tv Mad Money CNBC February 8, 2012 11:00pm-12:00am EST
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we're more than 78,000 people looking out for 70 million americans. that's health in numbers. unitedhealthcare. i'm jim cramer and welcome to my world. you need to get in the game! firms are going to go out of business and he's nuts! they are nuts! they know nothing! i always like to say there's a bull market somewhere. "mad money," you can't afford to miss it. hey, i'm cramer, welcome to "mad money," welcome to cramerica. other people want to make friends. i'm trying to save you money. i'm here to coach and teach so call me at 1-800-743-cnbc. on a real push kind of day, the average meandered around and dow closed up six points and nasdaq climbing .41%. here is something that should be on the mind of a good investor.
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what keeps me up at night? what wakes we up, like clockwork, besides my over drive brain and metabolism? it's something that i've wondered about. you have said i worry about nothing. if only, i worry about everything. in fact, i had to warn an early morning tweeter that talked about the destiny of some stock to go higher. the moment that you let your guard down, that is the moment that the bears will rip your lungs out and tear your face off. and it's reasonable to think, what could go wrong? right? shouldn't we be thinking about that? more bulls than we had in a long time. there was a ton of money made at the beginning of last year only to be lost in the compressed bear market that was the second half of 2011. so let's list them. go down.
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what am i fretting about? first and foremost is the looming israel/iran showdown. where israel thinks it's 1938 all over again. you can tell it's the big time elephant in the room. given how the rest of the world seems to be adopting a league of nations sanction approach. and we saw how well that worked in the 1930s. so i will explain what is happening. we know the israeli defense minister said a strike might be necessary. with europe slowing down to a crawl, brent crude should be down $20 from here. no way anyone is going to make that bet against crude. second, a similar related worry, the price of gas, maybe people are using more efficient cars or we are richer than we think.
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but $4 a gallon gasoline is the wall we cannot climb. as a seafood lover who watches "deadliest catch", restaurants get hammered at the $4 milestone. and it will not be made up. we cannot do as well when we are paying $4 at the pump. it takes too much out of our pockets and does not leave enough for retail. those stocks are all on fire. you cannot whistle forever past the pump graveyard. i worry. we need gasoline lower. third, i'm concerned about our taxes going up. i'm concerned because ben bernanke has told us you better be. i'm a huge uncle ben fan. he is my first draft in the "mad money" fed fantasy team and he is telling us he cannot take his foot off the pedal because of the possibility of tax increases. who am i to tell him not to
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worry? i'm nervous about the fact that people who have hated the market now love it. a bunch of noted permabears who will remain nameless. why? because i'm feeling diplomatic today and i'll spare them the embarrassment, they've turned bullish. when someone who hated the market comes in now, let's not confuse him with king solomon, maybe with larry, moe or curly, or even the talentless shemp. no matter what happens with greece, the market may sell off anyway. so in a counterintuitive year it could sell off if there's a greek collapse or a deal. portugal have king oscar in the can over there, they better let him out. that is the level of caution i
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have about that country. but greece could produce a sell off. albeit not as bad as iran/israel. i need you to be prepared for it. okay, enough worrying. let me tell you what i'm not worrying about. what doesn't keep me up, or wake me up. earnings, i'm not concerned about earnings because they are terrific. whether we are talking about disney or time warner or whole foods after the close or apple every day, twice on days when the market is open. i listen to people saying 60%, those people are, i don't know, they are not doing the work like i am. they are not, okay? you know if you listen to conference calls rather than reading the headlines you would not touch a stock. if you only read the headlines you would never buy a stock. disney is trying to make movies that make money, not meet the revenue numbers. frankly i'm not worried about politics. if obama wins it will be because the economy is doing well.
