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tv   Mad Money  CNBC  December 21, 2017 6:00pm-7:00pm EST

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throttle them. >> that's how you started the show we'll end the show with micron, mu >> all right i'm melissa lee. thanks for watching. see you back tomorrow at 5:00. "mad money" with jim cramer starts right now my mission is simple to make you money. i'm here to level the playing field for all investors. there's always a bull market somewhere, and i promise to help you find it. "mad money" starts now hey, i'm cramer. welcome to "mad money. welcome to cramerica other people want to make friends, i'm just trying to make you some money my job isn't just to entertain you but to educate and teach you. call me at 1-800-743-cnbc or tweet me @jimcramer. do you know the defining feature of this market it's that we don't have enough shares to go around.
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that's how i feel about this incredibly strong year and the uber bullish reaction, dow gaining another 56 points, s&p up and nasdaq. there's just not enough supply, stock to meet the demand from buyers who had to radically switch orientation to deal with a much more positive backdrop. and that's been very good for the averages and your portfolio. whenever anybody talks about stock shortage, automatically greet them with a little skepticism there are always bankers ready to pump out stock to meet demand but it's not a wholesale shortage of stocks but stocks that fit the program meaning belonging to companies that are high domestic taxpayers and got a big boost to their
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earnings recent performance of amazon not doing well versus walmart, on fire two largest retailers out there. walmart, effective tax rate of 32%, soon to be cut to 21% consistently buying back stock for he years amazon has higher but don't pay much in taxes because don't have much in earnings, spending to win and aggressive issuer of its own stock over the years not a lot of shortage there. walmart had 14.1 billion shares outstanding but buybacks, under 3 billion shares last tally. amazon, 24 million ten years ago but tie 482 million. when portfolio managers want to reach for a big company that's
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major beneficiary, thinking walmart, not amazon. could see them dumping since the latter is well-run and accelerating online initiatives. contrast is stark. walmart used to have tons of turnover at store level, costly, you have to spend a lot of money to train replacements. but thanks to recent pay raises, turnover's dropped dramatically. apparently paying people a living wage is good for business who knew walmart has great fundamentals and fits the program i've been talking about. because of the buybacks in even shorter supply given $290 billion company. just doesn't take as much buying power as you think to move up this behemoth.
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and amazon very much doesn't fit the program and lot more shares go around floating all over the place. people who dumped stock of amazon may be right short-term but i think get bad case of seller's remorse when they talk about how great they did over the holidays fact is sooner or later, new tax regime will be priced in the market and investors will stop penalizing companies like amazon that don't benefit from it that much given the passage was a surprise and analysts just now figuring out its impact, my guess that this could continue longer than people think another example of the shortage phenomenon industrials been buying back stock. why? for ages not enough worldwide demand for the products.
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instead of investing in the business, close factory and artificially shrink the number of shares. now a triple bull whammy in their favor. u.s. economy and rest of the world, getting stronger. second benefit from accounting change that makes it cheaper and easier for clients to buy heavy machinery and goods. put that with number three, buybacks, honest to goodness stock shortage in industrials, caterpillar anyone hundreds of billions likely to flood into the market this year and next through index fund buy, don't have enough shares to go around from business perspective, very few losers under the bill. big and little tech companies won't benefit as much as industrials or even domestic
