tv Mad Money NBC October 19, 2016 3:00am-4:00am CDT
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my mission is simple. to make you money. i'm here to level the playing field for all investors. there's always 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 friend, i'm just trying to make you some money. my job is to educa and teach you, so call me or tweet me. @jimcramer. maybe it is this whole stay home economy, stupid. dow gaining 76 points. s&p climbing. nasdaq climbing .85%. led by netflix and dominos, both of which exploded after monster earnings. we have to ask ourselves, is there something going on here
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companies doing well. what is netflix? but a company who offers you competitive in-home entertainment experience who many feel trumps going it a movie theater. netflix produces long firm movies and shows you need to binge to get the full story. you binge at home. what is domino's? but the ultimate eat at home experience where you don't even have to call them. you can go on-line using their pizza your way without ever having to talk to another human being. something that the millennials absolutely love. ? hallelujah ? because there is nothing they hate more except talking to their parents. you can go to the apple watch, no cash necessary. let's order. what can we help you with?
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habits and most importantly they have become essential to our way of life. netflix reports sharply better, adding 3.5 million subscribers bringing million of 87 million, that's more people than the analyst were looking for. companies growing fast, 25% clip every year. how does netflix do it? i'll tell you, it's simple. great content. just go on the conference call. can you hear that narcos 2, mostly in spanish show about pablo escobar, while stranger things added to domestic numbers. that brought them both up. they mentioned both of those to different features as ways, reasons why the numbers really went up. the analysts who follow this stock wanted so much to pin the growth down to something simple they could catch within the four
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won't give it to them. perhaps because they don't think the whole wall street process that seriously, honestly, who can blame them? analyst wants a commitment to cutting back on his huge content spin which is running into $6 billion next year. but hastings wouldn't hear any of it. no. he said, we'll keep investing in growing the contents then even domestically for quite a long time. we see an ability to continue to please consumers with a wide range of content. so i think if you're trying to model the business long-term you should think of content and how it is viewed and brand love all as continuing up in the u.s. for a long time. oh, in other word he will spend some more money. take that. not only that but with a reread right around the bend and a knockout drama about queen elizabeth 2 and the royals starting november 4, a series that hastings on the call said
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seen directly ahead and i bet you don't see a stock rallying 19 points in one day for nothing. more importantly we have a shift more than a monthly subscription from netflix and everything at stands highly ridiculous. that's highway rockery. i believe fear of a national terror take is playing a role at staying home. we have seen the instance in mall and theater and stays in your head and they talked about how european terrorism put a lid on international travel. i think staying home something people would do if they have the choice. it is beloved with water cooler shows that people can't stop talking about. how about domino's? we were bummed recently when the nearest domino's was too far from where my daughter lived in
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13.8 will% increase in domestic same-store sales versus 8.5% number that people expected. double digits. i will speak with pat doyle later to discuss how is that even possible? again, cheaper and more tv friendly to stay at home and order a pizza. according to neilson, americans spent leisure time hence relentless stock and taking interaction and stay at home bull market gets even broader. take blue apron, they have been all over the place for their first push for the category but
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with the supermarket where food prices have been rolled back and some cases to levels we haven't seen in years if you stick around i will tell you about another stay at home eating play that doesn't know when to quit. in past i haven't cared for the stock of grub hub. so many competitors vying to be a winner in the on-line food delivery space. but it's been a winner. delivery has become a top priority. i have watched with interest of private company post mates as well as the caviar division of square because they seem to be thriving as people want things delivered instantly. my small plate brooklyn restaurant that i own, we want the food to be eaten as soon as it's made. but we have no choice. people want takeout. they want to eat at home. they have had to bow to their wishes so we hired drivers to deliver for us. i think is a major reason why the restaurant business has been in such a funk. remember, we're a bar. we make our money on liquor.
