up, pitlick is up -- >> we need that, guy. agree. >> bristol meyers, mel. >> thank you for watching "fast money." see you back here tomorrow at 5:00 for more "fast." meantime, do not go my mission is simple. to make you money. i am here to level the playing field for all investors. there is always a bull market somewhere and i promise to help you find it. mad money starts now. hey, i'm cramer. welcome to mad money. i am trying to help you make some money. my job is not just to entertain but to teach you. call me at (800) 743-2622 . sometimes we forget that people have no idea what we are

talking about. they can toss around terms like cyclical or capital appreciation fixed income. it represents a combination of arrogance and cluelessness about what people understand and are comfortable with. don't even get me started on that thing called the unicorn. two days like today when the dow tumbled and the nasdaq sacked 1.18%. these terms come into play and you have to understand them. just remember that the market, u.s. treasuries are the most important bonds in the world because they are very large michael's -- markets in a are backed by the full faith and credit of the u.s. government which still matters despite the fact that uncle sam is $34 trillion in debt. despite that, although the bonds are priced often. the companies with the best balance sheets can issue bonds to attract buyers. less healthy companies have to pay more for their debt.

beneath bonds are the dividends. it is the opposite of risk free. it can easily be canceled. they have zero obligation to keep paying money. why not go to the world of fixed income? because i want to explain to you what the heck is going on with the stock market right now. i can't do that unless you know how important higher-yielding dividend stocks are at this moment versus stocks that offer little to no yield. when i talk about little to no yield i mean stocks like the magnificat seven. why bring up the distinction? ever since october 23, the day that long-term interest rates peaked, higher-yielding dividend stocks have been flying while the magnificent seven have fallen behind. for most of the year the market

was led by the mag seven. ever since the rates peaked they have lost their leadership. i want you to consider the disparity between the performance of the s&p 500 with each member stock equally weighted weather than market cap weighted. every stock is equal in size versus the magnificent seven. ever since rates peaked confirmed by the decision to stop tightening the interest rates, look at what happened with the equal weighted s&p 500. this is the version of the s&p where apple and microsoft have the same weighting as all of the other stocks. the equal weighted s&p has be in the magnificat seven by 13.4% to 11.2%. that is 223 basis points. the leader for the last couple of months has not been the magnificent seven. those stocks are underperforming.

that is actually a significant margin. if you stuck with the seven you lag behind the more pedestrian equal weighted index that makes it the equivalence of the rest. why is that? the market is going away from the seven. once the rates peaked the dividend yields might be less puny once we get the rate cuts we are expecting. more on that in a moment. what is working? all sorts of other stocks as you can tell. for some it is the banks. j.p. morgan went to a thai, all-time high. can you believe it? it will be a big winner when it comes to earnings. the rates have peaked and it offers a higher yield. bank of america has gone to 23. the wheel -- real estate trust pipelines, they all outperform the magnificent seven. what does this tell us?

nothing about the seven itself. those are still great companies. this is about the new consensus that interest rates will keep coming down making dividend stocks more valuable. i don't want to put this as part of the winners. the institutions are making sizable best healthcare which is usually a sign that somebody is worried about the economy. they may not cut enough or fast enough or not at all. at least not aggressively. i see this as making some sense which is why we continue with the capital trust. many of the drug stocks are having almost parabolic moves because they are both in the economy and they pay large dividends. the performance is so stark you have to recognize that these have become the new darlings that are above the surface while the sevens has stalled

out. you might ask, who has the money for these other stocks? where is it coming from? again the answer is right in front of you. the money is coming out of none other than the magnificent seven itself. these stocks are what's known as sources of funds. many portfolio managers are selling them in order to raise money so they can invest in other places. at the moment they are putting it in healthcare. that's why i say it is a rotation. money going from one part of the stock market to the other. the high-yield her son not even that high-yielding anymore. it does not matter. when you look at that you know that investors act ahead of events. what does all this tell us about your portfolio? i think it is clear. the market has momentarily fallen out of love with the mag

seven. the money is headed away from a small group known for its magnificence to a much larger group as well as the stocks that have been kept down for fear surface the recession. don't worry. it will eventually return to the rightful place but not until the rest of the market catches up or if the rest of the market and everybody else falls but the rest of the market does not fall harder. bottom line. this is a new market with the mega cap tests. the market where money is being put to work with boring higher yield stocks as well as healthcare, banks, and utilities. we have real profit-taking causing us to continue our more cautious tone. not putting money to work, not just watching and waiting with a lot of cash for much better prices.

