Transcripts For CNBC Mad Money 20131221 : comparemela.com

The bear market with some bullish advances to an out and out full blown bull market. This was the year where we finally vanquished the demons that haunted this market since the nasdaq top at the beginning of the millennium. This was the year where things worked out where hard issues were resolved positively. The house of pain. And good news translated at the end to, yes, good news right down to todays action where the stock market toasted a fantastic 4. 1 Gross Domestic Product game. With a darn good rally. Nasdaq soared 1. 15 . You should have seen the action in that index. You might be shocked to hear that we only just went into an all out bull market mode this year. After all the Dow Jones Industrial averages run for 6,600 in march of 2009. It hasnt happened in the bull market, the gains have been consistent, right . But i would contend until this year, all we did was make up the ground we lost in the crash before the Great Recession and 2013 was the year we saw big rallies across all sectors, not just a couple of narrow areas that couldnt sustain their gains. Many people were baffled about whats really happening in this market, though. Theyre confused because they hear its all done with smoke and mirrors. We talk about how the fed is manipulating the market, or the politicians will never let us make real money or the world is a screwed up place and the stock markets a fantasy land that makes no sense whatsoever. Completely detached from the real economy. If we have 7 unemployment, how can the stock market go higher . Were used to people arguing back and forth about the legitimacy of the Federal Reserve and the craziness of the 4 trillion balance sheet. We accept everything is political now and its phony and false. And what happens . We get a flash crash, facebook gaffing. Worse, people are afraid to champion this market. Afraid to hit the button. They think, well, what happens if it reverts to the true character and crashes after i praise the market . Do you want to be the guy we see on youtube saying the market looks great here we played endlessly after the big decline . Do you want the link jimcramer on twitter, the butt of a comedy channel joke because you were bullish on the top . Much better to argue qe is behind everything and the only way to approach is be cynical, a knowitall who has the vision, the vision to see the next crash coming. Whats the real problem of the market. The twin peaks of this negativity came last year. During the fiscal clip discussion that was right about now. And this year with the absurd Government Shutdown and the bizarre debt ceiling fight. But, you know what, the bull never blinked. And each time one of these peaks appeared before us, it was scaled. Scarily scaled, but scaled nonetheless and each summit, this was more beautiful than the last time. And finally the politicians gave up trying to destroy the economy and just shut up entirely which gave us one more beautiful lift at years end and that trounsed the bear, last nail in the coffin. Its been so long since legitimate bull markets of the 1980s and 1990s we forgot what happens in one of these truly positive moments. Or maybe, people just arent old enough. Lets go over the five bull market tenants. Something to think about over the next five days. Call it your game plan for the last week of the year. First, in a bull market, things happen, they get resolved positively. While it seems impossible to believe they will. Who remembers the cypress crisis of march 2013. Do you know how many people thought this countrys woes, country probably nobody can find on a map and can barely recall what went wrong. What would actually bring down the western financial world. There were specials done about this thing. I had to fight these naysayers off with a stick finally resorting to the ultimate of insults to the bears. When i repeatedly asked the question on mad money, what does the cypress crisis have to do with the price to earnings multiple of cramer fave say it with me, bristolmyers up an astounding 64 this year. You have to suspend your skepticism at times in a bull market and the scars of the past, that was difficult for many, but it has to be done. Second, bull markets, all bull markets are based on profits, not the prophet kind. Profits. When companies create bountiful profits, regardless of whether it be from buying back stocks or refinancing, the stock market does go higher. Its a fact of life. There are plenty of people who tried to tell you that only sales mattered. Others said the profits would be taken away by the fed, obama, the tapering. You name it. They were all wrong. They will never admit they were wrong. You heard it from me, they were wrong. Im tired of hearing about them and their endless hectoring of ben bernanke. The critics, listen up, your times over. Heres your hat, whats your hurry . Dont let the door slam you on the way out. Third, in a bull market, Companies Take matters into their own hands. They arent paralyzed, they dont wait for a big wave. They break themselves up, merge, do dividends, gigantic buybacks, spinoffs, execute well and dont care about the fed. Ceos matter i read about 21 of them in my soon to be released book, 21 execs you need to back because they took matters into their own hands. And thats bull market behavior. And in a bull market, people get put to work and jobs become plentiful. And thats whats beginning to happen right now. Thats what occurred this quarter. Employments coming back, but you dont hear about it because theyre always in a newly politicized world. Two sides to every story. Even when theres only one story. Theres a democrat side and a republican side. I could care less. Jobs are recovering and that makes a ton of things possible. You heard that later from paychex in the show. Ultimately more consumer spending. Thats what you saw in todays raging Gross Domestic Product number. Finally the fifth trade. No inflation. We dont talk about inflation enough here because there is no inflation. But inflation is what handcuffs the fed and keeps it from being able to help the stock market. What ruins our purchasing power, makes it impossible for companies to make enough money for the profits needed to get the stock market moving. Inflation is the scourge of the bull. However, right now, we dont see any. And i sometimes feel the only other guy who realized this is my hero ben bernanke who always brings it up and its always ignored by the democrats and republicans who want to debate inflation. So heres the bottom line, you know youre in a true bull market when despite the myriad of skeptics, profits are bountiful, ceos are driven to create value, jobs begin to become plentiful and theres no inflation. For the First Time Since the new millennium began, we have all five. And that is why were going higher. Tom in michigan. Tom . Caller hi, jim, tom from saginaw, michigan, with the 100th rose bowl booyah to ya. Im jealous, too, man, pasadenas gorgeous. Whats up . Caller i saw that broadcom, brcm was recently downgraded. Is it a good selection from the Technology Sector from my mad money portfolio . No, it is not, sir. It is too wildly inconsistent. And what i find about broadcom, its a serial disappointor. If you want to be in a stock that is similar, you can go, indeed, for zylinks. Can i go to massachusetts . Caller hey, jim, a big holiday booyah