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if he loses, it's because the people are happier with the new president. i'm not concerned about stretch valuations and downgrades. and if we do not get hit with a shock that i just mentioned we will fall back to levels that got the previous people in. stocks are stretched if we're in the same old bear market. if this is like the 1980s and '90s, stocks will go to levels you did not think they would. yeah, i worry, you do not want to worry, get a safety deposit box and put everything that you own inside it. otherwise, understand, the companies i listen to are more bullish than they were six months ago and the stocks do not reflect that optimism, so until then, count me in, not out. other things keep me up at
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night, which is why i still have a night light. danny in texas. >> caller: appreciate you taking my call. i watch your show every day. >> thank you danny, i appreciate it. >> caller: my question is about diamond foods and the news release that says they will have to restate their physical year results for the last two years and they will be replacing their ceo and cfo. i want to know what this means for the stock. >> okay, i have a sign, accounting irregularities means sell. the stock is down. there was a very irresponsible firm that told you not to worry about that recently, they should be taken to the wood shed.
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i'm not going to reveal who it is, it's so shameless. let go to joel in indiana. joel? joel? >> caller: hey, jim. booyah from the home of super bowl xlvi. >> i think everybody said you guys did a great job, eric gruben, that nfl guy in charge of the super bowl, great job. >> caller: thank you, nokia shifting all assembly to asia, in between $5 and $6 a share with 5% yield, what do you think of them as a long-term investment? >> i tweeted this morning that they fired 4,000 people. maybe if they fire everyone the stock will go up. these guys do not have, i don't think that they really have clue right now, they are a river in finland and i do not want to paddle up or down it. don in new york? >> caller: a big, big, big hello from niagara falls, new york. >> holy cow. >> caller: i'll give you my
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question. i like to thank you for your tv program and your book, it's real helpful and it's a godsend. >> well thank you very much. thank you. i appreciate it. >> caller: my question, some time ago i bought some disney stock, i know there's a report of increase because of the theme parks. but i would like to know the way the stock goes up and down like a yo-yo, should i sell it or keep it? >> it is a terrific stock that you can give your kids. you follow it along. this was a monster quarter, bob iger did a terrific job, if you want to hear what a ceo can do, he's paid a lot, but he deserves every penny. the stock is making a lot of money. stay disney. there are still things worthy of worry. i am worried but the things that the companies tell me, they are better than six months ago but the stocks do not reflect that
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we spend a lot of time here on "mad money" trying to puzzle out what the future looks like for all sorts of companies. we can't peer into the future but there's a great predictor of higher share prices down the road. when wyndham worldwide announced a 53% dividend boost on top of a terrific quarter, it's no wonder the stock shot up 6.1%. wyndham is the largest franchiser of hotels on earth. you have stayed at one, ramada, days inn, they are the top time
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share developer in the world to boot. i love that they boosted the dividend significantly, even though the yield went up, that is what happens when stocks let me give some context. two years ago wyndham tripled its pay out. they have had a 90% gain and it's been working and i bet it keeps working. wyndham is a spectacular story and a spectacular turnaround story, that is why i'm thrilled to have steve holmes with us tonight to talk with us about the quarter and what comes next. great to see you, you are a man of your word, you said when you took that dividend up it was a precursor of things to come. and it was. >> we feel confident in the company and the future and that is why we can raise our dividend. >> i'm critical of buy-backs,
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but i've got to temper my negativity. >> it was this year. >> just this year. bought it back, more than $10 below where the stock is now. i see as a company that generates a huge amount of cash and has a fee for service stability stream that is unlike almost any other fee stream i have, and a stock that sells at 12 times earnings, i do not get it. this a stock that should sell at a premium given the stability, dividend and stability and return to capital. explain to me what is going on here. >> i think we are building momentum and interest and we are a relatively new company. i heard you say it before, you have to prove yourself and prove you can deliver. we have proved we can deliver. with each quarter with earnings and with the free cash flow.
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>> and deploying it in ways that are terrific for people. >> and we are not afraid, we can add more leverage as we grow. we are bottom of the investment grade and that is where we should to be. >> what is telling on this quarter, and it is not window dressing, a lot of people did not stress it in the q and a, you are building a web presence that could be some of the brilliance, transforming travel, transforming hotel reservations, it sounds like this room key could be a game changer for what you have. >> room key is a great concept, it was put together by five hotel companies, who felt the idea of capturing people and giving them an access point to hotels at the lowest possible price is the best way to go. and by coming to us, coming to our web sites, you are going to get the best price on a hotel room, and it's guaranteed. you can come in through room
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key, it's almost the kayak of the hotel business. >> that is the next question, i've seen people say that there's a sum of the parts situation brewing here. we saw marriott do it. marriott does not have the robust properties you have. you have a website presence that could be gigantic and a hotel business. are the parts worth more than the whole? >> i don't know if the parts are worth more than the whole, and i would argue they are not. you can do some of the parts and look at the valuation that we have, some of the businesses are under valued in our opinion, based on their component pieces. so, if you are doing a sum of so, if you are doing a sum of the parts roll up, i argue there's greater value there. does it make sense to break it apart? if it drove shareholder value, we would.
