The machine broke down today, Jim Cramer told viewers of his “Mad Money” TV show Tuesday. And it happened very quickly — too quickly for people to react.

An “overheated market” in China and system error caused the U.S. market to drop 416 points in the blink of an eye, he said. Although there were plenty of buyers, they “simply couldn’t get to the floor fast enough to buy.”

Meanwhile, the selling, perhaps exacerbated by exchange-traded funds, “cracked the dam,” Cramer said.

In the old days, when things were sane, there were order imbalances, a stoppage of trading; but things are different now: “You can force the market down,” Cramer said.

“My sources indicate that a big options trade went awry and some concentrated ETF selling … simply crushed this market as easily as a knife through butter.”

The “most important takeaway” here is that market players only have three protections “from the whims of a broken system,” he told his viewers.

First, there are companies that pay dividends equal to or better than Treasuries after taxes — a “great defense,” Cramer said.

Then there are stocks that are “so low in valuation” that investors and the companies themselves know they are bargains, “meaning they are buying back stock right here,” he said.

Or finally, you need to have companies that are so defensive in nature that if there is a worldwide slowdown, these companies will meet their expectations regardless, Cramer said.

If a company does not have at least one of these three protections, investors will not be OK for now, Cramer said.

Opportunity Still Knocks

After the “worst trading day in years,” there is still something “beautiful” happening in a distant corner of the ugly market, Cramer told viewers.

He advised people to take this selloff as an opportunity to start buying financials — in particular one of the five major brokers: Merrill Lynch (MER) , Lehman Brothers (LEH) , Morgan Stanley (MS) , Bear Stearns (BSC) and Goldman Sachs (GS) . Cramer owns Goldman for his charitable trust, Action Alerts PLUS.

For the first time in his memory, all five big brokers are “being run by great management,” Cramer said, adding that a company’s management can make or break its performance.

Here are the five “best run companies on Earth,” and they are selling at a “major discount,” a 30% markdown compared with the average stock, he said. This, Cramer said, will not last.

The thing that attracts him to these stocks now is that they’ve been getting killed for the past five days, Cramer said. “These are the kinds of pullbacks you need to be on the look out for,” he said.

Cramer recommended that people start putting money into one of these names. “They will go lower before they come back up, but I’d start my position as they go down,” Cramer said.

Out of them all, Cramer likes Goldman Sachs the most, calling it “the best run I’ve ever seen it.” However, Cramer said he is in favor of people buying any of the five, and he urged market players to pick up one of these stocks as he believes that the management at each of these “top-notch” brokerage houses knows what its doing.

Don’t Sell, Don’t Sell

History tells market players that they should be ready to buy after a down day in the market — if not immediately, then soon after, Cramer told his viewers.

The 9/11 selloff looked as if it was the end of the market, and during the crash of 1987, the market fell 508 points, the largest one-day percentage drop in history, Cramer said.

But a few months later, people who had panicked and sold everything wished they had bought something instead.

Today’s drop is similar to the crash of 1987, Cramer said. While a Chinese selloff started the selling today, the German market caused it in 1987, he said. And just as the market did not reach a bottom the same day, Cramer believes that we have not seen the end of the selloff here, either.

“That is why people should be in a protected zone” and look for dividends and buybacks, he said. Cramer urged people not to panic, to keep a cool head and to be buyers. He said people should not buy all at once, not expect immediate gratification and be patient.

Otherwise, Cramer believes that three months from now, people who will have sold everything will wish they hadn’t. And Don’t Buy …

Cramer welcomed James Morgan, the president and CEO of Daktronics (DAKT) , to the show and asked him why people should buy the stock after the company’s recent miss.

In terms of the quarter, though it was on target, the disappointment was related to the projection Daktronics gave for the coming quarter, Morgan clarified.

He added that the underlying drivers of the business are still intact and that Daktronics has “invested a lot of capacity to be able to respond to growth” that the company anticipates.

“One of the limiting factors is getting though the regulatory constraints that exist,” Morgan continued. Although there is a very good revenue model with digital billboards, limiting constraints on how quickly the billboards can get deployed are a reality, he said.

Cramer said he is on the fence regarding the stock and put Daktronics in the “don’t buy” camp for now.