from andover. Whats up . Caller i want to know your thoughts on a couple of key apple suppliers. Jbl and crus. Im all right cirrus logic is seeing pressure, jabil is a disaster. Im trying to get my head around how it has fallen off a cliff. I dont want it. Okay. The year of the bull may be upon us. All right. Were in an actual true out and out bull market now that started in 2013, its really the first year of the new millennium. The others were all bear markets with bullish spikes. You know what i think . Together, recognizing these five signs of a bull market, we can solve this conundrum together. Mad money will be right back. Coming up stay the course, the markets making new highs, but if youre like most investors, some of your stocks just refuse to rally. Tonight, cramer has some ideas about what to do with tickers that arent cutting it but seem too cheap to cut. And later, cramer claus, he made a list and checked it twice. Now hes ready to reveal which stocks are nice. Dont miss the companies that could make the season bright when cramer reveals his favorite Stocking Stuffers. Plus, check cash . Payroll process of paychex has delivered more than a 40 return to date. Is this the way to play a recovering job market in 2014 . Find out when cramer speaks with the ceo before the ink dries on its report. All coming up on mad money. Dont miss a second of mad money. Follow jimcramer on twitter. Have a question . Tweet cramer, madtweets. Send jim an email to madmoney cnbc. Com. Or give us a call at 1800743cnbc. Miss something . Head to madmoney. Cnbc. Com. [ woman ] ring. Ring. Progresso. I just served my motherinlaw your chicken noodle soup but she loved it so much. I told her it was homemade. Everyone tells a little white lie now and then. But now she wants my recipe [ clears his throat ] [ softly ] shes right behind me isnt she . [ male announcer ] progresso. You gotta taste this soup. Yep. Got all the cozies. [ grandma ] with new fedex one rate, i could fill a box and ship it for one flat rate. So i knit until it was full. Youd be crazy not to. Is that nana . [ male announcer ] fedex one rate. Simple, flat rate shipping with the reliability of fedex. The energy in one gallon of gas is also enough to keep your smartphone running for how long . 30 days . 300 days . 3,000 days . The answer is. 3,000 days. Because of gasolines high energy density, your car doesnt have to carry as much fuel compared to other energy sources. Take the energy quiz. Energy lives here. Weve just been through a period of truly fabulous gains for the stock market. With today being still one more example punctuated by hideous squalls of selling that make everyone doubt the resilience of the bull. And for years, despite repeated bear raids, the bull has come through for us. However, just because were in a bull market doesnt mean there wont be plenty of instances where individual stocks go down and go down hard. When i was writing my new book get rich carefully, i reviewed every trade made by my trust along with the bulletins we sound out at the same time explaining the rationale for each decision. You know what i found, when i see a stock spiralling lower, i tend to move too soon and buy it before the pain has come to an end or if the trust owns the stock thats getting pole axed, i tend to wait too long to sell it. Sell, sell, sell. Again in the mistaken belief that the bottom has already arrived. These mistakes are not unique to me, not at all. Most investors are far too eager to try to call a bottom. In the interest of letting you learn from my errors so you can avoid making the same misjudgments myself, i cataloged all the times where the trust bought a falling stock too soon or sold it too late. And i group them into seven patterns that i call false floors. Because if you try to lean on them, youre going to fall right through them, and that will produce some hefty losses. What are these false floors and how can you avoid them . Im going to warn you about two of them. Two of the worst ones. And you can read about all seven in get rich carefully because i am, indeed, of course, a shameless tease. The first false floor, a big buyback. No matter what you might tell yourself, even a monster buyback cannot put a real floor on a stock in a severe market wide downturn or worse, if the company itself isnt producing good numbers. Doesnt matter. Cant buy back stock for a losing company thats doing poorly. You might think that a huge buyback would be a terrific cushion for a stock. Big down days, theyre in there buying. Management coming in, supporting the price with buying, the share price is getting hammered. I wish it were like that. While there are a few genuinely great buybacks that shrink the share count, most dont result in any significant shrinkage in the number of shares because at the same time, the company will be out there doling out big option grants. But even in a situation where you have a company that is shrinking its share count, the truth is, most buybacks are done in an insanely stupid manner. That will not help you if a stock is getting bent, spindled, or mutilated. Think of it like this, executives know about Running Companies but dont necessarily know anything about running money. And ive met many who seem to revel in their ignorance about their own stock. Over the last few years, weve had a lot of days where the averages just got crushed usually because of discord in washington, or maybe trouble overseas or simply because of selling pressure from the s p 500 futures or the double and triple levered etfs that spill over to so many stocks. These would be the perfect opportunities for a company to step in and buy back its own stock at a discount. Everyone will win the loyal shareholders, the company itself will be using the repurchase authorization money in the most efficient way possible. In reality, most execs who i talk to seem oblivious to the declines or simply dont think theyre worth trying to take advantage of. Steams me. Lots of managements seem to check their brains at the door of the Stock Exchange when it comes to doing their own buyback of their own stock. They think price doesnt matter. But the fact is, a company repurchasing its own stock isnt all that different from you or me from a regular investor buying stock. In both cases, you want your buys to be effective. And you should want the best price possible. Otherwise youre just wasting your fire power. With most buybacks, though, the fire powers wasted. Either because the Companies Come in and make their purchases or give a Carte Blanche to fill their order. And no one is going to stick their neck out on a horrible day to make a big purchase. Theyre not incented to do so. If you own a stock thats getting hammered or youre thinking of buying one and you expect to be saved by a huge buyback, please be warned, that buyback will not save you. It is, indeed, a false floor. Youre better off not buying, or if you own it yourself, simply selling the darn thing. Sell, sell, sell before your losses get bigger. Very contrary view but its what my bulletin showed me. How about the second false floor . This ones a really easy mistake to make, and ive made it myself a number of times but none of us should make it again when you hear how embarrassing it is. No stock write this down. No stock is ever too cheap to sell. When i look back at my Charitable Trust, much to my chagrin, i was struck by how