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retailers. that's all the market cares about right now, relative winners at this momentum plus tech companies tend to be aggressive issuing new stock and pay people in stock. both less attractive and no splash orders to speak of. how much does this matter? homeowners are one of the few industries that could arguably do worse under the new tax reform business. curtails mortgage interest deduction and state and local tax deduction. but toll brothers, states where residents buy pricey homes like they make, could get whomped without that deduction yet what happened to the stock hasn't even dropped. i think it's because it's buying back shares at furious pace. on top of that, at times toll's tax bill been as high as 37%
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tax reform might cause fewer to buy homes, make it up and then some with the tax rate can't stress this enough, hearing that changes to the tax code are baked into the market already. who are these people almost impossible given the swiftness of the passage and surprise it took so many people. and our market's performance in line with other industrial countries. they didn't just pass tax cuts not fully baked in much more ahead. if you presume this is giveaway to big business and companies use it just to boost dividends and buy back stock, will be good for the stock market boosting earnings for each company. how much does this matter? best, most rigorous argument against this market has been its
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high valuation it's expensive although not as expensive as it seems given the paltry competition from bonds with tax reform it is entirely possible that the best bear case out there just got neutered. how the heck can you say the market is too high next year when the estimates become way too low? oxymoronic take away that problem and this strong part of the bear thesis does seem to let's just say crumble. given all the positives, analyst after analyst will come up with new names to recommend as soon as next year or maybe next week. i think the calls will have impact each time portfolio managers are desperate to find stocks that work and companies are being cagey how much they'll benefit from the
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tax cut. remember that some of the companies like banks can't raise numbers yet because probably haven't figured out tax rates, net interest margins or increase in demand from big clients desperate for financial advice there are things that can go wrong, especially, exogenous situation, black swan like my executive producer is wearing at this very moment that's what you have to fear maybe not that black swan. but you get the point. bottom line is we're in a different, better and cheaper kind of market here. i'm only one who seems to want to say it. but i don't care i think it brings buyers in from the sidelines. wholesale reallocation of capital. keep buying this market perhaps for some time to come. jim in florida jim. >> caller: hey cramer, florida
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boo-yah. >> go knowles, boo-yah >> calling about blue apron, aprn is today's dip a buying opportunity or sell and move >> i don't like the company, tax loss selling will abate next week, maybe a higher price, dump it then. albert in florida. >> caller: boo-yah opinions on alrm and connected home space >> i like it but connected home is not that big a business yet, but i do like the company and there are offthe shelf products good here but like the idea -- i was doing work on little cameras, and i know they're doing well as business and stock has come down a lot. linda in ohio. >> caller: hey jim i had a question on sage therapeutics, with the new drug for depression, putting patients
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in remission, down 4% today. is it a buy for long-term? >> i got to tell you i'm concerned. read the literature, they're early on making such hoopla statement about it read the literature, it's not as defined as they would make it, as the market would make it sound. it's not long island bitcoin block j&t but you know what i mean josh in new york. >> caller: calling from new rochelle >> it's inexpensive stock. biggest problem is one large shareholder might start selling again but it's very well run, the stock is compelling. no one is talking about it we're in a different market, a better and cheaper market, a market full of winners and tonight, this week, gold
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could be due for update. if the commodity is ready to run, should you be looking for play in this space sitting down with the ceo to see what's ahead and tax bill official, gathering around the fire for questions. and what is next for paychecks now that tax bill is improved. i've got the ceo stick with cramer. >> announcer: don't miss a second of "mad money," follow @jimcramer on twitter have a question? tweet cramer, hashtag #madtweets send an e-mail to madmoney@cnbc.com or give us a call at 1-800-743-cnbc miss something? head to madmoney.cnbc.com. ♪ (music plays throughout) ♪ ♪ ♪ ♪ ♪ cannot live without it.