we have scott an ohio. >> hey there. how are you tonight? >> i am doing well. what's up with you? >> not much, man. fire to the pandemic which devastated the entire travel and tourism industry, i invested quite heavily with carnival cruise lines. do you expect the leadership to get restored back to pre- pandemic levels? >> i think they are good but i am more focused on royal. they have a better balance sheet. i think you are fine. cruising is a great bargain and people always come back to it. we said that at the height of covid and we are sticking by it. royal caribbean looks the best right now. randy and new york. >> hey, jim. i want to thank you for everything you do. my wife and i watch you every morning at 9:00.

>> you like my sister's friend i bumped into who loves what we are doing. how can i help? >> we have been talking about discipline a lot lately. i get it. i did trim some of the giants, but i got to google and something is on my shoulder saying, don't trim it yet. it's not dominating the portfolio. >> understood, but here is the problem. i trim all of them because they are too big. we have had too much of a run. google cloud services, if that does not come back the stock will stall out. i am more concerned about google than any of the other magnificent seven. >> hello. how are you? >> all right. how are you?

>> i am good. thank you. thank you for taking my call. i have been watching for a long time. i have a question for you on paypal. i have been holding for the past two years. i continued to hold the stock or sell it off? >> i have to tell you. this guy alex that is running the company, he is a winner. i have not been behind paypal for a long time. if he delivers a good quarter we will know that they are back and bigger than we expected. again, google is not expensive but i am concerned. we were being greedy. the magnificent seven analog of the leaders. it's going into high-yield her's, banks, drug stocks, healthcare, i think that all of this will keep happening and the seven is going to stall.

that is why we trim some of them. is it time to trim your winners? we will look at the s&p 500 standouts. it is not all about the winners. i will give you the stocks that were at the bottom of the barrel. plus, is the market high expectation of interest rates too far ahead of reality? i will tell you what i think is going to happen. stay with cramer. >> don't miss a second of mad money. follow jim cramer on x. you can send an email or give us a call at (800) 743-2622.

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so many people swapout their stocks only for the s&p 500 to make full some of them by giving you a 24% gain. before we get to the winners and losers let's just talk about the framework. last year started with the consensus that we were headed toward a hard landing. remember last march and the relentless series of rate hikes. then we got inflation under control without crushing the economy so the fed put more rate hikes on hold. everyone who told you to sell because we had an inverted yield curve that supposedly signaled an inevitable recession, they look like stooges. after stealing ourselves for a year of underperformance for all but the most recession proof stocks, this was

reflected in both the winners and losers for 2023. you see what did well and what did poorly. it is all about that changing top-down worldview. even as most of the best performers came from the ranks of tech. first up no surprise. it's nvidia which gave a staggering 239% gain. they had a stunning sales guidance missed to the upside. i have never seen anything like it before. it's a collection of hardware and software that has made it possible for generative ai to prevail over the all the forms of technology. when you combine that with large language model you can envision the drudgery of work going away and almost the most imaginative of products require human and that. i think most of the worries are overblown.

we did not need to be afraid of skynet. i can't dismiss fears that a i will put people out of work but it produces more money and more hiring. so we have intel great gordon moore that said chips double in power every years. we assumed that was the natural speed limit. it grew right past that. the market off it's like meta- and amazon try to get as many as they could. the chinese said they had to settle for dumbed down gaming chips. something that must frustrate the military. i don't know if this stock can maintain its trajectory. it has been stalled since july. i still say to own it, but it is hard to imagine the stopped tripling. the second best performer in

the snp's meta-platforms. the rally is shocking only to those. it is not just the expense side that mattered. there was a resurgence in instagram as they created a workaround to make the ads that were targeted on apple devices which were then blocked by apple. let's just say they got around it. and then, reels started to come on strong. i know that they need to produce winners. maybe that will come from the headset or the ai ray bans. i'm betting the metaphors will no longer be bereft of revenues. i have no idea how big they will be but the main driver has much more to do with mark zuckerberg. that could change in 2024. when you consider there was no recession, you can understand