many times i used the phrase too cheap to sell as a justification to keep owning bad stocks that were shedding points left and right. Sometimes i would reach out and buy a falling knife for the same bogus reason. Take a pen and paper and write this down. There is no such thing as too cheap to sell. It doesnt exist. And more important, doesnt make any sense whatsoever. So if you hear yourself refusing to sell a stock because its too cheap, i want you to take that as your own personal red flag and ask yourself if there might be something bigger going on thats crushing the company. You need to look beyond the fundamentals and search for something broader in the world. The reality is, cheap stocks, they can always get cheaper the truth is, theyre usually cheap for a reason. Its usually because they deserve to be hitting new lows. Let me give you an example. Back in february of 2010, the Charitable Trust was drawn to the big israeli company, the pharmaceutical that makes the generic drugs but as a major drug kicker in the form of copaxone multiple sclerosis medication. We thought it was attractive trading down to 58. Well, it was selling for just 12 times earnings, a big growth stock, very cheap versus the historical average. Thats what made this so excited. But kept on dropping, and by the time it traded down to the mid40s, i learned that one of the competitors had been able to come up with a generic challenge to capaxone. Something the management assured us couldnt happen. Well, it did happen and while the generic wasnt going to be able to launch for a few more years, so tevas near term earnings were safe, i realized as soon as the generic hit the market in 2015, it would tear the earnings to shreds. As weve been watching this competitor develop its own generic, we wouldve realized that on the out years which is what really matters, actually incredibly expensive. The stock supposed cheapness on the near term earnings turned out to be false, and the trust racked up a major loss. Dont just watch out for my false floors, you should look at your records and see where youve held on to loser stocks too long to identify your own pitfalls. For now, though, remember a big buyback will not save you from big declines. And no stock is ever too cheap to sell. After the break, ill try to save you some more money. Coming up, cramer claus, he made a list and checked it twice. Now hes ready to reveal which stocks are nice. Dont miss the companies that could make the season bright when cramer reveals his favorite Stocking Stuffers. All week ive been sending out Stocking Stuffers. Highquality stocks that i think would make terrific Holiday Gifts for your children or anyone else you think could benefit from a profound lesson in how to financially be more responsible. Granted, im sure your kids would rather get an ipad or kindle than a bunch of stocks. But stocks are the gift that keep on giving. Theyll teach your kids about how when you invest your money it can become the most powerful tool for Wealth Creation out there, producing year after year of profits. Thats why i take this idea seriously and so should you. Ill admit that making an actual gift of stock to your family is a christmas faux pas. Almost as bad as someone giving a sweater. If youre going to do this, you need to make sure the stocks you use as Stocking Stuffers are stocks that will go higher in the not too distant future. Even though its a boring idea for a present, it gets exciting very fast if the recipient can actually watch something they own consistently appreciate in value. Changes the equation. Hence why im only recommending my absolute favorite stocks for the series. The ones i like so much we own them for my Charitable Trust. So far, ive given you eight Gross Domestic Product<\/a> game. With a darn good rally. Nasdaq soared 1. 15 . You should have seen the action in that index. You might be shocked to hear that we only just went into an all out bull market mode this year. After all the Dow Jones Industrial<\/a> averages run for 6,600 in march of 2009. It hasnt happened in the bull market, the gains have been consistent, right . But i would contend until this year, all we did was make up the ground we lost in the crash before the Great Recession<\/a> and 2013 was the year we saw big rallies across all sectors, not just a couple of narrow areas that couldnt sustain their gains. Many people were baffled about whats really happening in this market, though. Theyre confused because they hear its all done with smoke and mirrors. We talk about how the fed is manipulating the market, or the politicians will never let us make real money or the world is a screwed up place and the stock markets a fantasy land that makes no sense whatsoever. Completely detached from the real economy. If we have 7 unemployment, how can the stock market go higher . Were used to people arguing back and forth about the legitimacy of the Federal Reserve<\/a> and the craziness of the 4 trillion balance sheet. We accept everything is political now and its phony and false. And what happens . We get a flash crash, facebook gaffing. Worse, people are afraid to champion this market. Afraid to hit the button. They think, well, what happens if it reverts to the true character and crashes after i praise the market . Do you want to be the guy we see on youtube saying the market looks great here we played endlessly after the big decline . Do you want the link jimcramer on twitter, the butt of a comedy channel joke because you were bullish on the top . Much better to argue qe is behind everything and the only way to approach is be cynical, a knowitall who has the vision, the vision to see the next crash coming. Whats the real problem of the market. The twin peaks of this negativity came last year. During the fiscal clip discussion that was right about now. And this year with the absurd Government Shutdown<\/a> and the bizarre debt ceiling fight. But, you know what, the bull never blinked. And each time one of these peaks appeared before us, it was scaled. Scarily scaled, but scaled nonetheless and each summit, this was more beautiful than the last time. And finally the politicians gave up trying to destroy the economy and just shut up entirely which gave us one more beautiful lift at years end and that trounsed the bear, last nail in the coffin. Its been so long since legitimate bull markets of the 1980s and 1990s we forgot what happens in one of these truly positive moments. Or maybe, people just arent old enough. Lets go over the five bull market tenants. Something to think about over the next five days. Call it your game plan for the last week of the year. First, in a bull market, things happen, they get resolved positively. While it seems impossible to believe they will. Who remembers the cypress crisis of march 2013. Do you know how many people thought this countrys woes, country probably nobody can find on a map and can barely recall what went wrong. What would actually bring down the western financial world. There were specials done about this thing. I had to fight these naysayers off with a stick finally resorting to the ultimate of insults to the bears. When i repeatedly asked the question on mad money, what does the cypress crisis have to do with the price to earnings multiple of cramer fave say it with me, bristolmyers up an astounding 64 this year. You have to suspend your skepticism at times in a bull market and