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margys but we have to cater to those who take the food home too. these days, that's lot of people. then amazon, greatest stay at home story of all time. not needing to own a car and having everything brought directly to your house is so deeply ingrained is crushing brick and mortar he operations. amazon prime is one of the great bargains of all time. it is using machine learning and incredible distribution network to give you what you want when you want it for a cheaper, lower price. amazon makes it too easy to stay home. don't forget many of these items and devices and trends start with apps, apple apps, mobile and specifically the iphone. huge component of this trend. people like to say that such and such a theme is in early innings
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when it comes to this stay at home trend i think there's no way it will end as quickly as it began. that's assuming, if it ever ends, and i think that's a big assumption. here is the bottom line. always going to be cheaper to stay at home. always going to be safer to stay at home. and in the case of netflix, always going to be more entertaining to stay at home as long as current management stays at the helm. let's get to charles in texas. charles? >> hey, jim, how you doing? >> i'm doing well. how about you? >> i'm pretty good. hey, i noticed that bass pro bought out cabela's and then out in camping world, it went public. so when those things happen, what does that mean for camping world with cabela's and bass pro joining as one? >> i think the category is okay. camping world is doing well. could it matter if they close
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that could happen but i doubt that's the case. i don't think so. but i'm always willing to have camping world holdings on the show. to talk a little bit more about what is happening there. don't feel like going out tonight? you're not the only one. and with more and more people staying in, it's full stream ahead for netflix. as long as they keep cranking out hits. "mad money" tonight. much better year for commodities than anyone expected. we have to ask, can the trend year? i'm going off the charts to find out. then for salt to pep earn more exotic flavors, you can likely find consumer giant mccormick in your kitchen cabinets. but is it a stock for your portfolio? and domino's delivers pizza in about 30 minutes. stocks have 5% return today alone. account company help make your
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earnings. so stick with cramer. >> don't miss a second of "mad money." follow @jimcramer on twitter. have a question? tweet cramer. #madtweets. send e-mail to cnbc.com. or give us a call at 1-800-743-cnbc. miss something? head to madmoney.cnbc.com. is that ice-t? nope, it's lemonade. is that ice-t? lemonade. ice-t? what's with these people, man? lemonade, read the sign. lemonade. read it. ok. delicious. ice-t at a lemonade stand? surprising. what's not surprising? how much money marin saved by switching to geico. yo, ice-t! it's lemonade, man!
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something happened to regularly around here it is almost like clockwork. for example when a domino's blows numbers and sends stocks soaring in the atmosphere rallying for 5.9%. what can i say about domino's? this is a stock i've been pushing for seven years. since it was 10 bucks. now at 161. the strong seven cent earnings beating off an 80 cent basis. rising nearly 70% year over year and spectacular same year sales. i thought it was a typo. domestically, up 6.6% overseas. that number was down right astonishing, frankly. can the stock keep climbing? up over 11% since july. it does have more room from run. don't take it from me, let's
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ceo of domino's. mr. doyle, welcome back to "mad money." >> thanks, jim. appreciate it. >> typically i was going to say, i have to ask, how did you do? no one does 13. >> it was a terrific quarter. it is about the power of momentum but so much more than that. great digital, great analytics, traffic pizza, consistent value. the store is getting reimaged but at the end of the day what drives it is franchisees and store managers executing. you can't get a 13 that much volume growth without an awful lot of terrific execution. they got it done, our supply chain kept them supplied. technology people kept the technology working. it was a terrific team effort to put up this kind of a quarter. >> and yet very clear, you're not done. there's tons more room. this is a do -- this is for everything but you said you have
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the last trailing 12 months? i mean, geez, tremendous demand. >> yeah, there sure is. the return on investment for that store is great right now and so we're getting you know terrific builds both domestically and internationally. we had conversions going in the third quarter. so it just, momentum keeps building. great return for franchisees means they are going to build more stores. that drives you know more volume through the system. more advti more efficiencies and good things happen as you get a momentum going and it is feeding on itself. >> let's talk about advertising. i'm watching the game this weekend and you got that monday through thursday lower pricing. you just extended it to the weekend. that's quite a bargain. that's going to help the numbers again. >> yeah. it should. and now that we've got our stores mostly reimaged, and completely done by the end of next year. and we want our customers to
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giving them great value for the carry out offer as well. and extending it the whole week and clearly it's been working for us. >> the most impressive one is 36 blast, tell us what ma means. >> 36 blast is just the most basic off tackle football run. all it means is if everybody is executing their job, if everybody is doing what they're supposed to be doing on the team, stop. and frankly, you know, it is working for us so we're just going to keep running it. we're not getting off doing any short term offers that aren't going to really add to the overall experience for the customer. we're work willing on long-term improvement for the customer's experience. while that's working we will keep running the same play. >> important to point out also that you just said, look, the category is only growing 1 to 2%.