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we run the business for the shareholders. i have been through spin offs and split ups and tracking stocks. there's a lot of different ways to do it. and we look at all of them. we think right now we have a great business mix producing great cash flow. >> i was surprised that you were able to do these numbers. you have a substantial european presence but it's not hurting your business. >> 15% of our business comes out of europe, it a well balanced business over there, it's exchange and rental. and frankly, european rental is a mainstay for the way people vacation in europe. and our product is in the best possible places. in prior downturns we have seen pressure, but germany right now is in a great position and they are the largest travel market in europe. they are the largest travel market in the world, so there's balancing points over there. we managed through it though. we feel like one of our charges is to attack that and find a way
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to mitigate the pressures we are feeling. >> one of my themes, and you'll be able to gauge it better. consumer in america feeling better, have you a huge, 75% of your business is in the united states. you have a sense of whether the consumer is opening the wallet. do you have that level of conviction that i'm starting to get, that things are getting better? >> we have been saying it for a while. the consumer may not be chasing after the luxury goods. i'm not sure where they are in that regard, from a consumer's confidence standpoint, and you can see the results from the michigan studies, you feel it when you go out and see, when you walk the streets, look at the stores and go into our hotels, they are fuller than before and people are in a better state of mind. >> that is what you need, things will only get better for you guys.
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be confused with the totally non champion buffalo bills. this stock was born to be wild. they are $12 higher today. 70% move in one day and not a takeover. yet last night cramer fave buffalow wild wings reported a better than expected quarter. said that the beer and wings turns out the only chickens here were the analysts that down graded the stock before the results. they proved they can triumph over higher wing costs. these costs hurt the competition more. the quarter was blazing hot, like their sauces.
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bwld delivered a earning with revenue coming in higher. bullish commentary and super bowl sunday guests ate 7.7 million wings. buffalo wild wings is giving you a 54% gain since last year, but with the the nba back in action and march madness around the corner, the stock will erupt. do not take my word for it. let's go to sally smith, the ceo of buffalo wild wings, and hear more about the quarter and the prospects. welcome back. >> thanks for having me. >> i spoke with you on february third, you came on "squawk on the street" i asked you, wing prices, and you told me, do not worry, company will do fine and an analyst down graded it.
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why do these analysts not get that you have consistently dealt with higher wing prices over the course of your career and it does not hurt business? >> we try to get that story out there. we spend a lot of time with analysts, i think the ones that really understand us, understand that we have a lot of different levers that we can pull when wing prices are high. i focused on the earnings call, you can look at g and a, we have strong same-store sales, and managing wing costs is part of managing our business. you can go back and look historically how we performed when wing prices have been high and have confidence that we can achieve the same thing this year. >> there's a perspective that it's really your only cost and that everything else does not matter. that has not been the case at all with buffalo wild wings? >> no, it's funny because wings
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used to make up 40% of total food sales and now they are 20%, so actually there's less pressure on wing costs than there were five years ago, but we have to manage the entire commodity basket and you have labor to manage, and the initiatives, construction costs to manage, and training and simple technology changes. there's a lot of moving parts. wings being just one of them. >> how many wings do we eat? it was like an inspiration, i go to a lot of airports and you mentioned that airports are a place to have them. you have 900, maybe you are being too conservative about where where we can have buffalo wild wings. >> i think there's a lot of options for us, we have two buffalo wild wings in two airports, one is in houston hobby. for southwest airlines. and we have one in the international terminal in jfk, both doing really great business and we are on an army base in el