the scars of the past, that was difficult for many, but it has to be done. Second, bull markets, all bull markets are based on profits, not the prophet kind. Profits. When companies create bountiful profits, regardless of whether it be from buying back stocks or refinancing, the stock market does go higher. Its a fact of life. There are plenty of people who tried to tell you that only sales mattered. Others said the profits would be taken away by the fed, obama, the tapering. You name it. They were all wrong. They will never admit they were wrong. You heard it from me, they were wrong. Im tired of hearing about them and their endless hectoring of ben bernanke. The critics, listen up, your times over. Heres your hat, whats your hurry . Dont let the door slam you on the way out. Third, in a bull market, Companies Take<\/a> matters into their own hands. They arent paralyzed, they dont wait for a big wave. They break themselves up, merge, do dividends, gigantic buybacks, spinoffs, execute well and dont care about the fed. Ceos matter i read about 21 of them in my soon to be released book, 21 execs you need to back because they took matters into their own hands. And thats bull market behavior. And in a bull market, people get put to work and jobs become plentiful. And thats whats beginning to happen right now. Thats what occurred this quarter. Employments coming back, but you dont hear about it because theyre always in a newly politicized world. Two sides to every story. Even when theres only one story. Theres a democrat side and a republican side. I could care less. Jobs are recovering and that makes a ton of things possible. You heard that later from paychex in the show. Ultimately more consumer spending. Thats what you saw in todays raging Gross Domestic Product<\/a> number. Finally the fifth trade. No inflation. We dont talk about inflation enough here because there is no inflation. But inflation is what handcuffs the fed and keeps it from being able to help the stock market. What ruins our purchasing power, makes it impossible for companies to make enough money for the profits needed to get the stock market moving. Inflation is the scourge of the bull. However, right now, we dont see any. And i sometimes feel the only other guy who realized this is my hero ben bernanke who always brings it up and its always ignored by the democrats and republicans who want to debate inflation. So heres the bottom line, you know youre in a true bull market when despite the myriad of skeptics, profits are bountiful, ceos are driven to create value, jobs begin to become plentiful and theres no inflation. For the First Time Since<\/a> the new millennium began, we have all five. And that is why were going higher. Tom in michigan. Tom . Caller hi, jim, tom from saginaw, michigan, with the 100th rose bowl booyah to ya. Im jealous, too, man, pasadenas gorgeous. Whats up . Caller i saw that broadcom, brcm was recently downgraded. Is it a good selection from the Technology Sector<\/a> from my mad money portfolio . No, it is not, sir. It is too wildly inconsistent. And what i find about broadcom, its a serial disappointor. If you want to be in a stock that is similar, you can go, indeed, for zylinks. Can i go to massachusetts . Caller hey, jim, a big holiday booyah from andover. Whats up . Caller i want to know your thoughts on a couple of key apple suppliers. Jbl and crus. Im all right cirrus logic is seeing pressure, jabil is a disaster. Im trying to get my head around how it has fallen off a cliff. I dont want it. Okay. The year of the bull may be upon us. All right. Were in an actual true out and out bull market now that started in 2013, its really the first year of the new millennium. The others were all bear markets with bullish spikes. You know what i think . Together, recognizing these five signs of a bull market, we can solve this conundrum together. Mad money will be right back. Coming up stay the course, the markets making new highs, but if youre like most investors, some of your stocks just refuse to rally. Tonight, cramer has some ideas about what to do with tickers that arent cutting it but seem too cheap to cut. And later, cramer claus, he made a list and checked it twice. Now hes ready to reveal which stocks are nice. Dont miss the companies that could make the season bright when cramer reveals his favorite Stocking Stuffers<\/a>. Plus, check cash . Payroll process of paychex has delivered more than a 40 return to date. Is this the way to play a recovering job market in 2014 . Find out when cramer speaks with the ceo before the ink dries on its report. All coming up on mad money. Dont miss a second of mad money. Follow jimcramer on twitter. Have a question . Tweet cramer, madtweets. Send jim an email to madmoney cnbc. Com. Or give us a call at 1800743cnbc. Miss something . Head to madmoney. Cnbc. Com. [ woman ] ring. Ring. Progresso. I just served my motherinlaw your chicken noodle soup but she loved it so much. I told her it was homemade. Everyone tells a little white lie now and then. But now she wants my recipe [ clears his throat ] [ softly ] shes right behind me isnt she . [ male announcer ] progresso. You gotta taste this soup. Yep. Got all the cozies. [ grandma ] with new fedex one rate, i could fill a box and ship it for one flat rate. So i knit until it was full. Youd be crazy not to. Is that nana . [ male announcer ] fedex one rate. Simple, flat rate shipping with the reliability of fedex. The energy in one gallon of gas is also enough to keep your smartphone running for how long . 30 days . 300 days . 3,000 days . The answer is. 3,000 days. Because of gasolines high energy density, your car doesnt have to carry as much fuel compared to other energy sources. Take the energy quiz. Energy lives here. Weve just been through a period of truly fabulous gains for the stock market. With today being still one more example punctuated by hideous squalls of selling that make everyone doubt the resilience of the bull. And for years, despite repeated bear raids, the bull has come through for us. However, just because were in a bull market doesnt mean there wont be plenty of instances where individual stocks go down and go down hard. When i was writing my new book get rich carefully, i reviewed every trade made by my trust along with the bulletins we sound out at the same time explaining the rationale for each decision. You know what i found, when i see a stock spiralling lower, i tend to move too soon and buy it before the pain has come to an end or if the trust owns the stock thats getting pole axed, i tend to wait too long to sell it. Sell, sell, sell. Again in the mistaken belief that the bottom has already arrived. These mistakes are not unique to me, not at all. Most investors are far too eager to try to call a bottom. In the interest of letting you learn from my errors so you can avoid making the same misjudgments myself, i cataloged all the times where the trust bought a falling stock too soon or sold it too late. And i group them into seven patterns that i call false floors. Because if you try to lean on them, youre going to fall right through them, and that will produce some hefty losses. What are these false floors and how can you avoid them . Im going to warn you about two of them. Two of the worst ones. And you can read about all seven in get rich carefully because i am, indeed, of course, a shameless tease. The first false floor, a