To view Cramer’s interview with James Morgan, please click here. Lightning Round

Cramer was bullish on Celgene (CELG) , AT&T (T) , J.C. Penney (JCP) , Procter & Gamble (PG) , Colgate (CL) , Diageo (DEO) , Wyndham (WYN) and Hilton (HLT) .

Cramer was bearish on Pain Therapeutics (PTIE) , Salesforce.com (CRM) , Retail Ventures (RVI) , Playtex Products (PYX) and Choice Hotels International (CHH) .

For more of Cramer’s insights during the Lightning Round, click here.

Want more Cramer? Check out Jim’s rules and commandments for investing from his popular book by http://www.thestreet.com/tsc/cramerbook.

NEW YORK - Oil giant Exxon Mobil Corp. on Thursday posted the largest annual profit by a U.S. company $39.5 billion even as earnings for the last quarter of 2006 declined 4 percent.

The 2006 profit topped Exxon Mobils own previous record of $36.13 billion set in 2005.

Revenue at the worlds largest publicly traded oil company rose to $377.64 billion for the year, surpassing the record $370.68 billion Exxon posted in 2005.

Exxon Mobil continued to leverage its globally diverse resource base to bring additional crude oil and natural gas to market, Rex W. Tillerson, chairman of the Irvin, Texas-based company, said in a statement.

Exxon Mobils record annual earnings followed a year of extraordinarily high energy prices as crude oil topped $78 a barrel in the summer driving up average gasoline prices in the United States to more than $3 a gallon. Prices retreated later in the year.

The fourth-quarter decline reflects lower profits from Exxons refining and marketing operations and a sharp drop-off in natural gas prices.

Results for the October-December period mimicked those of U.S. competitor ConocoPhillips, which last week said its fourth-quarter profit fell 13 percent also primarily because of lower natural gas prices and refining margins. But hefty earnings earlier in the year helped Houston-based ConocoPhillips record its most profitable year on record, earning $15.55 billion.

ConocoPhillips is the nations third-largest integrated oil company behind Exxon Mobil and Chevron Corp., which is scheduled to report 2006 results Friday.

Also Thursday, Royal Dutch Shell PLC reported a 21 percent rise in fourth-quarter earnings, buoyed in part by high energy prices and the sale of some operations. Net profit came to $5.28 billion, up from $4.37 billion. But excluding divestitures and other one-time items, Shells earnings from oil production fell 3 percent, while fourth-quarter sales were flat at $75.5 billion.

The company, based in Amsterdam, Netherlands, also said it had taken important steps to bulk up its proven reserves, which were revealed to have been inflated in a 2004 accounting scandal.

At Exxon Mobil, profit for the fourth quarter of 2006 declined to $10.25 billion from the $10.71 billion Exxon earned in the 2005 quarter a record quarterly profit for any U.S. public company. That best-ever profit came when the price of both natural gas and crude oil skyrocketed in the wake of hurricanes Katrina and Rita, which damaged wells, pipelines and refineries in the key energy-producing Gulf of Mexico.

Analysts largely have predicted declines in fourth-quarter earnings for the big U.S. oil companies because of the moderation in prices.

Exxon Mobils per-share earnings in the fourth quarter rose to $1.76 from $1.71 as the company reduced the number of shares outstanding. Wall Street analysts polled by Thomson Financial had forecast earnings of $1.51 a share.

Excluding special items, Exxon Mobil earned $9.84 billion, or $1.69 a share, in the final three months of 2006. Quarterly revenue fell to $90 billion from $99 billion in the year-ago period. For the year, Exxon earned $6.62 per share in 2006 versus $5.71 per share in 2005. 2007 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

THE surroundings were almost as familiar as the wood-panelled walls of the High Court.

Before Donald Findlay QC were 140 passionate Rangers supporters from the Loyalist stronghold of Larne, Northern Ireland, and at his side were two Rangers legends, Willie Henderson and Andy Goram.

Like the former Rangers director, they had been booked to entertain the revellers, who had paid 22 each for the privilege of hearing their tales in April 2005. The hazy atmosphere, allied to the death of Pope John Paul II a week or so earlier, inspired one of Findlay’s jokes. “It’s very smoky in here,” he was reported to have said. “Has another f***ing Pope died?”

There was reportedly an unprintable joke about a nun but, as Findlay’s supporters point out, the Rev Ian Paisley was also a target for his humour that night.

