Transcript
Jim Cramer (0:00)
When you're with Amex Business platinum, you get 5 times Membership Rewards points on flights and prepaid hotels booked on amextravel.com so going the extra mile for your business is even more rewarding. That's the powerful backing of American Express Turn Supply.
Merrill Lynch (0:12)
Learn more@americanexpress.com AmExBusiness this episode is brought to you by Merrill with a dedicated Merrell Advisor. You get a personalized plan for your financial goals. And when plans change, Merrill's with you every step of the way. Go to email.combullish to learn more. Merrill, a Bank of America company. What would you like the power to do Investing Involves Risk Merrill Lynch, Pierce Fenner and Smith Incorporated. Registered Broker Dealer Registered Investment Advisor Member SIPC.
Jim Cramer (0:43)
My mission is simple to make you money. I'm here to level the playing field for all investors. There's always a bull market somewhere and I promise to help you find it. Mad Money Hey, I'm Kramer. Welcome to Man Money. Welcome to Crame America. A few of my friends. I'm just trying to make a little money. My job is not just entertaining, but to put things in context. So call me at 1-800-743-CNBC tweet, beach and Kramer. Sometimes we forget what we're trying to do around here. We're looking to find good stocks at good prices and buy them. We want to sell bad stocks at any price and and kick them out of our portfolio. Yet somehow, on a not so hot day where The Dow tumbled 268 points, SB lost.39%. Nasdaq shed 0.32%. We tend to feel like it's only worth only stocks that manage to go up today, this session. Everything else, a total loser. You got to get rid of them. I get this feeling myself. You know, I was a trader for a considerable part of my life. Today would be a day where I'd be looking for opportunities, taking them while casting aside others that weren't in keeping with that day's action. Often we start from scratch on a given day. No positions on our sheets. There would be points where we were up a great deal at the hedge fund at some point during the year. And from there we just day trade. Oh, it was huge amount of fun. We only commit a small portion of our capital. We didn't want to give up our year's gains. Our rules are pretty simple. One, don't go against the tide. If people are buying the drug stocks, find the best drug stock. On a day like today, we probably would have bought some J&J good yield, decent prospects, great balance sheet, down big from the high to make sure you aren't buying something that's headed down after you purchase it. Just take it out immediately. You get trapped. 3. Be mindful that you can't turn a bad trade into an investment that you kept overnight. That's the heart of a loser. If a trade doesn't work, you have to throw it out. Throw in a towel by the closing bell. Does any of this sound familiar? I bet it does to you because you hear it all day. I think it defines much of what we see and hear about stocks these days. It's as if everyone I watch has plopped down on that trading desk with us during one of these day trading modes where we had so much software, so much knowledge, yet it still is a fraction by the way of what modern traders have. Their artificial intelligence these days can find out the precise correlations among the drug companies. No seat of the pants knowledge like we had. They'll know whether Merck or Pfizer would work best. Merck with no news or Pfizer with news that amounted to something good simply because it wasn't bad, as was the case today. Now all of this is very useful if you're a trader, but I think as investors we're putting on mental shackles if we behave like this. Remember back on my hedge fund, our whole goal was day trading, which is scalp pennies from the flow. That's a lot of risk for not much reward. It's better zero in on dollars for the big picture. That's what I want you to do. And what exactly is the big picture? How about something that says we're now experiencing a nine day losing streak for the Dow Jones Industrial Average, the longest since February of 1978 when if you can imagine, we had double digit inflation and a severe lack of leadership. The federal funds rate was at 6.75% at the time, but it would finish the year 10%. Wow. So we were at the start of a horrendous decline in the abyss of the late 1970s with super high interest rates. Now we're still nearing the beginning of a rate cutting cycle. Don't listen to others, you say, well still my it's not a cutting cycle. It is. And it may or may not go slowly. Does it matter? It's very different from the similar losing streak in 1978, a time when most of you were not alive and I was living in my Fort Fairmont. What else is part of the big picture now? How about the fact that we're heavily oversold when we've experienced this level of oversold negativity. Minus 5.2% on this S and P short range oscillator. I swear by only twice in 2020. For one time in April where the S and P bottom at 4, 9, 67 then advanced to 5, 6, 6, 8. Another time in November when the S and p had sunk to 5701, then rallied to 6900. These were two of the best buying opportunities we had the entire year. But you had to be willing to go against the prevailing attitude of negativity with tons of articles and news stories about how something terrible was about to happen. Now, I know there are plenty of major events coming up. I didn't say major negative events, just events. We have a big Fed meeting tomorrow where we pretty much know what will happen. There could be dissents, there could be members of the Open Market Committee who are more hawkish than others. But we'll still have a Fed chief who's data dependent. Data dependent and doesn't want to get too far ahead of himself, even if the commentators all wish he would. We know that there are inflationary tariffs in the wind, but we don't know their size, their breadth or their impact. But that's why we're already oversold. People saw this coming, they're worried and they took action ahead. They dumped stocks so they wouldn't be long or own as much when the meeting occurred. Now we got some leadership stocks that are being torn apart, the heaviest of which of course is in video, up 163% for the year, but down 22 points from its recent high. Points, not percent. Gee wheelers. What exactly is the matter with Nvidia, down 8 out of the last 9 days? I think nothing. Air mainly in the most important space of the entire market. It's riding a wave accurately depicted by seasoned warrior Matt Murphy, the CEO of Marvell Technology, who. Who said something amazing on this show about the size of the opportunity just last night. Listen, we are in an unprecedented AI supercycle for AI as a service, but also for the Silicon TAM underneath it. This is unbelievable. I've been doing this for 30 years. I've been through every major one of these cycles. PCs, smartphones, digital cameras, cloud computing, you name it. This one's bigger than all of them. Nvidia is not being dethroned by any competitor. Even the companies that are trying to compete against it are faithful customers who have no choice but to try to develop something. Because Nvidia can't supply, they can't supply enough chips to meet the demand. For most customers I think it's just profit taking after monster run. It has been a monster run, hasn't it? But understand on January6nvidia found 2025nvidia founder and CEO Jensen Huang will be presenting a keynote at C S the largest tech expo in the world and he's used that podium before. It introduced many of the innovations that made Nvidia the 1 most valuable companies on earth when will the Stock bottom? I always let a stock tell me what to do. Nvidia bottoms when the stock rolls over at the open, then hits a level on big volume where it stops for working its way back up to well above where it opened. That people is called a crescendo. Bottom when everyone of size who wants to get out has done so. No need to jump the gun, but keep in mind that if you don't own any, you might want to wait to right ahead of the ces. Oh, and another thing, please, if the stock opens up, please do not buy it. It rarely works. Final element of the picture. We have been working on a series that tries to come up with bargains. Stocks that have been sold down so hard that they only take into account the negatives and none of the positives. The stocks I'm looking at are beaten up. They look like death warmed over. In other words, they're precisely the kind of stocks that I tried so hard to avoid when I was day trading, but that made perfect sense if you're investing. We were disciplined traders trying hard not to start a position and would to cut our losses no matter what. At 3:45pm that's not what you want to do. Here's the bottom line now. The goal is to build a position that starts somewhere well below where it was simply because it has gone out of style in the current version of the Wall street fashion show and is being hit with heavy end of the year tax selling like some of the health care stocks that we're profiling tonight. You know what? You know why you do this? Because of the overarching principle behind good investing. Buying low so that one day you can sell high. Or maybe not. So let's take questions go to Bill in New Jersey. Bill Bill.