big buyback. No matter what you might tell yourself, even a monster buyback cannot put a real floor on a stock in a severe market wide downturn or worse, if the company itself isnt producing good numbers. Doesnt matter. Cant buy back stock for a losing company thats doing poorly. You might think that a huge buyback would be a terrific cushion for a stock. Big down days, theyre in there buying. Management coming in, supporting the price with buying, the share price is getting hammered. I wish it were like that. While there are a few genuinely great buybacks that shrink the share count, most dont result in any significant shrinkage in the number of shares because at the same time, the company will be out there doling out big option grants. But even in a situation where you have a company that is shrinking its share count, the truth is, most buybacks are done in an insanely stupid manner. That will not help you if a stock is getting bent, spindled, or mutilated. Think of it like this, executives know about Running Companies<\/a> but dont necessarily know anything about running money. And ive met many who seem to revel in their ignorance about their own stock. Over the last few years, weve had a lot of days where the averages just got crushed usually because of discord in washington, or maybe trouble overseas or simply because of selling pressure from the s p 500 futures or the double and triple levered etfs that spill over to so many stocks. These would be the perfect opportunities for a company to step in and buy back its own stock at a discount. Everyone will win the loyal shareholders, the company itself will be using the repurchase authorization money in the most efficient way possible. In reality, most execs who i talk to seem oblivious to the declines or simply dont think theyre worth trying to take advantage of. Steams me. Lots of managements seem to check their brains at the door of the Stock Exchange<\/a> when it comes to doing their own buyback of their own stock. They think price doesnt matter. But the fact is, a company repurchasing its own stock isnt all that different from you or me from a regular investor buying stock. In both cases, you want your buys to be effective. And you should want the best price possible. Otherwise youre just wasting your fire power. With most buybacks, though, the fire powers wasted. Either because the Companies Come<\/a> in and make their purchases or give a Carte Blanche<\/a> to fill their order. And no one is going to stick their neck out on a horrible day to make a big purchase. Theyre not incented to do so. If you own a stock thats getting hammered or youre thinking of buying one and you expect to be saved by a huge buyback, please be warned, that buyback will not save you. It is, indeed, a false floor. Youre better off not buying, or if you own it yourself, simply selling the darn thing. Sell, sell, sell before your losses get bigger. Very contrary view but its what my bulletin showed me. How about the second false floor . This ones a really easy mistake to make, and ive made it myself a number of times but none of us should make it again when you hear how embarrassing it is. No stock write this down. No stock is ever too cheap to sell. When i look back at my Charitable Trust<\/a>, much to my chagrin, i was struck by how many times i used the phrase too cheap to sell as a justification to keep owning bad stocks that were shedding points left and right. Sometimes i would reach out and buy a falling knife for the same bogus reason. Take a pen and paper and write this down. There is no such thing as too cheap to sell. It doesnt exist. And more important, doesnt make any sense whatsoever. So if you hear yourself refusing to sell a stock because its too cheap, i want you to take that as your own personal red flag and ask yourself if there might be something bigger going on thats crushing the company. You need to look beyond the fundamentals and search for something broader in the world. The reality is, cheap stocks, they can always get cheaper the truth is, theyre usually cheap for a reason. Its usually because they deserve to be hitting new lows. Let me give you an example. Back in february of 2010, the Charitable Trust<\/a> was drawn to the big israeli company, the pharmaceutical that makes the generic drugs but as a major drug kicker in the form of copaxone multiple sclerosis medication. We thought it was attractive trading down to 58. Well, it was selling for just 12 times earnings, a big growth stock, very cheap versus the historical average. Thats what made this so excited. But kept on dropping, and by the time it traded down to the mid40s, i learned that one of the competitors had been able to come up with a generic challenge to capaxone. Something the management assured us couldnt happen. Well, it did happen and while the generic wasnt going to be able to launch for a few more years, so tevas near term earnings were safe, i realized as soon as the generic hit the market in 2015, it would tear the earnings to shreds. As weve been watching this competitor develop its own generic, we wouldve realized that on the out years which is what really matters, actually incredibly expensive. The stock supposed cheapness on the near term earnings turned out to be false, and the trust racked up a major loss. Dont just watch out for my false floors, you should look at your records and see where youve held on to loser stocks too long to identify your own pitfalls. For now, though, remember a big buyback will not save you from big declines. And no stock is ever too cheap to sell. After the break, ill try to save you some more money. Coming up, cramer claus, he made a list and checked it twice. Now hes ready to reveal which stocks are nice. Dont miss the companies that could make the season bright when cramer reveals his favorite Stocking Stuffers<\/a>. All week ive been sending out Stocking Stuffers<\/a>. Highquality stocks that i think would make terrific Holiday Gifts<\/a> for your children or anyone else you think could benefit from a profound lesson in how to financially be more responsible. Granted, im sure your kids would rather get an ipad or kindle than a bunch of stocks. But stocks are the gift that keep on giving. Theyll teach your kids about how when you invest your money it can become the most powerful tool for Wealth Creation<\/a> out there, producing year after year of profits. Thats why i take this idea seriously and so should you. Ill admit that making an actual gift of stock to your family is a christmas faux pas. Almost as bad as someone giving a sweater. If youre going to do this, you need to make sure the stocks you use as Stocking Stuffers<\/a> are stocks that will go higher in the not too distant future. Even though its a boring idea for a present, it gets exciting very fast if the recipient can actually watch something they own consistently appreciate in value. Changes the equation. Hence why im only recommending my absolute favorite stocks for the series. The ones i like so much we own them for my Charitable Trust<\/a>. So far, ive given you eight Stocking Stuffer<\/a> names for the holidays. Ive given you General Electric<\/a> and johnson controls. Google and bank of america, ciena and apple and caterpillar. Not only winners in 2013, that doesnt interest me. I dont care about where a stocks been, i care where its going. Tonight were putting a bow on it. With our last pair of