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the pizza back. just something you guys are doing. >> that's right. this is all about share. count are probably flat in the category. getting a little bit of ticket or pricing in the category. this is about share this quarter. i'm proud of the team. they really out executed versus category and that's what is driving the growth. >> i think it's important to point out that you said that e to a domino's call, apple, facebook, not like you are partnering with other restaurant chains, you are doing serious technology right now. >> we absolutely are. it is where customers are spending their time. we've got to be there for them. make it easy for them to order from domino's. the latest thing we rolled out was ordering through facebook messenger. there is more to come.
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to order from domino's. then once we got them in that environment, we got all of the data, all sorts of things we can do from marketing perspective to get them to come back. drive frequency, loyalty program. those things are playing into the momentum as well. >> you did the pie loyalty but also salads. people are liking that. >> yeah, they are. absolutely. and you know, look, they are terrific salads. we've been trying to figure that one out for a while, frankly. we think we nailed it. they are great salads. people want it with pizza. and there are also going to be veto votes. a group of people getting together, somebody doesn't want pizza. they want salad. we didn't get that group order until we had a great salad for them to satisfy their need. so that's going to help not only selling salads, but we should get some incremental orders by eliminating the veto vote. >> i feel the same way.
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and it was really bumming us out because we were watching dallas game, candidly. i don't know why she feels interested in that. we were saying, where is the drone? give us the drone. she is out -- she is 40 minutes from domino's. but we figured if you had drones we would just go right on facebook and get it. when is that going to happen? >> for that far, 40 minutes, they need more battery life, i think, before we do it. but we're looking at all those things. delivery is clearly going to change over the next 5, 10, no question we're going to have changes in delivery and how that works. 40 minutes out is a while. >> you got solve that. as i mentioned, it really is true, pat, people want to stay at home now. we have just been hearing from everybody. you stay home, a little less expensive. you can get your pizza and you can have your beer at home. you want to watch the game. you want to watch netflix. you are integral in that secular shift, aren't you? >> yeah.
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right. you know, people love being home. they love the convenience. and happily we're playing to that pretty effectively. >> and more than that also, the millennials want to be home and want convenience and they don't want to talk, right? they really want that order placed in the way they do everything else. which is precision on their cell phone. >> yeah. absolutely. they want to control the process. you know. and when they are able to do it, wherever they are, whatever social media they're on. whatever their's watching. so they can control that and make sure the order is right, that's where they're going to go rather than ordering over the phone. >> and it also means, i would think, that it does hurt the, let's say the quick serve. hurts the going out. the going out thesis is just something that is lost on the millennials, i find, so to speak. they like it, whether it be from delivery from post mates, uber or by domino's. easiest, always hot.
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that's another thing they hate. you figure out what they hate. >> that's absolutely right. absolutely right. we make it easy for them. make it easy to prepay. tokenize their credit cards so they don't have to worry about payment when they order. and that certainly carries the day. >> they like that much more than going out to eat at a restaurant, don't they? >> yeah. >> fair enough. you are at the vanguard of this from day one when you took the job and made the pizza taste great and easy to get. patrick doyle, president of domino's pizza. an amazing quarter. >> thank you, jim. i appreciate it. >> this hits every trend. domino's. still inexpensive. "mad money" is back after the
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it is a big theme tonight for our show. i spent a lot of time focussing on the down sides here. like restaurants, not enough traffic, too many seats. but there are upsides. people aren't staying home because they are broke. they are staying home because it is more fun. that's why all week i'm going to keep highlighting the ways to play the new normal. where staying in is more compelling than going out. we are going to try to make money off it. some is obvious. look at explosion in netflix. had a stock in stratosphere today. i saw just electronic arts upgraded again today or continued strength in amazon. both of which i talk about the at top of the show. and i think amazon, bill miller told us, delivery alpha. it could double. tonight i want to give you the anecdote to the weakness in the restaurant.
