hot ipos, will soar at the opening of trading, and we never like to pay up in the after-market. but for once with first interstate, we have a deal we like that we think can work well over time that might not trade at a premium to where it is supposed to open. and that's going to be your opportunity to pounce. consider this one through the eyes of aesop. calix and maxlinear are hares. first interstate is the tortoise. you know who to bet on the end, especially when the tortoise is willing to let you get in on its back to race with him. at $16 alone i think this tortoise should be a big winner for the patient person's portfolio.
after the break i'll try to make you even more money. >> announcer: coming up, news has this tech titan on the run. but are the technicals telling a different story? cramer's going off the charts to find out. and later, natural solution? could this bridge fuel put profits in your pipeline? cramer's going one-on-one with congressman maurice hinchey to find out what could be in store for this alternative energy. all coming up on "mad money."
when the facts change, we don't bury our heads in the sand like an ostrich and pretend nothing's different. we don't dig in our heels and make up reasons for why we're still right. nope, when the facts change, like the legendary economist john maynard keynes, we change our minds. we change our minds fast. and boy, oh, boy, did the facts just change at google. this company just ran into a chinese wall, and it's time to re-evaluate where we stand given that google is now shut outof mainland china, perhaps as badly as kansas is shut out of the final four. yep, when it comes to google, the moo shu pork has just gone bad, hoisin can't make it taste any better.
and we don't want to dig in our chopsticks. back on january 13th, the day after google announced it would stop cooperating with internet censors in the land of mao, partially in response to a sophisticated cyber attack originating in china, we lowered our price target on google from $750 to $700. it was in anticipation of china's response. and now that the china shutdown's a done deal, we're going off the charts to take a look at where google stands now. and what's happening with baidu, the top search site in the people's republic that's now lost a major competitor. to analogize, that company's starting to look like the university of kentucky wildcats in the pursuit of madness if not the outlying ohio state. the last time we examined google's chart was on december 15th when with the help of dan fitzpatrick our go-to technician and my colleague at thestreet.com where i'm chairman, we said google was going higher, perhaps as high as 750. that was based on both the technicals and of course the pre-china problem fundamentals.
at the time the stock was trading at $593.14. and for a time it did go higher, peaking at $630. right up until the company decided to pick a fight with the chinese communists. now, take a look at google's daily chart. back in mid-december fitz liked this picture because of all of the moving averages were trending higher. you can see that. these are all the moving averages, right? with the shorter ones like the 20-day moving average above the longer ones like the 50 and 200-day moving average indicating the stock was trending higher and higher and really this is the 20, really just outperforming almost every stock i follow, frankly. this relationship among these different trend lines was a thing of beauty for chartists. but it fell apart when google plunged on the chinese news. as soon as the 50-day moving average flattened out, okay, on the 50-day, you're looking at the red one, as soon as this flattened out, that's the flat one, okay, fitz thought that was a yellow flag, if not an
outright sell signal. right there is where it got sticky. then the red flag came on january 22nd. okay? that's when google gapped down. you can see this is the gap down. that was very significant to the technicians and effectively completely broke its uptrend, took out that line, that line, and that line. those were the uptrend lines. now, fitz thinks that google has fallen through the floor and could continue falling until it hits 520. that's where the buyers have been aggressively taking stock. but he says if it falls below $500, all bets are off. so he thinks there will be a bottom here, but if it doesn't hold that level, boom. i don't know, man. that's pretty dire. and guess what? want to see the opposite chart?