holiday goodies, Health Care Company<\/a>, johnson johnson, and offprice retailer tjx. Lets start with j j. The Worlds Largest<\/a> Health Care Company<\/a> with three divisions, pharma, consumer, and diagnostics. J j is an example of a company where i believe the parts are more than the combined whole. The shareholders, i believe, would benefit enormously from a breakup. In fact, i cite them as one of my potential breakup plays in get rich carefully because i think this one could be a terrific winner if management does what i regard as the right thing. And, by the way, i believe management will do the right thing in part because the relatively new ceo is so committed to creating value. Ill admit that j j has done pretty darn well, though, without any kind of breakup. The stock is up 31 for the year thanks in large part to the fabulous stewardship. But i think this thing could go so much higher if management would do the obvious thing and split j j in three pieces, that would be a topnotch drug company with a terrific pipeline that grew sales at 10 clip in the most recent quarter. Thats fabulous for big pharma, then youd also have a slowgrowing and incredibly consistent Consumer Products<\/a> business, the number one play on over the counter drugs that could give you a bountiful dividend. And last but not least, the medical device and diagnostic business is solid. But its more inconsistent than the rest of the company. And im hearing its for sale. I think all the components would get a higher valuation if the piece of the pie were just to stand on its own. Remember what i said about breakups early earlier in the week . Wall street is simply not built to handle these big conglomerates like j j. Analysts specialize in individual sectors and Money Managers<\/a> want to own bitesize Companies Pure<\/a> plays on a given business. J j is a Great American<\/a> company. Its the definition of whats left of being called a blue chip. But if it were to break up the three resulting stocks would be a lot more appealing than the Money Management<\/a> community than the current stock. Of course, even if j j doesnt follow my plan, its worth owning, it can deliver Revenue Growth<\/a> in the midsingle digits and highsingle digits. Plus the company has a great track record of raising the dividend currently yields 2. 9 . Right now j j sells for 2. 8 times next years earnings estimates. And i think the stocks going to go higher in 2014. Id like to, of course, buy more if the stock would go below 90 where my trust intends to be able to sell some a little bit higher because it had become the largest position in the trust. Now, for our final Stocking Stuffer<\/a>, i want you to consider tjx. And thats the Company Behind<\/a> tj maxx, marshalls and home goods. Ive got one in the building im at in the morning, the street. I got a belt there. In an environment where retail has been inconsistent and with some really good and really bad, tjx stands out among the best. Understands the consumers new value branded mindset. Sells brandname merchandise at Bargain Basement<\/a> prices at more than 2,600 Stores Across<\/a> the u. S. The company can do that because of the Business Model<\/a> and terrific execution. When other retailers need to offload their inventory, maybe too much after a holiday and they also have to bring in new merchandise, tjx swoops in and buys the stuff for cash, for far less than its retail value. Then they turn around and sell that same merchandise to you. It works because the companys fabulous at knowing what kind of the product the customer wants and buying excess inventory from the other retailers around the country. This model means that tjx can procure in a couple of weeks where a normal Department Store<\/a> needs six to nine months. Because theyre not buying an already finished product from another store. Thats whats so fast about this. Not only a great concept, one thats been taking shares from likes of kohls and jc penney, but an impressive growth story. Still in the early innings in the expansion overseas with a quarter of the sales coming outside the u. S. Plans to double in store count longterm with 50 growth in the countries where it currently operates as well as expansion in new countries, primarily in europe where they have really growing and profitable business, even during the downturn. I think tjxs home goods division, which represents 15 of the sales and has about 450 stores has enormous capacity to grow here. Its a lower, less expensive william sonoma. These home good stores are doing incredibly well in an environment where Consumers Want<\/a> hard goods, especially homerelated ones. Consistent, highsingle digits same store sales. Not just a place to get a huge porcelain plate with a turkey on it for thanksgiving. Although, i got the huge porcelain plate with a turkey on it for thanksgiving there and everybody loved it. Tjx has recently increased the Online Presence<\/a> pretty dramatically with the launch of tjx. Com. Youll never see her, im sure, its going to be one more big hit. This has been an incredibly consistent retailer. Over the last decade which includes the Great Recession<\/a>, tjx has two quarters where the same store sales declined. The Company Raised<\/a> the dividend the last 15 years. The stock keeps going higher and higher. Plus the companys addicted to buying back stock and always seems to be in there buying on the rare tough days and shrinking the float. Right now tjx trading at 19 times next years earnings estimates. Right now the stock is less than two points off the 52week high and probably a better price, maybe below 60 if you wait for the next market swoon. These two Stocking Stuffers<\/a> could be riding a truly major one. Johnson johnson a classic candidate to get aboard the breakup train. And tjx is all about the consumers new more value oriented consciousness. I like both stocks very much here and i think they are ideal gifts for those who dont mind their purchases are not returnable. Frank in new york. Frank, frank, frank . Caller booyah, mr. Cramer. Booyah, chief. Caller thank you and your staff for all you do. It really helps a lot. Youre terrific for saying that. Trying to do a good job every day. Got a great staff. Whats up . Caller and you do. I would like your opinion on amgen. Amgn, several of the latestage Development Including<\/a> a potential cholesterol drug which could generate up to 4 billion in frank, frank, frank listen. Were members of the four horse men of the beg pharma apocalypse and theres no room in there for amgen. We like gilead and regeneron and were not deviating from those. Can i go to sead in connecticut. Caller my question is about your thoughts on puma biotech. Which is coming up on the clinical trials. Your thoughts and let me know what you think about well, i know it spiked on that, but thats not good enough. Anyone can see that from the chart. I have learned my lesson. When you opine without doing the most recent analysis on a small cap biotech, say under 3 billion, you dont know what youre talking about. We have to come back and do much more homework driven analysis of puma. All right. All week we helped you with your Stocking Stuffers<\/a> for gifts that keep on giving. Look no further. Look at this. Ge, johnson controls, bank of america, ciena, xilinx, not all red hot, stocks you can still buy. Stocks are great gifts for kids, and we wish you a very merry