how royal caribbean could see stocks rally 160%, 157% respectively. royal caribbean showed that cruises remain big even though a few years ago they were seen as floating covid carriers. royal caribbean was capable of raising a huge amount of money when it's stocks or shaft of the pandemic. they backed it up with great revenues and earnings. they performed better than norwegian cruise because of the balance sheet. nevertheless, one year ago they expected a vicious hard landing. everybody believes in the heart soft landing. it has never really waned when it came to the cruises. as for the first source, get to know this name. it confounded many especially those that have never heard of it. it provides professional homebuilders with everything they need to do to do the work. they perform so much better than home depot and lowe's.

you have to believe they do it much better than the do-it- yourselfers. it looks much better than the strength of the homebuilders. the professionals crushed but the amateurs chose to pull back their spending. there 570 distribution manufacturing cases under the radar for most of 2023 but i think those days are behind them and there is plenty of room for more stores and more growth and better stories for this year. finally, one of my favorites that i think might be dismissed or destined for multiyear and that is uber. here is a company that many thought would be a perennial money loser because it only ever seemed to care about revenue growth not earnings. in 2023 they made the pivot pulling off a transformation from loss maker to profitability. they have a rejuvenated competitor which i backed. there is no doubt that they have won over the hearts and

minds everywhere. we have seen this prevail not just in transportation but also food delivery. given that they can conquer both categories it is no wonder the stock can roar like that. let me give you the bottom line. when you get the top five performers, you have three extremely high quality tech and two economic stocks that caught a huge tailwind steering toward a soft landing. i would not expect them to put up similarly insane gains this year, but i bet they can keep climbing albeit at a slower pace. we will be back after the break. coming up, we have heard about the s&p top swimmers. which index component did the doggy paddle in 2023? find out next.

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when we think about what could have been the worst in the s&p 500 for 2023 a lot of people were guessing a popped artificial intelligence bubble, a couple of total collapsing stocks and the regional banks. how many people believe that ai had the pieces to make money? only nvidia and microsoft really cashed in on these big profits. only nvidia succeeded in delivering great numbers but the air never did come out probably because it is not a balloon in the first place. in 2023, the people get hurt by ai where the short-sellers betting against it. as for the banks and the home voters the regional banks did

crash last spring. the banks had a lethargic come back after the collapse of first republic. it accelerated nicely. the most shocking performances came from the housing cohort. this should happen crushed because mortgage rates doubled. thanks to the lack of overbuilding they had some of the most baffling products they have ever seen. who can blame them for holding back during the most aggressive tightening cycle. with tough zoning laws and expensive labor, the homebuilders were constrained to begin with.

higher interest rates should have squelched any chance of that happening. that led to a remarkably different group of users than most investors would've expected . this is going into 2023. the worst-performing s&p 500 was a solar power company. they fell 15% last year and that's even after rebounding. what happened to cause that rally? the same thing that killed it in the first place. it had been a huge winner from 2020 through 2022 running in 21 at the bottom of march 2020 just under 340. thanks to these high-energy courses they decided to feed fossil fuels but a collapse in the far more important enterprise.

it turned out to be interest rate derivative and not much more. hardly anybody can get these solar panels without financing. we know they are a renewable energy company second. the stock bottomed out and rates peaked. this one crushed people who thought it represented the future of energy and not the future of credit. speaking of shocking, how about this play? that stock is up 49%. most people don't realize the company is likely to see earnings get cut in half. the feed the world thesis probably came to an end. grain prices cascaded lower once the world adjusted to the war in ukraine. other countries eventually did make up the difference. it did not matter that it's a great company because the whole complex failed with many of the reversals finishing in the red. most people did not see that coming given the chronic food

shortages worldwide. sure, add can bounce back but i would rather own john deere. their worst performer, dollar general. i look to see if i could see something that would explain those stocks. i saw a lot of empty shelf space. there is a dearth of help that it dollar general, that's the same thing i saw the year before. i think with the difficulty of hiring people and of course the prevalence of shoplifting. they brought back their old ceo and i think he can make a go at turning things around. at the end of the day, you don't get a dollar stores stock when the economy is better than expected. if you think that is a hard landing still, this might be a good one. even as many of the stores simply are not stocked correctly. next, i can't believe that