i want you to take a look at baidu's daily chart. okay? right now baidu's in the same position as google was back when we featured it on the "off the charts" on december 15th. look at these. see all the moving averages looking so good. nice trend lines. really beautiful. they're all going higher with the shorter ones above the longer ones. again, we like that. that's strength. the big difference? baidu is coming out of a three-month consolidation from october to mid-february. all right? so it's been just kind of consolidating. that means it's been churning right here which fitz thinks creates a floor that should allow it to vault higher with the current breakout. fitzpatrick says if baidu closes above 600, the next leg of the rally will actually begin. so, in other words, we've got a takeoff point. remember i showed that google goes like that? if we go through this point, fitz says we go up here. all right. that's the technical story. now, how about my opinion of the fundamentals? fundamentals? well, we still like google's robust search business, especially as the advertising market recovers. and it's still the premier play on advertising dollars moving from print, radio, and television to the web. although radio and television are getting stickier. but it's hard to be bullish on this name given the china fiasco. being a global company without chinese exposure is, once again,
to analogize to march madness like filling this your ncaa brackets with teams that didn't even make it to the dance. no, thank you. even though the actual direct revenue lost here is limited as goggle's gross revenue in china was 300 million in 2009, only 1% to 2% of the total, the damage to its future prospects, which is what we care about on "mad money," is bigger than that. china's the largest internet market by users, with roughly 340 million people using the web and 155 million using the mobile internet. that's why the chinese online advertising market, which was just worth 3 billion in 2009, is expected to grow at a 15 billion to 20 billion by 2014. that's a whopping 40% compound annual growth rate. given that google had about a third of the chinese search market before it got itself kicked out, that implied google has lost $5 billion to $6 billion, 5 billion to$6 billion of potential chinese revenue in 2014. now, i wouldn't sell google here.
but it's hard to argue that the pullback in the stock was anything but justified. and i would still only buy it more on weakness. let's use fitz's level. we'll come in when the buyers are. we will exit if it doesn't take off. how about baidu now that its principal competitor is out of the picture? analysts think google's site being restricted by the chinese government could add $4.76 to baidu's 2011 earnings. holy cow, that's going to give it a 35% increase. it's likely to capture 53% of google's lost china revenue. but the stock has already made its move, up 54% from the original google china announcement january 12th. there's reasons to like the stock. baidu's the number one search play in china over 70% query share and over 60% search revenue share, and you know those numbers are now going much, much higher. baidu now owns almost all the future growth of chinese web advertising. the company's upgraded its contextual search system, improving its display technology to support more data formats.
and, well, i've got to tell you, it's had a big run. but like the communist party, it now has a lock on china, the engine of global economic growth. so i've got to tell you, even here as i've been saying, since the news baidu is still worth buying. i'm recommending it. the bottom line, the technicals, as interpreted by dan fitzpatrick, tell us that google has lost its momentum. just as it has joined general stillwell in losing china, and it won't be coming back anytime soon. meanwhile, baidu's going higher, and the same signals that worked with google before it hit the chinese wall are signaling that its breakout is for real, and the fundamentals confirm the trend. hold off on google. but even still, i want you to buy baidu. i'm recommending it. remember, the ultimate takeaway, though, neither the chartists nor the fundamentalists saw the chi-com attack coming. that's a reminder that sometimes with all the pictographs and all of the research and allof the homework, you can still be blindsided by the caprice of a true dictatorship of the
capitalist kind of proletariat. can i go to michael in new york, please? michael. >> caller: boo-yah, jim. this is michael from brooklyn. good evening. >> good to have you on the show. how can i help? >> caller: okay. my question is given google's exit or, rather, their redirect strategy from china, how will this impact companies like microsoft and yahoo, especially given that there's going to be obviously a flow of ad revenue out of google and especially since bill gates has apparently come out in support of abiding by chinese internet control and microsoft plans to aggressively target the chinese search and smartphone marketplace through the search engine being and its agreement with motorola. >> these are not -- look, these are sexy things. and they sound terrific, and they've got a lot of sizzle to them. and you'd like to use them as reasons to buy, however, the
yahoo! fundamental business is just okay. microsoft you buy because of windows 7 strength. i am recommending microsoft. it is not because of china that i would buy microsoft or yahoo! it is because of the smoking good new iteration of microsoft desktop software that makes that stock attractive. and yahoo! -- >> don't buy. don't buy. >> how about jamal in maryland? jamal. >> caller: boo-yah to you, cramer. >> good to have you on the show, sir. how can i help? >> caller: i'd first like to say your book "getting back to even" proves that you're a genius. >> well, thank you. i mean, it is a harder book. i do want to tell you i have written easier books but a lot of people asked for advanced things on how to do options so i decided to give it to them. thank you so much for those kind words. >> caller: quick question. i'm thinking about adding a tech stock to my portfolio, more specifically a smartphonemaker, and i was thinking about palm and nokia. do you think that's a good idea or they've been beaten too much up by the market, or do you have any suggestions? >> okay. i can't recommend palm because while i do believe it will be taken over, i do never recommend on this show a stock with faltering fundamentals that
could get a takeover bid. nokia does not have the horses. once again, i know that research in motion reports next week. that stock's been bid up, bid up, bid up to levels where i now find it to be nosebleed. i said it would go up until the day it reports, which leaves me with apple, which i still think is a buy. and you know i've got a much, much higher price target. when the facts change, we change our minds. you need to hold off on google. google is no longer what we once thought it was. baidu? they're the new king. and they can still be bought. stay with cramer. >> announcer: coming up, ride the lightning. take a non-stop thrill ride as cramer goes stock after stock. all your calls taken rapid-fire on the "lightning round." and later, natural solution? could this bridge fuel put profits in your pipeline? cramer's going one on one with congressman maurice hinchey to find out what could be in store for this alternative energy. all coming up on "mad money."