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eating at home super markets would be in great shape. but you're wrong. they are hammered by food deflation. you might be attracted to the package food stocks too but some are giving up gains for 2016 because their dividend yields look less attractive with a looming rate hike and fact that rates have gone up. it is enough it make you tear your hair out. and wonder if there are any winners left in the food space. so how do we profit from the fact that more people are cooking at home? when both supermke packaged food names have become almost toxic? there is one company that definitely benefits here. it is the stealth way it play this environment where more and more people are indeed cooking for themselves and i'm talking about mccormick. mkc. they are season mixes and condiments. i've been to this restaurant in new orleans. pretty good. if you're eating something somewhere, there is a good
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a lot less time at restaurants you have to assume they are spending more time eating at home. the fact is you want a genuine home cooked meal and you want it to taste good you're probably using mccormick spices. i know i do. they make everything on the shelf, both brand and private label. their market share is so dominant it is almost unfair. if they had to put the company together these days the justice department would probably break it up. they have two main lines. companies gets 60% of sales from consumer. products it sells from grocery stores all over the world. they get 40% of sales from what it calls industrial. meaning supplying spices and flavors to multinational food manufacturers. quick serve restaurants and chefs. fortunately the consumer business outweighs the industrial business because right now the consumer is where the money is. i mentioned mccormick tonight because i think you get a tremendous bargain. while the stock is up year to date, the truth is the mccormick
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highs over the summer when it traded as high as $107. stocks at $94 and change. and that seems crazy because mccormick has two terrific quarters in a row. mccormick has been drifting down hard in recent weeks even though fabulous earnings not too long ago, september 30. while stocks initially jumped two bucks on the news it is now falling more than 5% since it reported. dragged down by the gravitational pull of the food of taco seasoning mix earlier in the month because of unrecorded milk allergen. when mccormick delivered it reported 94% basis. that's incredible. stronger than expected revenue and expanding gross margins up 180 basis points, that's a lot. even management raising full
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expect to generate a lot of cash and plan to return it shareholders. no wonder the stock could initially jump from 97 to $99 on the news. as on the conference call, we are driving both sales growth and productivity improvement and expect 2016 to be a record year for mccormick. consumer demand for healthy high quality flavors continues to grow in markets around the world end quote. at the same time, aggressive i accounting costs to 100 to $110 million cost savings this year alone. why the is the stock clobbered? i think it is guilt by association. mccormick gets the broader weakness in the super markets and restaurants even though we know they are in good shape. if you go through the analyst commentary in response to the corner there is one response that pops up repeatedly and that's valuation. mccormick may be putting up
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expensive versus rest of the group. which brings me to the big question. how much should we pay for the stock of mccormick. it is 23 times or 21 times the 2018 earning assessments. given that stock and s&p 500 sells for two times the numbers it is clear that mccormick has a premium valuation and deserves premium valuation. mccormick may be slow and steady but still growing at a 3% clip and i think is more important 6% when you exclude the impact of currency fluctuations. now again that may not sound like really fast grower but the average stock in s&p grew at sales of 1.2% in the second quarter and maybe 2.2% growth in third quarter and given what we have seen so far from earnings it is possible that even that's too high. at the same time mccormick is growing at a high single-digit pace. average stock of s&p 500 operating income shrink in first
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deserves to trade at premium s&p 500. the numbers don't lie. how about the packaged good stocks? right now kellogg's and general mills sell for around 18 times the numbers. mccormick is premium to these companies but mccormick is doing better than they are. they yield just 1.8% but in this market that might be a good thing. other packaged food plays have investors who own them for their yield. those yield chasers are likely to sell once the fed raises interest rates making the bond market more attractive. mccormick doesn't have to worry about that. they are in it for the growth or of course they own it because it's from baltimore. here is the ravens. they got this one since they won the super bowl. ravens didn't look too good this weekend but don't hold that against mccormick. odell beckham i think versus mccormick. with more and more people
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this one, mccormick is a natural winner. if you cook for yourself you have it buy your own herbs and spices and we know mccormick is doing well because they just reported the bang-up quarter. i think the pull back is an amazing buying opportunity to buy this at-home play. i wouldn't be too worried about the valuation given managers the play to execute. something they had proven time and again. over and over that they know exactly how to do. let's take calls and go to todd in missouri. todd? >> hey, jim, i've been researching the habit restaurant. habt. sales growth of 25%. contribution margins of 22%. comparables up from last quarter. volume of $1.9 million. sales ratio 1.4. what do you think? >> you know what, you are still dealing with a very premium pe. you know the stock is down a great deal. down 41% for the year. look at the problem we just had
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i this think stock will face year-end tax law selling. i think you have to wait until the end of the year todd to pull the trig owner that. hey, larry in massachusetts. >> caller: hey, jim, thanks for your continuing dream force inspired interviews. technology hit home because my daughter is also an avid editor. >> really? >> caller: yeah. >> that is one that we had because someone asked, it is small cap stock and pointed out i was talking with my executive producer regina about whether that is an interesting stock. i'm sure your daughter knows much more about it than we do. >> caller: it was special, jim. >> thank you. >> caller: in the way of the michael acquisition but given concern when upper management resigns suddenly how do you feel about the abrupt departure of allison cornel from international flavors and fragrances and how many up, how many down into the quarter?