these covid success stories covid and pfizer -- moderna and pfizer could see their stocks fall so far. moderna was the first company to develop a vaccine for covid. it did not last. most people believe that they could put it to work in an instant. the company failed to show its profitability. the belief that they can develop these vaccines to stop cancer. i think even he had to be shocked by how people could turn on him and his stock which fell down to 99 at the end of last year. that is up from $62 and change. that might not mean much in the face of healthcare. maybe people are starting to put behind the covid headache.

pfizer stock was one of the biggest in history. the ceo needs to organize disparate as acquisitions in the face of the endless patent cliffs. the stock was hurt severely because of its inability to forecast how quickly people settled in to recognize that it was here to stay. it's treatment that is the closest thing to a cure, once we saw the real numbers the market overreacted. cannot make a comeback? sure. they even have a nice rally going on right now but big pharma makes a great political punchingbag for both parties. the biden administration even pulled off the totally unthinkable. they got approval to negotiate lower drug prices. on that group, it could give

them an excellent anticancer feed. that will make it more valuable in a lower strain environment. maybe hope springs eternal, bottom line it is a group of losers that may not have occurred if we were headed for the hard landing that so many expected. we had a soft landing which created a whole bunch of winners and losers. >> happy new year. go cowboys. i was wondering if you think lulu lemon will continue higher or will it be a january slump. >> i have been a big believer and i am not backing away.

. i think they have what it takes to be great worldwide. those are hard to come by. zane, >> looking at energy transfer, common stocks giving me a 9% dividend. other stocks like candor morgan and williams are anywhere between five and 6%. >> a lot of people are worried about that balance sheet. i have made my peace with the balance sheet. the sector has been doing quite well. i like enterprise products. i have to tell you if you are really going to buy one of these you have to go through enterprise product partners. so many predicted a hard landing and if it had panned out maybe these would've acted better instead of the soft landing.

they just were not what people wanted. i am giving you my outlook on the upcoming action from the fed. investing club members know it is hard to trim the magnificent seven stocks. so what makes me confident? i am sharing my thesis and if i think these still have staying power in the new year. stay with cramer . power e*trade's award-winning trading app makes trading easier. with its customizable options chain, easy-to-use tools and paper trading to help sharpen your skills, you can stay on top of the market from wherever you are. e*trade from morgan stanley power e*trade's easy-to-use tools make complex trading less complicated.

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do you ever forget that price matters in this business? after the rally in november and december i'm feeling a little

bit more queasy in the new year especially when it comes to the high multiple tech stocks. even though i am still feeling good about the economy, i like the prospects. the averages have gone up a lot in the last couple months. the higher we go the more you need to worry about what might trip us up even if you like the company's. right now, one of my biggest concerns is that the market may have gotten ahead of itself. everybody is expecting rate cuts this year but that does not mean they will happen. we may not get as many as we want. long-term rates peaked in october which is what kicked off the year-end rally. then we got another higher after the meeting last month when it was heavily implied that hey are done raising rates. that is after the last few weeks of monster gains. they were pushed to all-time highs last week. however, let's remember what the fed actually told us.

the dot plot, the graphic that shows where the members of the open market committee see the federal funds rate at the end of the year. this time the majority expected the fed to cut rates at least three times in 2024. that was a major shift from the previous party line that rates may need to study higher longer. in response the averages were. wall street is not behaving like we are going to get three cuts this year. it's behaving like we are going to get a lot more. betting on with the fed rate fund will be it is now pricing in not one, not two, not three, not four, five, but six normal rate cuts. that it is outrageously greedy. the majority are betting that it will be between 3.75 to 4% range or even lower after the