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it is time! it is time for the "lightning round" on cramer's "mad money." what's that all about in that's rapid-fire calls one after another. you say the name of the stock i tell you whether to buy buy buy or sell sell sell. just to be clear i don't know the callers or the stock questions ahead of time. my staff prepares the graphics on the fly. we play until we hear this sound, and then the "lightning round" is over. are you ready, skee-daddy? it is time for the "lightning round" on cramer's "mad money." i'm going to start with jennifer in california. jennifer! >> caller: mr. cramer, how about a big st. mary's college of california go gaels boo-yah! >> well, i think an everyone but villanova boo-yah to you. in one of the most exciting games i've seen, northern iowa and st. mary's. great, great job. what's up? and cornell. what's up? >> caller: i would like to know about chevron, cvx. >> i had chevron on actionalertsplus.com the other day stephanie runs it with me. you know what, there is a moment
where oil is not acting that well so we want a little more yield. so we traded up out of chevron, which has decent growth, to british p. after bp bought those incredible assets from devon and it has that higher yield, i thought it made sense to -- >> sell sell sell. >> and buy -- >> buy buy buy! >> british petroleum, now called bp. and that's just what i did. how about ron in florida? ron. >> caller: boo-yah from florida, jim. >> boo-yah, sunshine. how can i help? >> caller: hey, with warren buffett's acquisition of burlington northern and csx's aggressive ad campaign, do you visualize railroad stocks in one portfolio, especially burlington northern? >> i think burlington northern, if you own it through berkshire hathaway is a definite buy. berkshire hathaway remains just a fantastic situation. i know that warren buffett may -- look, he can run it forever. what he's done is put together a portfolio that i think will last not forever because nothing lasts forever but as close as you're going to get. i endorse berkshire. meanwhile, union pacific's still cheap with redoing some
contracts. their earnings can go up. and there's nothing the matter with csx. you know we like michael ward, the ceo. how about catrice in north carolina? catrice! >> caller: hey, jim, a big used to be from philly and now from north carolina boo-yah to ya. >> how about a trade-down boo-yah? sorry, i have to put it right in your face. as a philadelphian currently. how can i help? >> caller: wondering about potash. p.o.t. >> i think that that works. i think the fertilizer bull market's alive and well. we saw an unbelievable quarter for them. i was quite surprised the stock pulled back today given the fact deere's had a run. i think the pullback minuscule as it might be versus a $122 stock makes a buy buy buy. i think the fertilizer industry is growing. please do not forget sociedad chemica, a stock that has not done absolutely nothing. it's in an unfortunate place in the world right now, the tragedy of chile. but it remains the cheapest of the fertilizer stocks. how about dylan in florida. i thought dylan had a show on another network. dylan?