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so if you can't live without it... why aren't you using this guy? it makes your wifi awesomely fast. no... still nope. now we're talking! it gets you wifi here, here, and here. it even lets you take a time out. no! no! yes! yes, indeed. amazing speed, coverage and control. all with an xfi gateway. find your awesome, and change the way you wifi. earlier this week we checked in with carly karner, resident commodities expert, argued that gold could be due for update what do you do with gold mining stock? aem for home gamers, high quality operator with eight
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mines across canada, finland and mexico, and exploration in u.s. and sweden 2016 stock caught fire, rallying nearly 55% this year reversed up 6%, trailing 10% gain in gold and broader averages reason some may be because people genuinely believe that bitcoin is replacing gold as repository of the world's wealth. gets harder to believe as cryptocurrency pulls back from highs. company raised production forecast, what we want to see. could this gold stock be ready to get its groove back sean boyd is ceo of agnico eagle mines. welcome back to "mad money." >> nice to be here jim >> give us a lay of the land why
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your company is real and other gold companies make projections and miss them hard and fast? >> lot of it has to do with 60-year history. we've realized over that period that it's a long-term business it's tough business, you have to invest in the future during the period from 2012 to 2015 when most of our competitors were retrenching, selling assets, cutting exploration budgets and cutting people we were investing in juniors sh adding people and expanding drills set us up for further growth, see production increasing 25% between now and 2020 >> lot of gold companies had to reach and go to areas where the governments have -- let's say -- not been fair to company and taking more and more any country ever tried to
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confiscate your gold or put on arrangement that you think is let's say prohibitive to your profits? >> no. and when i was hired 32 years ago, founder of the company, his motto was agnico eagle does not know where they don't wear overcoats in the winter. that's a way of saying avoid the political risks. mining is tough enough, take the rest of the noise out of the equation >> you have a mine in mexico, $300 an ounce finding. labor costs and fabulous veins if you can just do nothing but mine from that, make a fortune every day. >> mexican business has been one of the best cash flow generators mines tend to be quick to build,
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quick payback, high investment returns and lower cost that's an area we hope to expand over the next several years. >> you just routinely it seems raise your forecast for gold production why are you so certain and many of the other gold companies are reluctant to give you a forecast >> i think it's just to do with the history and experience of the company. we've got a if feel for those places in the world we choose to operate in quebec, four mines close to each other, nguyen yvette is connected to that business we have a good handle on what we have, and take ameasured to approach to growing and mma. it's managing approach and balanced approach. >> told us seasonally this is the right time for gold and may be ready for a big move.
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do you have a forecast for 2018? >> we've been doing a lot of meetings with generalist investor crowd there's no shortage of the meetings our sense is investors are starting to do their homework, revisiting the high quality gold equity there is a sense that gold is about to turn here wouldn't be surprised 1,400 to 1,500 in next months beginning to turn. >> somebody told me gold will be replaced by bitcoin because more sure 4,000 years it worked and no longer, time to buy bitcoin. he had college degree, not a yahoo. what do you say to those people? >> gold is highly developed market, liquid, efficient store of value and portfolio
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diversifier. that's why you need to own it. one of the things about bitcoin and cryptocurrencies, is there really unlimited supply? are the developers of the cryptocurrencies just mining the public >> wow, i'm going to use that from now on, you're a real miner and gold has been good for 4,000 years. >> it's proven itself. hard to believe it's going away just because of technology people can invest in cryptocurrencies but now is the time to own gold stock market setting record levels, rather own gold than bitcoin. >> i'm totally with you. that's the way it's been for me and for you. thank you so much for coming on. sean boyd, ceo/vice chairman of the board at agnico eagle mines.
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"mad money" is back after the break. directv has been rated number one in customer satisfaction over cable for 17 years running. but some people still like cable. just like some people like pre-shaken sodas. having their seat kicked on an airplane. being rammed by a shopping cart. sitting in gum. and walking into a glass door. but for everyone else, there's directv. for #1 rated customer satisfaction over cable, switch to directv and for a limited time get a $100 reward card.
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experience amazing at your lexus dealer. and now a fire sd chat with jim cramer >> countdown is on 2017 anything but boring close out year and open a new one, many wondering where is it headed what is the market going to do what can we expect in 2018, i'm taking questions to help prepare for next year. ashley in florida. >> caller: thanks for taking my call and happy holidays. hoping for advice from you i have three boys, 7, 13 and 14. for christmas opening up
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custodial investment accounts for each to teach them about investing in the stock market hoping for tips from you for a couple of stocks for them to choose from. only a few hundred dollars to three or four picks in $20 under under range. hoping to see what advice you have for me? >> first be clear whenever we start these things, mutual funds, s&p, mutual funds you like what i did for my kids but then if you're allowed to have individual stocks in your account, i would ask them what they like. because it's really a drag to have someone own a stock, don't really know what company does, can't say it in three sentences, so buy something that goes down, blow it out. ask your kids what they like, tell them to google it, read a conference call. if they don't want to read that,
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maybe just stick with mutual funds. carey in ohio. >> caller: how are you doing >> couldn't be better. >> caller: honor and pleasure to be on the show watched for years. >> thank you we've been on for years. >> caller: main question is if you look at various transaction speeds of the crypttos out there, can't help but notice light coin faster than bitcoin, is that a main factor or is it user adoption? >> i think it's going to be depth of market, how much friction when i see the futures in the two different exchanges, different prices that's crazy can't have futures be that off you're looking for a market that's more transparent and has one price to it.