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have the smell of money? not out here. but you know, when we -- we spend a lot of time with the ceo and a lot of time at company. i got tell you, larry, any break in this stock, even 143 to 130, i like it pip like the lower multiple stock. i think that company has things figured out. i wouldn't worry about management changes. this one is seamless. i like it. congratulations on your daughter. hope she does a great job. all right, as more people choose to stay home, and they want to do cooking, you got consider the stock of mccormick. could spice up your dinner and portfolio. do you know anyone who uses any other spice in this is all we have. much more "mad money" to have. copper to ore and to oil. whole commodity seems to change in 2016.
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stock pickers falling out of fashion. we know that. but i'm talking about opportunities existing for home gamers, not big mutual fund managers. all your calls, rapid fire in tonight's edition of the lightning round. stick with cramer. red 97! set! red 97! did you say 97? yes. you know, that reminds me of geico's 97% customer satisfaction rating. 97%? helped by geico's fast and friendly claims service. oh yeah, baby. geico's as fast and friendly as it gets. woo!
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because they give us a read on the health of the global economy. that's why tonight we're going off the charts of with the help of carly garner. brilliant technician, co-founder of carly trading. to get a better sense of how the commodity complex is holding up. we had a wholesale melt down that seemed to be on the verge of sucking the life out of the high yield debt market. borrowing too much money and looking like they might have trouble paying it back. even with people talking about how the commodity collapse represented a sift systemic risk. fast forward to today, 2016 played out much better than many investors feared. certainly back in january and february. that's aided by the dramatic rebound on the energy market with oil and gas finding a new equilibrium. she thinks it is likely that commodity recovery will continue even as oil and gas might face near term resistance.
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group higher. going forward, this strength will be driven by grains, meats, maybe even metals. there are industries created to help track the performance of commodities as a whole. first is goldman sachs commodity index which is probably the most used even as garner says it doesn't always paint you the most accurate picture because it is so heavily weighted toward energy. look at this weekly chart. you can see it is rebounding nearly 38% from the january lows. that's impressive. but that's because of the strength of oil and gas. garner thinks it has more room to run. she likes the relative strength index, rsi, okay, important momentum indicator. still in the mid 50s. meaning goldman sachs still has a ways to go. before it moves -- moving higher before it is overextended. it's not there yet. if it can break out of its ceiling near 380, you can see
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here up to mid 400s. that would be a big move. however, while she expect the break out to come eventually, garner admits a weak period historically and given that goldman sachs is heavily biassed towards energy that might mean we might get pull back before a big move high eater the same time this index has a strong floor of support near 335. that's this line down here and as long as that floor holds, garner says that should be enough to fend off any return to th again even if goldman sachs does pull back here, the weakness here is representative of what is happening to commodities as a whole because this particular index again is so dependent on oil and gas. the second important benchmark for the commodity complex is dow jones commodity index and garner believes this is much more better balanced than the goldman version. take a look at the weekly chart. you might notice that recovery and dow jones has been much tamer.