>> caller: hey, jim, i want to give you a big tallahassee university of florida state boo-yah. >> let me give you a -- let me give you an adams street boo-yah. how's that? >> caller: that works. >> all right. >> caller: i tell you, my stock is mark west energy partners, ticker symbol mwe. >> i think it's a good one. you've got a great yield, and it's a natural gas gatherer. 8%. i think it works. i'd bless that situation. i like yield like that. that's what we need at a time when interest rates are so low. all right. now, let's go to one more. let's go to skip, who didn't want to skip, in texas. skip! >> caller: hello, jim. a big texas-size boo-yah to you. >> very large boo-yah. >> caller: i'm a new home gamer. i've been reading your book "getting back to money." >> thank you. >> caller: got some prudhoe bay, bpt. been kind of exciting the last couple of days. >> the stock had an unbelievable decline of ten points on friday. it looks like some seller mistook -- some seller got it wrong. he dumped the stock. all the buyers stepped aside.
it was one of the great buying opportunities i've ever seen. i was commenting on realmoney.com. the paid side of thestreet.com where i'm chairman. and begging anyone to tell me what happened. do you know no one knew anything other than the fact that the buyers just simply walked away and the seller came in too hard. it is now literally recovered almost every single point from that down point, down $10, and i think it is a buy. but, boy, was that ever a super-de-duper buy just last week. and that is the end of the "lightning round."
natural gas, it's cheap. it's incredibly plentiful in america. it generates 40% less co-2 emissions than coal and 30% less than oil. and no coincidence, the stocks of natural gas producers have been some of the most incredible outperformers over the last 5, 10 and 20 years. that's why i talk about the stuff endlessly, and i'm going to keep pushing this commodity's stocks as long as it represents an incredible opportunity to help you make money. and, yes, of course, transform
our country for the better at the same time. right now we have a natural gas rush in this country with foreign companies itching to buy up u.s. properties. but despite all these positives, many democrats and environmental groups are pushing to make it more difficult and expensive to drill. they're worried about a process called hydraulic fracturing. we call it fracking. that's used in the unconventional shale plays like the marcellus shale that we talk so much about on "mad money." last week the epa announced it's going to launch an investigation into the impact of fracking on ground and surface water supplies even though we can't find a single documented case of groundwater contamination caused by hydraulic fracturing. i'm concerned that this could be the beginning of process that creates more regulatory hurdles for natural gas companies and makes it more difficult to drill in the united states. but you know what? we always want to hear the bear case, we want to hear the other side of the argument because maybe that's been one of the things that's dragging down the stocks.
that's why we're talking to congressman maurice hinchey. he's a democrat from new york. he's been a vocal proponent of studying the effects of fracking on the environment who introduced a bill to subject hydraulic fracturing to the safe drinking water act. i want to understand this position, especially because developing the marcellus shale using fracking could create a lot of jobs in his district. congressman hinchey, welcome to "mad money." >> jim, thank you very much. nice to be with you. >> sir, could you please explain to us why you think fracking has so many risks given the fact it has been in use for a long time? >> well, we want to make sure the natural gas in this country is able to be obtained. it's critically important for all of the reasons you were just talking about. and we want to make sure that there's nothing that's going to happen that is going to stop it from being drilled and being drilled safely. you had the clean water drinking act, which came about in the 1970s, which was very effective. but a significant portion of that was repealed in 2005. and that provision in 2005 said that people who were drilling don't have to tell anybody what they're putting into the ground. so what we're trying to do is
just try to make sure that drilling occurs, make sure that it occurs in ways that are not going to be injurious to the drilling operations, and make sure that it's not going to be injurious to drinking water and to other aspects of security. there have been a number of examples that have shown up recently where they have been advantageous and where they have been roughing things up and causing problems, as well, one in pennsylvania not too long ago. >> that was one. there was one where it was an illegal operation. that's true. it was a bad actor, not by one of the major drillers that would be interested in drilling in your state. >> it was 1 of the drillers that put 12 homes into jeopardy and which caused a lot of contamination of drinking water supplies. so these are the things that we've got to make sure don't happen because if they continue to happen, there's going to be a lot of public opinion that is going to be opposed to the drilling. we don't want that to happen.