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lite probably less deep because they're first mover advantage. dave in illinois >> caller: dr. cramer, so good to join you in relaxing chat in front of the warm fire. >> i couldn't agree more dave. what's happening 50th time, long time >> caller: what's that >> you're a pleasure to talk to and we've heard you before and think your questions about as good as we can get, hit me >> caller: you're too kind here it is 2017 has been a great year for u.s. equities, s&p will finish up 18% and priced 18 to 19 times forward earnings, recent corporate and individual tax cuts, repatriation of overseas cash and fed's actions to raise the fed funds rate three times while simultaneously and gradually unwinding the bloated balance sheet will present us a
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different investing environment for 2018 jim, how do you view macro environment for investors in u.s. equity markets in 2017? >> thank you i think 16 times earnings, will find out that market turned out to be cheap, interest rates won't go that high because not enough demand for money yet and plenty sloshing around i think we'll see what is thought of as expensive market will turn out to be cheap one. mark in michigan >> caller: boo-yah, this is mark from michigan. first thank you and your staff taking my call and all the good work you do for us small gamblers educational and insightful i converted 401(k) into cash, bulk into index fund
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converted to cash for two reasons, first since the presidential election, s&p increase of 10% and didn't want to be greedy thought get while the getting is good second, concerned about the geopolitical tensions between the u.s. and north korea so concerned i decided to go completely into cash, although you recommended differently, i couldn't pass the sleep test s&p has increased another 14%, question is when and how do you think i should start reinvesting cash back into the s&p 500 also in trading account i have substantial position in sirius satellite, should i continue to hold thanks again >> i like sirius satellite and discovery. you got to buy something next week all right? maybe -- let's say 15% back,
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every day buy some then wait. let it come down if it doesn't, go back and buy again. don't buy in the first week unless it's down a lot this is really important you cannot, cannot, cannot wait for a big decline to start investing. you got to start now got way too little exposure and not going to make enough cash. once you get up to 30%, 40%, wait for pull-back yeah it's that good of a market want cash but not that much. janet in wyoming. >> caller: hi. a lot of retirees like me depend on dividends from real estate development trusts for food on the table and lot have dates clustered in a week. for past two days prices have
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been dropping. could be because of the uptick in bond prices but do you see this dip as a buyable dip? so i can maybe have steak rather than chicken or is it truly a frightening beginning of 30% drop like 2013. i know you don't have a crystal ball but what do you think >> if you buy highest quality reits you'll do fine some in a knee jrk way sell these. some of these companies are worth a great deal when they throw away federal royalty, and others, you have to be there don't give you also like epr, which by the way
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mays on monthly basis. fireside chat of 2017, merry christmas, happy new year, much more "mad money" ahead including exclusive with paychex and company that works with ferrari, airbus, google and unilever you've never heard of and tonight ease edition of "the lightning round," stick with cramer cramer how sweet it is. ♪ for every hour that you're idling in your car, you're sending about half a gallon of gasoline up in the air. that amounts, over the course of the week,
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now that the tax bill is law, wall street is jubilant but after the big vote, dawned on us, goes into effect in 11 days if you're business less than two weeks to adjust withholding employees' taxes brings me to paychex, a stock that's been on fire in recent months environment for them paychex benefits from pickup in
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hiring and become more profitable when fed increases interest rates between the time pick up payroll and invest in your account, big pile of cash known as float. roared from $54 to $68 today but, this is a big but, paychex reported this morning, in line earnings with modest revenues. why? i think it ran too much in the quarter. although scramble to adjust to new tax regime asap my be part of it. good thing we have martin mucci here tonight welcome back to "mad money." >> thanks jim. great to be here with you. >> marty, 11 days to figure out what checks should look like what do you tell your clients?
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no one has gone through this even yet >> we work closely, team been around, working closely with the irs and treasury department to identify all the changes and be ready to put them in as soon as thez identify what they need rhett ready to implement it. >> first paycheck can't possibly be right can it? >> i don't think january, based on the irs and treasury looks like, probably february checks going to take them a few weeks to identify everything once they tell us, your systems are ready to go. take a few weeks to iron out >> took me by surprise, small and unit -- moderated while wages rising would think the opposite is there a weird disconnect? we all think there's hiring going on all over the place.