Regardless, the allegedly anti-Catholic jokes were made public, and Findlay was again at the centre of media attention. The Faculty of Advocates, a body that does not encourage its members to court publicity, was distinctly unamused.

Eight months earlier, in August 2004, American journalist Franklin Foer published his book, How Soccer Explains The World - An Unlikely Theory Of Globalisation. Foer visited Scotland during his research, taking in an Old Firm game at Ibrox and meeting Findlay afterwards.

Foer writes that Findlay expressed regret he had not been more bullish in his own defence over the notorious sectarian songs incident in 1999. Findlay was fined 3,500 by the Faculty of Advocates and resigned as Rangers chairman after he was caught on video singing sectarian songs with supporters following a victory over Celtic.

Foer reported Findlay as saying that a suitable test for British citizenship could be: “If a troop carrying the Queen’s colours doesn’t bring tears to your eyes, then f*** off!”

Foer says Findlay posed a series of provocative rhetorical questions. “Are you not entitled to say that you have no time for the Catholic religion, that it involves the worship of idols?” he is reported to have asked. “Why can’t you be forgiven for thinking that confessing to a priest who is confessing to God is ridiculous and offensive? Or that the Pope is a man of perdition?” he is said to have added.

It remains unclear what action, if any, the Faculty of Advocates took in the immediate aftermath of these reported comments. Two months after the Larne episode, Findlay resigned his post as chair of Faculty Services Ltd, the private company that looks after the business affairs of advocates. Precisely why he stood down remains a mystery.

However, independent of each other, two Scots made complaints to the Faculty. Tom Minogue, a retired Fife businessman, alleged Findlay’s conduct in Larne and comments in Foer’s book were not compatible with his role as a QC. Hugh Lynch, from Larbert, who retired in 1997 as rector of St Mungo’s RC High School in Falkirk and had served as an assistant director of education, was also appalled by reports he read of the Larne incident.

The Dean of the Faculty, Roy Martin QC, and the body’s complaints committee, agreed he was guilty of professional misconduct. It is understood Findlay was given the option of “putting his hands up” and paying a relatively modest fine.

Findlay, who is nothing if not a fighter, flatly refused and now faces prosecution at a formal disciplinary tribunal, which has the power effectively to finish his career.

Minogue was not available for comment, but Lynch said last night: “Sectarianism has to be wiped out in Scotland. Jack McConnell has described it as Scotland’s shame and I do believe the Executive wants to bury that shame.

“He [Findlay] claims he has a right to free speech and is not a bigot, but by his own actions he condemns himself. What sort of role model does he provide for young lawyers or young Rangers fans? He should not be allowed to continue to bring an august body like the Faculty into disrepute.”

Minogue petitioned the Scottish Executive in 2005 over Findlay’s alleged conduct, claiming it was wrong for the QC to receive Legal Aid money.

Minogue claimed the public had the right to expect a Scottish advocate, particularly a QC, to behave in a “dignified and appropriate” manner in public, particularly outside Scotland.

Findlay responded at the time: “I have appeared and spoken at Celtic supporters’ dinners, including one chaired by the local priest. I really don’t want to say too much about this, other than that we are all actors.

“We play to the audience that we have. I often tell stories about my childhood, and every word is a lie, designed to entertain. The things I say at a sportsman’s dinner should not be taken as the gospel according to Donald Findlay. I am playing a role.

“I do not accept the charge that I am racist or a bigot and I fear that Tom Minogue in due course will have to hear from my solicitors.” Highs and lows

Donald Findlay was born on March 17, 1951, in Cowdenbeath in Fife. He was educated at Harris Academy in Dundee, and at Dundee and Glasgow universities.

He became an advocate in 1975 and then was made a QC in 1988. He earns more criminal legal aid cash than any other Scottish advocate, making 300,000 a year.

Findlay has been a strong supporter of the Conservative Party and famously led the Think Twice campaign against Scottish devolution in 1997.

He has served as a defence lawyer in dozens of high-profile murder trials, including some of Scotland’s most famous cases of recent years, such as that of Luke Mitchell, convicted of killing Jodi Jones in 2005.

Related topic

- http://news.scotsman.com/topics.cfm?tid=225
http://news.scotsman.com/topics.cfm?tid=225