we need the clean -- these drilling operation occurs in clear, clean, safe ways that is going to provide the natural gas for us, which is something that we need. >> i know that in your area -- i look across the southern tier. it seems like there's a tremendous number of mineral land owners across the region and you're in the sweet spot of the development. do you think that what you want to do will hold up drilling for a number of months, years, or will it take maybe a decade to be sure that this works? >> no, i don't think what i'm doing is going to cause the drilling in new york to be, you know, hesitated in any way or stopped or done more slowly. the situation in new york, as it is in many other states, is determined by the local government, by the state government, and the state government there in new york is examining this operation, and they're looking into it to try to make sure that the drilling can occur but that it can occur in ways that are going to be
helpful, that are going to be positive and not negative. and we'll see. we'll see what they do and when that happens and how much time that will be. it may be sometime later this year. >> well, i guess i mean what i'm concerned is we have the sierra club on our show and it looks like if you are not in favor of natural gas, you are acceding to coal. coal is a terrible combination of sulfur dioxide, nitrous dioxide, mercury, say nothing of the carbon. and i wonder whether any delay in natural gas will keep it so that many of the coal companies and many of the utilities that are stuck using old coal plants will feel empowered and not want to switch to cleaner, natural gas. >> well, there's a lot of ways in which we're using a lot of -- you know, sort of a natural means of generating energy in this country. a lot of it comes from outside of the country like oil and things of that nature. coal, yes, from here. natural gas, as you point out, is clean. it's one of the cleanest forms of natural energy that is
available to be drilled underground. so we don't want to -- we want to make sure that the natural gas operation is going to occur, but it's going to occur safely so that it's not going to be negative. it's not going to be impinged upon in ways that are going to make it slower or make it more difficult to come about. it's got to be done carefully. it's got to be done securely, and it's got to be done in ways that are taking consideration for the effects that the drilling is going to have, and that it's done in a proper way. >> well, steve hertz is the epa's director of drinking water protection. he recently said -- i quote "doing a good job of hydraulic fracturing." and he added there is no evidence that suggests hydraulic drilling contaminates water, the process itself. he would seem to be a knowledgeable figure, he's the drinking water protection person from the epa.
>> well, there's a lot of examples where drilling has caused damage to drinking water supplies and other problems, including air contamination and fires and things of that nature. and they have occurred in places like colorado and texas and pennsylvania and a number of other states across the country. so what -- what we need to do is to engage in this process, but make sure that the process is engaged in in an effective way that brings out the high quality and the safety and security of natural gas, but it is done in a way that is not going to harm other aspects of the natural environment and other people's lives and their future. so, you know, it's a situation that just has to be done, you know, honestly and effectively. >> but there are always checks and balances. there's always things that will go wrong. sierra club says, look, 20,000 people are going to die from coal this year. it's really imperative that we stop drilling. nothing is perfect. there is no perfect solution to the energy situation. are you not worried, sir, that any slowdown in what looks to be a system that has been checked and double-checked will only make it so that the other alternatives, again, coal, have triumph and, therefore, make it that the jobs in your district
are lost and we continue to use a fuel that is far worse for the environment? >> no, i don't think that's the case at all, jim. i think that the time involved here is a very short period of time into the future. and it's not going to impinge upon the availability of natural gas. but it's just going to try to make sure that when the drilling occurs, it occurs in a safe way, a responsible way. you know, you had the safe drinking water act and the clean water act, which were very effective for a long period of time. they were put into effect back in the mid-1970s. why was the provision -- say like a simple provision of honesty with regard to what's going into the drilling repealed in 2005? that was a big mistake. and i think it was a big mistake that was generated by some interesting people in the previous presidential administration here. so this is something that really has to be done carefully, and it has to be done honestly and securely. if it's done in those ways, there's not going to be any problem. >> excellent. congressman, thank you so much for coming on "mad money." >> jim, it's my pleasure. thank you.
>> that's congressman maurice hinchey of new york's 22nd district. he has a different view. sounds like other individuals should be aired. i do believe that if this is delayed for too long, it will be bad for the stocks, and i think that is what matters on "mad money." maybe not in other places, but in cramerica, it does. "mad money" is back after the break.
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