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>> well there is -- i think what we saw was uptick after the election last year in small business, job growth numbers moderated over the last few months, particularly as we get closer to full employment. but wages that held in that 2% range are just under 3% increase now. that's good news but also as you get close to full employment, more scarcity of resource and have to raise wages a little bit more. now with tax reform may see more wages go up, more ability to hire and pay a little bit more >> you kept it conservative still. i was on with economist who didn't know how to predict it. but read through things, money coming back, going to companies, you have to believe would be better than before the bill. >> i do think it will be we had a solid quarter, for our
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second quarter, up 7% in top line revenue and operating and net income we feel good about the quarter this is our big selling season lot coming in in january, like to get through the third quarter to see where we are. we feel good about it, fed rate up about every quarter percent about $4 billion a year. >> to do nothing right fed takes care of? >> well, we protect it, make sure it's paid right time but you're right >> human resources, 15% revenue gains. tell people who don't know what exactly they get from you when you -- when they give you human resources? >> that category includes inside and out. but small business with 15 or 20
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employees and need hr support, we have a live person, hr professtional that will support you. don't have to provide hrperson tell you how to hire, fire and set up handbook, work through all your policies. it's great benefit and fast-growing service given the changes going on. >> all these people talk about abuse at workplace, sexual abuse at workplace, did you bring in people to focus on this, give briefs and tell you this is out there? or do people know how to handle it seems to be happening -- five happened today >> these are well-trained human resource professionals across the country. we have about 500 of them that support clients. they're well-trained and experienced. average one has about seven years of experience and they're
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out helping our clients prepare for that and make sure they're doing the right thing in handling any of those investigations >> ask one more question i hear you talking about full employment, scarcity of workers. is there any chance we could have inflation or still supply out there 62% or 63% because we just made a big tax law meant to put people to work but there aren't a lot of people left. >> that's true but maybe be expansion even more of the work force. it's going to be interesting to see that jim, great point. close to full employment but maybe those people sitting on the sidelines will get back into the work force as more businesses start up. i think this is going to help generate new business formation and additional jobs. i think people will come off the fence and jump into the work force with this. >> i sure hope they do and people are getting a rare
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break to buy your stock, it's terrific one, benefits itself from the lower tax rate. marty mucci, paychex, we've made a lot of money for people. stick with it, maybe buy some. "mad money" is back after the "mad money" is back after the break. ♪ ♪ ♪ ♪ what we do every night is like something out of a strange dream.
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>> announcer:lightening round is sponsored by td ameritrade it is time, "lightning round" and then the round is over are you ready skee-daddies let's start with mark many wisconsin. mark >> caller: i was wondering what your thoughts were on courset therapeutics cort >> this is a very tough area, psychiatric disorders, most companies do fail. but if you get it, huge win. it's a nice bet. robert in connecticut. >> caller: boo-yah from cold connecticut. >> perfect.
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>> caller: lime looking for stock ipg, interpublic corp. >> i don't like the advertisers because of alphabet, going to go down gym's charitable trust, doesn't fit the profile but once it comes in, it's a buy charles in california. >> caller: boo-yah, tell >> okay. that is soouky, apparently met with the saudis and said maybe should be investors. don't bet against him. want him back on the show. >> janet in south carolina. >> caller: switch has impressive client list. opinion? >> it's come down, like the data center
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i think really good. let's go to trevor in washington. >> caller: boo-yah cramer. what are your thoughts on pure storage? buy or sell? >> it's good but like vmware more my fave. jake in pennsylvania >> caller: love your show. big fat boo-yah from downing town, pennsylvania i'm a new investor, what about ar aris international >> don't go there as new investor, will get turned off stocks patrick in california. >> caller: newstar >> doesn't work. i think that kind of thing but don't know what they own, not
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last month we got disappointing guidance from autodesk, dominant provider of computer-aided design software imploded
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spread into tangentally related to them. few will be huge winners from the changes in the tax code but could the weakness give you a rare buying opportunity? anss, leading maker of simulation software. help users test out product design on computers. cheaper than real-world prototypes straightforward. companies use ansys as a platform, saves businesses time and money. ferrari wants to test aerodynamics of a new race car, this is faster than real model in wind tunnels like they used to business has been good company reported nice top and bottom line. robust guidance. stock is down $8 from highs.