christmas. New business owner, it would be one thing ive learned is my philosophy is real simple American Express<\/a> open forum is an online community, that helps our members connect and share ideas to make Smart Business<\/a> decisions. If you mess up, fess up. Be your partners best partner. We built it for our members, but its open for everyone. Theres not one way to do something. No details too small. American express open forum. This is what membership is. This is what membership does. It is time, it is time for the lightning round on cramers mad money. Rapidfire calls, say the name of the stock, i tell you whether to buy or sell. Play until this sound then the lightning round is over. Are you ready skedaddy. Time for the lightning round on cramers mad monemoney. Dan in ohio. Dan . Caller hey, jim. Yo. Yo. Caller im looking at an energy stock at an eightyear low, pbr. Yeah, you know, we did a Technical Analysis<\/a> of that stock and i thought it actually had some game. Looks like i was wrong and its come back down. Its still so cheap, i cant walk away. But every brazilian stock is awful. Lets go to dave in california. Dave . Caller hey, jim. Booyah. Booyah, dave. Caller hey, jim, id like to ask you about denton. Shes one of my bankable 21 ceos from my soon to be released book called get rich carefully. Im a buyer of ventas. Carol in new york. Carol . Caller booyah, cramer. Yoyo. Caller happy holidays. And id like to find out about rite aid. Yes, its absolutely true. It was not as good as walgreens or cvs. Did it deserve to fall like this . It reminds me of wendys. I want to circle back and buy rite aid right here. Lets take another. I want to go to gail in north carolina. Caller im curious why you think amc didnt do so well when it came on the open market. Thats a great question. I thought it could be higher. But you know what the answer is, i still believe in my judgment. I think it goes up to 23. I think a lot of the bigger cap ipos like hilton, they didnt pop the premium, thats the opportunity. Im sticking by my judgment that amc is inexpensive. And that, ladies and gentlemen, is the conclusion of the lightning round. The lightning round is sponsored by td ameritrade. Merry christmas, a warm one to you, jim. Excellent. 78 degrees here. Okay. Its miserable here. Rub it in. Lets go to audrey in florida. Maybe you could do something about my sciatica since you have my back. I need you to go see dr. Erickson, my chiropractor, shell straighten you out. A change of Epic Proportions<\/a> in the food and restaurant industries. In our house tofurky is a delicacy and it worked a couple of years ago. Dad, whats in velveeta that it never goes bad . Listen to me, its not my fave, but if you slather anything in enough cranberry, its okay. Ive always been adamant you dont need a degree in i lost my thought. Julias in new york . Julius . Julius . Brutus . Portia, julius caesar. Come on, man, im thinking with my feet. Well, that strong gdp number we got this morning was fabulous. If you want to get a terrific read on the Employment Situation<\/a> in this country and more important the strength of the Small Business<\/a> community, then theres no better source of information than paychex. Thats the second largest Payroll Processor<\/a> in the United States<\/a>, specializes in small and mediumsized businesses. Plus, the company also has an outsourced Human Resources<\/a> division that is growing quite rapidly. Paychex reported wednesday after the close and the company beat wall street earnings estimates. Stock immediately spiked. More important, the companys Payroll Services<\/a> division grew at a 5 clip. Its the fastest growth since before the recession. With the bulk of the increase coming from higher revenue per check and more checks per client. On top of that, the Human Resources<\/a> business is benefitting from the rollout of obama care. Paychex has rolled out 75 this year and up 13 since we last spoke to the ceo at the beginning of october. Even up here, though, paychex supports a 3 yield. The stock could keep roaring in 2014. Dont take it from me, lets check in with marty musey. Welcome back to mad money. Hi, jim, thanks for having me. Marty, it happened this quarter, didnt it . The breakout quarter weve been waiting for . I think so. Were really happy with the progress. Obviously growth has accelerated as you mentioned. Service revenue up twice as much as it was in the first quarter. And the hrs Revenue Growth<\/a> was 12 . Really strong this quarter. Were you surprised to see this . And where is it . Geographic . Is there Certain Industries<\/a> . I mean, because this is such a huge jump. Ive got to try to understand how it happened. Yeah. It was really across the board. I think on the hrs side, 401 k has been growing pretty well, and i think were starting to see it pay off on the revenue side. We went after a larger market, more conversions of existing 401 k plans. And thats really paid off for us. And the outsourcing, particularly our peo business has picked up because of obama care. More people looking to for help and assistance on what to do with all the confusion. And that certainly has given us a little wind behind us, as well. Marty, i know you guys were preparing all along for obama care, but did you also see the problems with the website coming and thats one of the reasons why you had a spike in business . Well, i think, jim, you know, we were prepared right along. We have insurance products. Some of that being delayed now till january 1st. But we also have the hr outsourcing team and our peo business dealing a lot with total hr. And that helped a lot with clients. We were prepared, had them trained up. And we have a great Compliance Department<\/a> that stays on top of these things and trains our folks. I think were able to get in front of a lot of clients, help them and that ended up increasing our sales a little bit in the second quarter. Lets talk about float. Theres a guy at jpmorgan that hasnt liked the stock. Hes been wrong, frankly. Says float income was flat ahead of our down 7. 9 estimate on higher balances. Is this something is this the beginning of that inflexion point, too . I think it is. Were at 10 million a quarter in float. And we really think were at the bottom of the trough now where things start to turn as the timing changes now for us. And weve seen the estimates, i think Interest Rates<\/a> are going to go up slowly over time and i think thats going to be good for the economy and its certainly going to be good for us. I think thats got nowhere to go but up. The stock has had a major move. Is it still the right thing to continue to buy it . Well, i certainly our plans are to continue to drive a lot of investor value and to have that stock continue to go up. The market is what it is. You know better than i, but were going to certainly continue to drive a lot of growth in this business. Were excited about the progress and the acceleration of the growth. And weve got a lot of things going both in the u. S. Now and in germany. We just finished an acquisition, were starting up in brazil, you know, we feel really good about our chances for great growth in the future. We were out west recently, we pulled up with workday, a very good company. Youve got a Software Service<\/a> component coming. Will there come a time when youve got to transfer all of your business to the web . To the cloud . Or is it fine