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paso, texas and are working on the atlanta airport. and there are a good 60 to 75 major airports that we think that buffalo wild wings is a great fit. and i talked yesterday about smaller towns. those with a smaller buffalo wild wings footprint, not a lot of dining options there, but you know, why not? bring wings and beer and great sports viewing to some of the smaller towns across the country. >> i was thinking why wouldn't you have one next to every college and two or three, i know i went to the one at the university of michigan, couldn't every college campus have a buffalo wild wings? >> oh, sure and we are located near a lot of college campuses. we will also open in the suburban parts of markets as well. colleges, that's where we
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started and it's still provides a great growth vehicle for us. the thing about colleges, you have to wait for the right site and we have a great real estate team on top of that. >> one of the things that people are talking about, i have a second to ask you about on the show, five million followers on facebook, what does facebook do for buffalo wild wings. >> we just upped that number to six million facebook followers, we are number four. >> how did that happen? my numbers were recent. >> no i know they were five million, i was looking it over. i think we resonate with people. we have, we will post a question and they will come back with all kinds of answers. if their friends are at buffalo wild wings, they want to join. i have a live twitter feed on my
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computer in my office and it's amazing, people talk about i'm going to bws tonight and i'm going for wing tuesday and boneless thursday. we hit that age demographic really well. >> i have been known at times to have a beer or two, nothing beyond that. but you have upgraded the beers, that would be a lever where you could presumably, i'm having the hot sauce with my buddies, we drink more beer because it's hot. and now you have upgraded beer, so you have that lever too. >> we do, it was a focus of ours in 2011. it is that beer experience. i have said it before, cold beer cold. and we increased the number of tap handles we have. so we can let those general managers work with their local markets to say, okay, what local craft beers do you want on tap? provide great revenue for us, brings money to the bottom line and gives that guest exactly what they are looking for to go with those hot wings.
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>> a lot of restaurant companies were on the griddle today. people were saying, you are underestimating that the weather was great. how much do you think that weather helped you? >> we took a look at weather throughout the midwest, it has been wonderful and on the coast as well, not too many major snow storms. if we look at fourth quarter 2010, we have about 20 basis points in same store sales. if people want to get out during a snow storm, they will get out and i want to make sure they are coming to buffalo wild wings. >> you have done a great job, and you've been incredibly forward with everything that is going on. thank you for coming on "mad money." >> thanks jim, always great to talk with you. >> guys, i don't know, the doubting is sometimes, you know, you can be too skeptical, people. sally smith told us, don't worry about wings, you made a fortune in the stock if you listened to
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it is time, it is time for the lightning round. what's that about? rapid fire calls. you say the name of the stock and i tell you to buy or sell. i don't know the calls ahead of time. my staff prepares the graphics on the fly. play to this sound and then the lightning round is over. are you ready? time for mark in my home state of new jersey, mark. >> caller: this is mark from new
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jersey, a big, big booyah to you. >> right back at you. >> caller: listen, my stock is dndn. >> i like it lower, not here, it had a big move. let go to sal in florida, sal? yo, sal, sunshine, speak to me. >> caller: big booyah from clearwater, florida. >> i'm getting ready for opening day down there. what is up? >> caller: i have voxx. >> you go there, go to harmon, they are a better company. let's go chad in new jersey. >> caller: booyah, cramer. huge fan. >> thank you. thank you. >> caller: do you see a positive future in investing in pep boys? >> no, they are getting taken over, there's nothing there, go home, manny, mo, and jack and you. let's go to david in california. >> caller: the bears are hibernating for the winter, booyah.