2024 fed meeting. down more from where we are now? there is already a rate cut expended at the next meeting. they are betting that followed by five more at the end of the year. i think it is just way too optimistic. i think 2024 will play out more like the current view. three rate cuts likely occurring gradually. why does that matter? if socks are in -- stocks and expectation for four rate cuts and only get three is a huge deal. the people betting on six will get disillusioned. then they will start to sell. it could happen simply through public commentary. it could be's something that powell says at the next meeting. they might decide investors

overreacted last year so officials may make statements telling investors to cool their jets. powell needs to say that any rate cuts will be considered carefully. honestly, these guys may not even need to say anything. if there is a flareup in the data, the pce deflator coming in higher than expected, wall street will dialback expectations. given that the economy has been resilient, there are all sorts of ways to get a brief pickup in inflation. any reminder that we have not annihilated inflation may people . even if the fed gives us more rate cuts than expected, they only control the short rates. the long-term rates are held by the market. if there is demand which we saw in the late summer, the lower rates will come back up.

the rally kicked off when the treasury department said they would focus more on short-term treasuries. the oversupply was pushing into the stratosphere. they can't stop selling them entirely. a few more bad options could put us in a place where the fed loses its limited influence. i think wall street has gotten offsides in terms of the expectations. once they start to price in the three rate cuts, out of the six rate cuts that is expected it is the average. especially the stocks at the end of last year. i think this positive rate cut may be dashed as soon as this. there is a possible silverlining. i think it is a very good thing. these rate cuts will make the economy stronger than expected. that is okay. they think that it will tank.

of course they will take desperate action to prop everything up. it's easy to get caught up in the idea that rate cuts are good for stocks and hikes are bad for stocks. we need to take a step back. look at the macroeconomic picture because the fed does things for a reason. the fed raises rates when the economy gets too hot and they need to curb inflation. they cut rates when they want to stimulate the economy because it is too slow. i don't think we need that much stimulation. the fed will cut rates six times this year. that means the economy is in a tailspin. there are drastic measures to get things back on track. the bottom line, i do not think it will happen. i think the conomy will continue a little bit slower than it has been, maybe not terrible. with less and less inflation which is good. once you are ready to pounce on

any sale that comes from the more cautious fed that does not want to cut too hard to see inflation roaring back or panicking those that thought we were having a soft landing. mad money is back after the break. coming up, cramer takes your calls and the sky's the limit. (ella) fashion moves fast. setting trends is our business. we need to scale with customer demand... in real time. (jen) so we partner with verizon. their solution for us? a private 5g network. (ella) we now get more control of production, efficiencies, and greater agility. (marquis) with a custom private 5g network. our customers get what they want, when they want it. (jen) now we're even smarter and ready for what's next. (vo) achieve enterprise intelligence.

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ready? rodney in georgia. >> hey, jim. first time caller. stock club member for about four months. thank you so much for helping. >> thank you, bud. >> i have a question about midstream. >> very solid. good growth, good yield. i like the profile. the group rate is very high. it's an energy transfer product. let's go to michael in tennessee. >> jim. >> what's going on? >> merry christmas and happy new year. the ticker symbol iof. >> people want quantum. i do not think it holds up. the company is losing money. i say no. let's go to george in

pennsylvania. george. >> jim, how you doing? >> i am well. >> i wanted to wish you and your family and your staff a very happy and healthy 2024. let's go, words. >> absolutely. same to your family. >> thinking about holding position in j tls. defense and security solutions. >> i was talking to jeff martin. we are watching rtx sneak up. we have good news about northrop and let's never forget ava the. when you talk about drones. we had a bit on that company for a long time with and liking it. ever since i was using it in the parking lot at a place that i used to work. let's go to dave and virginia. >> hello. dave miller from richmond, virginia. how are you? >> i love richmond. tell me something. >> jim, a couple of years ago i

bought stock listening to it on this segment. i researched and did my homework . they took me up to 30 and traded up to 47 last summer. now it is taking a pretty big hit on those earnings and a downgrade today. pwa. >> you cannot sell that. i was watching it. people are selling a lot of cars, particularly hybrids. i am more about buyer. overthrowing magna and mga. don't get discouraged. let's go to anthony in pennsylvania. >> hey, jim. how are you doing? >> i am having a good time. how are you? >> happy new year's. go eagles. >> what can i say, they are still playing. >> i want to thank you for everything you do that levels the playing field for us small guys. >> thank you.