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lowes. garner says this truck makes a much better argument for continued upward momentum and commodity space that we should be focused on this one and rsi is right in the middle of the channel. okay. and trending higher. just what you want to see if you're a bull. and second, big difference between this and goldman index is that the dow jones is still nowhere near its ceiling of resistance. there, okay. a ceiling at 16.50. that's nice distance away from that. up another 5% from where it is currently trading. if it can break out above that level she thinks it could see 21. wow. in fairly short period of time. as depressed prices of commodity like corn, wheat, soy bean and at cattle returning to natural levels. not like many can go much lower. you know the price of corn is flirting with going beneath the cost of production. that's pretty much the floor. any lower and farmers will stop planning the stuff.
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garner says as long as dow jones holds above the floor of support at $14.60, the bulls will remain in control. but below that, she says we have to worry. even that it doesn't have much energy exposure, they are concerned that oil and especially natural gas can be a drag on performance. what's the problem in natural gas? first, despite mentioning the wisdom and price historically has a tendency to decline over the course of the winter. and the demand for gas comes stockpile ahead of the time. that makes sense, right? and they bring it out. unless we have a really bad winter. gas usually goes lower. and in fact according to more research, the seasonal peak in natural gas usually occurs on or around october 11th. history says natural gas may have peaked for the next few months. that's not the only reason garner is concerned. let's check out the weekly chart. that includes the commitments of
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which tells you where the big money is placing its bets. key thing to look at here is the large speculator line. okay? the green line. that tells you what the deep pocketed institutional money managers are doing. and in the case of natural gas garner found that rallies fizzle out once the large speculators cut their net short to above 50,000 contracts. that's exactly where you're headed here. believe it or not, that's actually indicates a very bullish attu because the big boys have been perpetually short since 2007. any time the position dwindles down close to 50,000 it usually means the price of natural gas is nearing a peak. we saw this. and look at this. 2012. peak, 2013 peak. massive 2014 rally up to $9. now we are seeing it again. so got to be careful. or look at this, take a look at this second more zoomed in
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year, garner point out that nat gas has become extremely overbought. and the long-term ceiling of resistance. relative strength index is near 70. that's rsi. way over. the percent, tool developed by commodities trader named larry williams be very similar to this we often talk about, is super duper overbought. look at this. these readings make it difficult for garner to believe that natural gas can contin it's been pretty strong. however, even though garner is worried about natural gas and this is a bad time for commodity she wouldn't recommend betting against it. one really bad cold snap, price could skyrocket. like it did when i showed you in 2014. dangerous. okay? although she thinks natural gas will pull back. comes back to mid $2 level and sees weakness, then and only then is garner interested in buying natural gas. so here is the bottom line. charts interpreted by carly
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commodities rally of 2016 still has more room to run even as one of the big drivers natural gas seems to be losing its steam. stick with cramer. it is time for lightning round. be discovered. some had audacious claims on their labels of green and all looked alike until new tide purclean. "that label's not green, it's purely just chic." then why is she using it week after week? but the power inside is what truly matters. new tide purclean, 65% bio-based, 100% cleaning power of tide. you know your heart loves megared omega-3s... but did you know your eyes, your brain, and your joints really love them too? introducing megared advanced 4in1... just one softgel
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>> like it. full disclosure, our parent company and people keep on rating it. go to john in california. john? >> caller: boo-yah, jim. we love you in vacaville, sacramento valley. >> i miss it out there. how can i help? >> caller: real quick, we loved new san francisco. come back again. >> i cannot wait to come back. how great is it when we good out there. love it. how can i help? >> caller: i've had cvs for a few years and it is going down a bit. i'm looking for buying more. >> i like that. i think the stock has come down because of a division it has and i think that is wrong. i think the company itself is doing quite well. how about bob in florida. bob? >> caller: yes, jim. hi from sunny florida. and my question is about sun power corporation. >> i don't like the solar companies. i don't think oil will explode up and somehow they do trade
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to anthony in new york. anthony? >> caller: boo-yah, thanks for having me on. >> of course. >> caller: clovis oncology. >> well, not like a pfizer. you got understand that. but i like that. how about david in louisiana? >> caller: good evening, jim. nice to talk to you. i got a question on arris international, aar -- arrs. >> yeah, you know what, i like when it comes to speculative, and when it comes to conservative, quiet on occasion. when it comes to conservative, i say cisco. you can follow along with that. and feel good about cisco. i like that dividend and the slow nice projection. chuck in california. chuck? >> caller: hey. jim. i'm just calling in about -- since your start there --
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north american banker. they cut the dividend -- >> yeah. that's why we gave up. i got to tell you, enough is enough. enough is enough with that. i dread natty, great. to suzanne in florida. >> caller: boo-yah, jim. >> boo-yah. >> caller: i have tech famous stock after seeing the gentleman on your show. and he thought it was a good idea. >> totally. that's a stock worth owning. i think tech data is terrific. mike in alaska, mike? >> caller: jim, no pun intended, i'm interested in icing you talked about last week. >> ice eskimos, alaska, i love it. we just did a nice profile of the exchanges. and they are making a lot of money.