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>> bears all over the place. >> caller: my stock is cov, are they selling off their pharmaceuticals unit and should i buy more? >> i think you should. i am getting a good feeling for them. stick with them. and let's go to mitchell in kentucky. mitchell. >> caller: booyah from kentucky. >> booyah back at you. >> caller: i've been in people's united financial for a while now and did not know if i should buy more, hold or sell. >> i do like it longer term. rich in new york? >> caller: booyah, jim, your old firm, goldman sachs. >> they are going higher, nobody likes the stock. another one, morgan stanley, i had a face off with my friend doug kass, and i got to tell you, he thinks that morgan
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stanley is a sale, but i think it a buy, buy, buy. keith in pennsylvania? >> caller: hey, bucks county booyah. >> my old stomping grounds, we know it. >> caller: pfizer getting hammered lately, should i sell? >> no, they have a big buy-back, it's not my favorite, but they are fine, they will be protected by that yield. do not forget bristol meyers. i do not care that it came down a bit. i like it more. vincent. >> caller: what is up, jim? >> not much. >> caller: i want to know where ford is headed. >> ford is doing okay, there is an article about how bad gm is doing in europe. but ford has china, and gm doesn't. ford is going to flatline until europe is fixed. let's go alex in the sunshine state, florida, alex. >> caller: booyah, walgreen --
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>> walgreen's is in a pickle here, they did not do the scripts deal. so they are a push. jeff in florida. >> caller: a big warm booyah from florida. >> man, we have a lot of sunshine today. >> caller: i've been holding on to linn energy because of their great dividend.. >> everything is up in the air in oil and gas, i do not mind it, but i no longer like it as much. i would like to see 8% yield before i step up. let's go to misty in ohio. >> caller: i'm calling from ohio, a big time booyah to you. >> that is an awesome booyah, the best in show. >> caller: what can you tell me about alcoa. >> they are debating closing another plant in australia. if europe comes back they go back to 14.
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i think it's okay, i cannot recommend it. that ladies and gentlemen is the conclusion of the lightning round. in what passes for common sense. used to be we socked money away and expected it to grow. then the world changed... and the common sense of retirement planning became anything but common. fortunately, td ameritrade's investment consultants can help you build a plan that fits your life. take control by opening a new account or rolling over an old 401(k) today, and we'll throw in up to $600. how's that for common sense?
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i like big themes, cannot lie. that was the third theorem of investing, i'm like a broken record when it comes to my favorite themes. have these long-term trends in the back of your mind so you can buy the stocks that work when they pull back. but every you pull-back must be scrutinized with rigor. perrigo, it is going through the great recession, and it changed the consumer's attitude toward trading down the cheaper store-brand merchandise. these days it seems insane to pay up for the name brands when the knockoffs works the same and cost less. perrigo reported higher than
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expected sales and rose 16.8%, the stock has now come down to $94. perrigo is ten points off their high, as people are fretting about the j and j recall problems. these seem like legitimate concerns, so let's check in with the ceo and find out more about where his company is headed. welcome to "mad money," have a seat. we have all of your products. >> noticed, they look great. >> they are the same, they all work the same. >> same safety, same quality, approved by the fda as the national brands and store brands. >> i'm a big bull in the economy, more bullish than the president and the republicans and ben bernanke.
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i worry as more people start doing better, they will go back to their other brands and you may return to your historic, excellent trend rate, but not the blow out rate that you had. >> well, jim, we know that once a person makes the decision that they will come from a national brand to store brand, 91% of the time they stay with the store brand. even if they get a better job or make more money, they still have to cut back some places and we give the same quality and safety and effectiveness, so they will stay with store brands. >> more people migrate when times are harder. the migrations may slow. >> there's more migration when times are hard, but we are launching a number of new products this year, we are launching 45 new products and when new those products are available, people will naturally progress to the store brand product. >> how does that compare to the years before?