>> that is the best compliment i can think of. >> that's great. thank you so much. >> you are the ultimate fiduciary for the regular guy. >> thank you very much. >> listen, i want to see if they can ever attain their old value? >> i think that will be hard. i'm not saying the best days are behind them because that is what the wall street guys said. i don't think you will get a lot of mojo out of that thing. i think if you are a company that is going to be a leader in mortgage rates there is better place. what can i say? i do not want to be in lendingtree. i would rather be in toll brothers. toll brothers is very good. let's go to ernest and north carolina. >> how are you doing? >> i'm doing fine. how are you? >> i cannot complain.

i follow the market a little bit. i have not started investing yet. longboard caught my attention yesterday and they were trading at about six dollars a couple of weeks ago. are they solid investment long- term? >> i think they announced a study, good topline data from a study they did. my inclination is to say we missed that move. when i see a power move like that i know i am not really but i thank you for the call. let's go to alyssa in florida. >> hey there. we love you from st. petersburg. >> i love st. petersburg. it never rains there. it is always sunny in st. petersburg, not philly. >> my question is, does jaeckel still have legs on it or did it run its course? >> they had a not great quarter and it's gone down. i would be a fire and not a

seller of jabil. that is the conclusion of the lightning round. >> coming up, trimming is such sweet sorrow but focus on the sweet. nobody ever got hurt talking a profit. cramer explains next. (grunting) at morgan stanley,

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trimming is such sweet sorrow. th i feel after letting go of small portions of the magnificent six. i say six because we don't keep tesla. they will be strong long-term performers but they have had huge runs and i feel like a pig if i did not take something off the table. it is not hard to sell some of these stocks on a fundamental basis. barclays downgraded apple to sell saying that there are lower estimates following another round of checks. we are still picking up iphone volumes. that as well as a lack of bounce back in the mac, ipads and wearables. i personally have great faith in them. it is just that there is a slowing and that robust

high-margin category. all in all it is a disappointing piece for those of us that are apple aficionados. i can easily dismiss that by saying, we have heard that all before. what about the vision pro? couldn't that be a force? as somebody who has worn it i could say that one day. i could get another piece just as you today saying that the stock is a hold as they wait for apple to get unstuck on the innovation front. they are creative enough to make a compelling investment. while we talk about that, these companies are different and at different places in the lifecycle. for example, we got a piece from bank of america about amazon saying that it sees room for margin upside in 2024 with prime video ads providing a nice boost. amazon spent $7 billion on prime media content. the research said they are about to charge of three dollars monthly premium for ad free video.

given that they have 150 million video users and 70% might choose the lower cost, that estimates that $3 billion in potential incremental ad revenue and $4.8 billion in total incremental ad plus subscription level. that is the equivalent of amazon waving a magic wand that prints money. one week i'm watching an excellent reacher episode, highly recommended. the next minute i'm watching one with commercials? no thank you. i will pay that three dollars. or take tesla, the one member of the magnificent seven we do not own. this morning the always creative adam jones reiterated his price target for this stock based on a whole host of what he calls beyond auto kinds of reasons. we may think of tesla as a vehicle company on a discounted

cash flow basis. but the some of their other parts, financial services, a possible deal with chinese electric vehicle makers, opportunities and insurance, ridesharing, tesla energy. among all of that he thinks the parts and stock could be worth $380. how many companies have that kind of option allergy and then there are these do nana -- nano ray bans. you say hey meta and you can answer a call. unlike every other attempt at smart glasses these look like simple ray bans. you can't even tell the difference. that could be meaningful demo line. when you sell or even just trim any of the seven something always seems to come up that makes you regret it. good news, looks like you will get a chance to buy things lower because the stock market is turning nasty. these companies are so good they always seem to come up

with something that makes them more compelling than we thought. that is just the definition of a good investment. as long as you do some trimming. don't worry. if they come down pick you can always get them right back again. i like to say there is always a bull market somewhere and i try to find it just right now on last call, avoiding all obstacles, gm scores huge sales but is something troubling lurking under the hood? bob eggers big win, on a winning path for 2024. jeffrey epstein's list of names. hundreds of court documents are being released. we have breaking developments. crushing homeowners. insurance premiums set to skyrocket, again. how much higher can they climb? >> plus go