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can it keep climbing check in with anjay goepal, president and ceo of ansys thanks and welcome to "mad money. you've got exciting company. hope i described it right. simulation software you pioneered, and the real precision companies need you, also cost too much these days. >> we're the world's leader in engineering simulation software, some might be familiar with the technology. >> you have to go through this. >> but we affect their lives every single day in products they use mobile devices, home appliances, airplanes, cars, those and
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thousands like them built with ansys technology >> dyson uses you. >> iconic brand, build innovative home appliances from vacuum cleaners to bladeless fans they take fan of ansys technology to optimize fluid flow and performance. >> one of our favorite companies in cummins, talked about how they're a customer they need engines aerodynamically perfect. what were they doing before you? >> market leader for almost a century. and for 30 years now, deep and long-term relationship with them they newsed methodology called analysis-led design, embracing the stuff we do and bringing
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early into the design cycle. as result of that, taking advantage of the full suite of technologies result for cummins is innovation in form of great technology to market faster and lower cost. >> in your documents you talk about validation phase now it's ideaate phase >> pervasive simulation. taking simulation from where it's been historiy in design and engineering and broadening it, earlier in design cycle to ideation and moving into preventive maintenance, into the product itself broadening market opportunity that's what we call pervasive simulation ideation and moving upstream is
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part of that >> i was with somebody other day using 3d printing and saving money. how do you get in early on 3d printing mold is something they run by you first? >> it's a new manufacturing process. >> real. >> multibillion dollar opportunity. process of printing itself causes materials to warp and change in manufacturing. using your simulation can evaluation and visualize that and take it into account as part is being printed using ansis technology, get more effective 3d outcome than without our solution >> some analysts say you have to spend more to grow and others say you're growing terrifically and not spending much more. can you solve that conundrum for
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me >> i can't talk about what the analysts are saying but look back at performance of the stock, we were in low $90 in start of the year, now in high $140s, done well, reflection of the strength and capabilities of the company. >> i watched ferrari video, very clear these guys directly attribute some of their winning race cars to you. >> absolutely. when you're in the business they're in, performance, where it really matters, every millisecond makes a difference between winning and just being an also-ran. with ansys technology, they can win. >> when do they bring you in >> we're involved in putting the car in digital wind tunnel. >> so cool. >> completely on the computer, built using our technology
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and can go through all the what-if scenarios. if i change the design of the car, become more aerodynamic, shave off milliseconds and improve the outcome. >> you've got to see that video, ferraris are best cars in the world. this is ajay goe pal, interesting story fundamentally. "mad money" is back after the break. break. thank you. what's the value of a walk in the woods? the value of capital is to create, not just wealth, but things that matter. morgan stanley
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their leadership is instinctive. they're experts in things you haven't heard of - researchers of technologies that one day, you will. some call them the best of the best. some call them veterans. we call them our team. i thwell wait. what did you meetthink about her? it's definitely a new idea, but there's no business track record. well, have you seen her work? no. is it good?
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good? at cognizant, we're helping today's leading banks make better lending decisions with new sources of data- so, multiply that by her followers, speaking engagements, work experience... credit history. that more accurately assess a business' chances of success. this is a good investment. she's a good investment. get ready, because we're helping leading companies see it- and see it through-with digital. lot of people been asking me, jim, doesn't fit the profile, should i sell it? not advising selling amazon, because i think it will come back and end up saying oh, my god, what did cramer do? got me out and missed 20 point decline. so not telling you to sell amazon promised to find bull markets for you on "mad money," i'm jim
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cramer, see you tomorrow >> welcome to the shark tank, where entrepreneurs seeking an investment will face these sharks. if they hear a great idea, they'll invest their own money or fight each other for a deal. this is "shark tank." ♪ who believes she has a new and improved version of a ubiquitous product. ♪ hi, sharks. my name is ivori tennelle, from irvine, california,

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