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>> we have over $10 billion products that are prescription today and that will move over the counter and give us an opportunity to introduce store brand in the next five years. >> you did get a leg up because of all the problems in the labs, of j and j division, people say they will come back. can they cut price and take the share back that they lost, in your opinion? >> i cannot speak to their plan, but my belief is that everyone from national brand categories, they try to focus on innovation, rather than cutting price. they will come out with new innovation, and for us that is great, it gives us more targets to go after in terms of following them. >> i was listening to restaurant chains saying the weather was great and it boosted sales. it has not been a strong cold and flu season. do i have to worry about it? >> the weather has been good and
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we have not seen the cough cold flue season, if we compare it with last year, it's down 8% this season from a year ago. however for us, it's about 12% of our sales, so the majority of our product sales are outside of cough, cold, flu, we are worried but it is not a major worry. >> can you tell me some of the bigger names? people say, what am i going to see that i will be paying a lot more now? >> we will launch the store brand version of mucinex, we have the store brand version and we will launch it over the next 90 days. there is a product called prevavid, we will launch that and we have the store brand equivalent of delsym, a cough
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cold product and a claritin-d that we will launch a store brand version of. allegra-d. we have so many new product opportunities that is what is exciting about perrigo in the future. >> you guys are incredibly honest. you call out that there's a dramatic decline in birth rate in the country. that can hurt your diapers and formula. >> the birth rate is down about 3%. the category that we are looking at is the infant formula category, we are down slightly in the u.s. but we believe that most of that was really attributed to a one-time game we had last year when one of our competitors had a recall. absent the recall we are doing fine. >> are you able to control
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commodity costs differently from anybody else? a lot of people in category are saying that everything is going up. same view? >> we do a very good job, because one of the things that perrigo does is we make our own active ingredients for many of our products. the active ingredients are the 50% of our cost, that allows us to keep our cost basis down, versus what the competitors may be saying. >> when a drug goes generic, that is prescription, the share falls dramatically. should we assume over time that your share will increase because of the over the counter drugs come out? >> we do not get quite a quick scale up in ramp up on the generic products but we certainly do gain. the most recent product we
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the audience is, the ideas that we are getting, they are amazing. you see the twicker, there's your tweets, please keep them coming cramerica. let's get into it. not all etfs are created equal. as part of the all request week here on "mad money," images for a cause tweeted, wondering why i embraced the gld, the gold etf and not any other etfs, it's a great question. i think that most of the exchange traded funds are doing a disservice to those that buy them. they are often grouped together to play the hottest trend or are offsetting day trading, but the gld is not one of those etfs, they are not risk on and risk off, it tracks the price of gold. what makes the gld better than
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the metal? buying gold is not easy, you have to store it usually in a depository bank, and it costs you money. take it home and try to hide it somewhere. of course, you can buy coins and i like those as an asset class, but the markup on coins above the raw price of gold, outrageous, and you have to hide them. you can buy the gold miners but the gold miners are having a great difficulty capitalizing on the 11-year rise in gold, because the expense of mining has become tough and the easy finds have been had. and then there's the beautiful gld, this thing acts just like gold, goes up and down, and close to a proxy as you can find.
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and you can follow my actionalertsplus.com. why does the trust own the iau and not the gld? the trust has restrictions on what it can and can't trade if it's mentioned on "mad money," and i mention the gld so often, that way if i want to buy or sell it, i'm not frozen by the show. why don't i like the stock basket etfs? because i'm dedicated to finding the best stocks not the mediocre stocks, you are giving in to mediocrity when you buy a basket. we do comparative stock analysis every night and i show you why some stocks are better than others in the same sector, and you have an etf that lumps them all together, and you want that? i say you can do better, don't settle for the etf, unless it's a gld, keep your requests coming, tweet me, @jimcramer #madtweets. [ sniffs ] i have a cold. [ sniffs ] i took dayquil
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but my nose is still runny. [ male announcer ] truth is, dayquil doesn't treat that. really? [ male announcer ] alka-seltzer plus fights your worst cold symptoms, plus it relieves your runny nose. [ deep breath ] awesome. [ male announcer ] yes, it is. that's the cold truth! [ male announcer ] for our town. [ dog barks ] for our country. ♪ for our future. ♪ this isn't just the car we wanted to build. it's the car america had to build. ♪ the extended range electric chevy volt. from the heart of detroit to the health of the country, chevy runs deep.
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without the stuff that we make here, you wouldn't be able to walk in your house and flip on your lights. [ brad ] at ge we build turbines that power the world. they go into power plants which take some form of energy, harness it, and turn it into more efficient electricity. [ ron ] when i was a kid i wanted to work with my hands, that was my thing. i really enjoy building turbines. it's nice to know that what you're building is gonna do something for the world. when people think of ge, they typically don't think about beer. a lot of people may not realize that the power needed to keep their budweiser cold and even to make their beer comes from turbines made right here. wait, so you guys make the beer? no, we make the power that makes the beer. so without you there'd be no bud? that's right. well, we like you. [ laughter ] ♪ the two trains and a bus to the 5:00 arider.holar. the "i'll sleep when it's done" academic. for 80 years, we've been inspired by you. and we've been honored to walk with you to help you get where you want to be.
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