to have a hybrid . I think its we have a lot of our clients on Software Service<\/a>s now. We have the lowend product, we share payroll and right up to our mid market product. And a lot of thats on software as a service now. We have clients who use our very good mobility applications on their iphones and androids. And they go online. And theyre also talking service at the same time. And even our service givers are on our offerings. So were really there and i think its always a matter of Innovative Technology<\/a> combined with great service. Thats what makes the difference. Last question, marty. Government seems to be out of the picture. Weve got some lets say an end to the yeah, i think i do think Consumer Confidence<\/a> is coming back. You saw a little bit of that in the restatement of the spend from the summer they announced today. I think as theres more Consumer Confidence<\/a>, i also think lending is opening up a little bit. Some of the indices were looking at, it shows Small Business<\/a> lending opening up. And i think Small Business<\/a>es start to come back. Ive said before, we do see housing, new housing starting to come back, particularly in certain markets like the southeast and the midwest. And as that comes back, a lot of jobs start coming around that. And as things, they start to feel more confidence in the government, you start to see housing come back, i really think its going to start to pick up Small Business<\/a>. Well, this was a huge quarter, marty, thanks so much. Its been such a great ride. And i think its going to continue to do so right through 2014 because the stuff, the good stuffs just beginning. Thank you so much, president ask ceo of paychex. Thanks, jim. Its been a big win, but its actually just beginning. Stay with paychex, stay with cramer. Great expectations isnt a book. Its a setup time talking about todays action in nike, because the wild trading is about what people expected versus what they got. Its hard to imagine that expectations being any higher than those going to the nike quarter. The newly minted member of the Dow Jones Industrial<\/a> average have been showing a level of momentum in china that had been spectacular and the u. S. Was running very hot. When this Charitable Trust<\/a> holding reported, we were braced for disappointment. Sure enough, got it. Delivered a terrific quarter, not terrific enough for the rabid owners of this thing who wanted to see much better than expected numbers print when a stock is up 50 for the year. What was wrong . Nothing. Nike has strong demands, amazing performance of western europe. 15 Revenue Growth<\/a>, 23 futures orders, thats the best predictor of how the company will do over the next six to nine months. China, however, grew only 5 . With 1 futures growth. That wasnt enough for those looking for the big upside surprise. The companys investing for the future, which meant more money not falling to the bottom line. Expectations now come down, and to me that makes nike okay to buy. But the darn stock did fall 92 cents and that was a mighty painful thing on a big up day. If you read the release, or listened to management on the Conference Call<\/a>, you would believe the stock would have been up 10 not down over 10 as it was today. Because of the big contracts they signed. One of the companies that is highly valued for the sales momentum and gain in the license revenue, key big metric showed a real slowdown. However, tibco is being hammered for the inconsistency. Its become hit or miss, on fire one quarter, cooled down the next. And investors are tired of hearing everythings fantastic. Fantastic means shoo the the lights on every metric, which is not what occurred this quarter despite the companys protestations throughout the Conference Call<\/a> otherwise. They are also weary of having to hear about sales force problems at the company. I mean, come on, growing pains . Nobody cares, tibco. They dont want excuses, they want blow away results. Tibco failed to deliver, but red hat did. Heres an open Software Company<\/a> that supports software on the cloud. The last quarter didnt show the kind of billings growth that the momentum investors expect. So they whacked it and whacked it some more. Jim whitehurst came on mad money and told us here that the business is going to be smoking in 2014 and the way the firm accounts obscured what could be tremendous strength. I gave whitehurst the benefit of the doubt because he seemed totally heart felt and bummed that people didnt get it. And he wanted people to run to not from the stock which is the reason we bought it aggressively for my Charitable Trust<\/a> into that weakness. Sure enough, everything you said on mad money about the real nature of the previous quarter was right. And the stock soared 14. 5 higher today. People were too cynical about this fascinating company thats part of salesforce. Com and so many ventures. Yet, people had too high of expectations for nike and expectations of consistency for tibco and, both, well, disappointed. Red had was loathed for that last quarter miss and had no expectations whatsoever. Those are the kinds of stories you must also always be on the lookout for especially when the quarter of lowered expectations wasnt that bad at all. Stay with cramer. Too small. Too soft. Too tasty. [ both laugh ] [ male announcer ] introducing progressos new creamy alfredo soup. Inspired by perfection. [ male announcer ] heres a question for you where does the United States<\/a> get most of its energy . Is it africa . The middle east . Canada . Or the u. S. . The answer is. The u. S. Most of Americas Energy<\/a> comes from right here at home. Take the energy quiz. Energy lives here. Open to innovation. Open to ambition. Open to bold ideas. Thats why new york has a new plan dozens of tax free zones all across the state. Move here, expand here, or start a new business here and pay no taxes for ten years. Were new york. If theres something that creates more jobs, and grows more businesses. Were open to it. Start a taxfree business at startupny. Com. All right. Lets go back over this nike, i think its the only opportunity that presented itself today. Nike was a good quarter. Theyre spending a lot of money. I believe china reaccelerates in 2014. This reminds me of disney when it fell from 66 to 63 and went right to 72. Thats nike. Theres always a bull market somewhere, i promise to try to find it for you here on mad money. Im jim cramer and ill see you monday i hit a huge swap meet. This is like uncharted territory. Looking for the perfect ride. How much you want . Ill take 90,000. But a simple paint job. Wait a minute. Has me seeing red. This was supposed to go all the way to the end. [groans] and when a big buyer heads to lubbock, i need to reel him in. Oh, yeah, that catches my eye. Before he skips town emptyhanded. I dont know, that color. Almost looks like a rust red. I need some aspirin. My name is jeff allen. I buy, fix, and flip cars. But i dont do it alone. Ive got perry","publisher":{"@type":"Organization","name":"archive.org","logo":{"@type":"ImageObject","width":"800","height":"600","url":"\/\/ia903004.us.archive.org\/14\/items\/CNBC_20131221_040000_Mad_Money\/CNBC_20131221_040000_Mad_Money.thumbs\/CNBC_20131221_040000_Mad_Money_000001.jpg"}},"autauthor":{"@type":"Organization"},"author":{"sameAs":"archive.org","name":"archive.org"}}],"coverageEndTime":"20240620T12:35:10+00:00"}