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no, that ladies and gentlemen is the conclusion of the lightning round. >> the lightning round is sponsored by td ameritrade. tual. people rely on that first cup and i wouldn't want to mess with that. but when (my) back pain got bad, i couldn't sleep. i had trouble getting there on time. then i found aleve pm. aleve pm is the only one to combine a sleep aid in relief that can last into the morning. ? look up at a new day...? hey guys! now i'm back. aleve pm for a better am. what are these? what is it? duck lips. quack quack. plastic surgery duck! uh huh! you are a backwards duck. instead of quack, he says- no, kcauq. kcauq. kcauqqq. kcauuuu. ? ?
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we know that stock pickers are out of fashion. we know that index funds have consistently beaten most money managers so there doesn't seem to be much reason it pay extra to go with someone who is actually in the business of identifying stocks that could work. i get that. everyone gets that. but when i meet people and talk about stocks, i find there's a desire, thirst even to own some their index funds and i'm a firm believe in augmenting an index fund with some stocks as part of what i call discretionary "mad money" portfolio. if index funds tend to beat active money managers, what's the point of them? first of all, i think that an individual investor picking a few stocks is likely to do a heck after lot better than do finding a man manager running a whole portfolio.
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who pretty much invented the index fund when he was at vanguard. my hedge fund and giving you 24% compound annual return after all fees versus 88% for s&p 500 over the same period. immediately asking me if my fund was raising more money off that good track record. i told him i had an exclusive policy where you had to be nominated by someone else to get into the fund. he said, aha, that explains it. as soon as you start marketing with that record you will take in too much money and it'll wreck your performance. i'm sure he was right. i've seen it happen time and again. when a stock picker is successful his funding is bombarded with money. but you raise too much money and it cripples your performance in part because when you get too big you can't do anything without moving the market and a lot of people end up closet indexing anyway.
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you're small enough to be nimble. that's why i'm such a huge proponent of the idea that individual investors should augment their funds with 5 to 10 stocks in a portfolio. as long as you have the time and inclination to do some homework. because frankly i think the ideas are everywhere. you know i've been recommending apple since single digits way back when my youngest daughter wanted a second ipod. she called it a fashion accessory. apple offers a better product than anyone else for ages i came up with the acronym, fang, facebook, amazon, netflix and google. all my kids use them. i turned positive on domino's when the kids who hate talking on the phone started ordering pizza on-line so they didn't have to talk to anyone. of course that was after domino's improved the taste from when it tasted like cardboard. but it was technology that drove it. it doesn't mean it is infallible. you will make mistakes if you
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comes with the territory. that's why you need to own more than one stock so you don't sink your whole portfolio on a stinker. maybe stock picking, money managing, maybe it's dead. but those ideas i just mentioned are like letters right on your face and they give you remarkable returns over time. believe me can you control some of your money. you can identify important trends yourself that you see everyday. so yes, you can surrender and join the index fleet for most of your money but don't give up stick with cramer. t changed. credit scores don't change that much, do they? really? i'll take it. sir, your credit... -is great right? when was the last time you checked? yeah, i'd better check my credit score. here, try credit karma. it's free. all right. no more surprises.
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some in the market and i promise to find it for you here on "mad money." i'm jim cramer, and i will see you tomorrow. . >> just hours from the third and final presidential debate. the candidates prepare as president obama tells donald trump to stop whining. a gruesome daylight swrofd el chapo's terrorist attacks digs calls. a parent's worst nightmare. a stranger tries to steal your child while your not looking. america talks to the leader about the exclusive for removing isil. >> they say chow at their final steak dinner "early today" starts right now. >> good morning, everyone, i'm ayman mohyeldin.
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