tv Mad Money NBC December 10, 2015 3:00am-4:00am CST
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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 save you a little bit of money. my job is not just tentertain but coach and teach. so call me or tweet me @jimcramer. it's day three. day three of the hangover from last friday's strong employment number and it doesn't seem to matter what is said or what's done. the market just seems to want to lower. dow sinking 76 points. s&p plunging .77% and the nasdaq plummeting 1.48%. why such a nasty day again? what is really ailing this market? first let's understand each
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this market's decline, three days, is all about building in the news of the impending rate hike. the first in nine years. now i'm hold enough to remember what the market has been like in the ten days leading up to a rate hike and you're getting exactly this kind of action once again. the change is visceral. those that want to get out before the hike are selling. you can't stop them. the strength of last friday's employment number was simply too great for the fed to ignore and the way portfolio managers always react to these things which is to dumb stocks in advance of something seen as very negative is gripping this market. it's making it very difficult to own stocks. a lot of fear now i can't blame anyone for wanting to sell it's been so long that there's probably no major fund manager that wants to have big exposure and all money in, just stocks.
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event. they fear the sell off, i don't know. maybe it's going to be monsterous. they don't want to take any chances. plus who know ifs the fed will say they're going to take more action soon and we need more rate hikes? now you know that's the discourse on our network and in the press even if it isn't the truth and i don't think it is so we keep building in losses until the event actually occurs. that's a time honored scenario that if you have not been in the market for a long time unlike me you might not recognize. second we have this commodity story and it never lets up. the relentless nature of the sell off makes investors believe at the moment the fed is going to raise rates the global economy is falling apart. they're using commodities as a descent thermometer. while it's true that many countries would kill for the growth that china has we know it's not good enough for the companies selling to the
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it's so bad that you have to worry about the loans, the bank debt, the commodity declines are so visible that many old timers think it has to be nuts to raise interest rates because commodities, let's say they have a history of not lying, they are used aggressively when the economy is expanding. and they are used much less when it's contracting. that's the nature of commodities. you're supposed to raise rates when the economy is expanding rapidly but commodities from oil to copper to nickel to iron are all saying are around the way. the world will be in recession in 2016. just when many expect the fed to be on auto pilot with a series of clueless rate hikes. plus many emerging market currencies are in trouble now. the stock market seemed to go down every day.
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dollar was today. that too has not been signed because any time the dollar had been weakened and viewed positive for ages. not right now. plus the industries that have been strong like autos and housing, they have stocks taking it on the chin right now because multiple rate hikes will indeed hurt their earnings in 2016. that's a fact of life. i want you to get used to something. i want you to get used to hearing cutting numbers housing stocks, cutting numbers autos. that what happens after a rate hike. time honored. third we got to talk a little. yesterday kinder-morgan cut it's dividend in a big way. 51 cents to 12.5 cents. a $90 billion energy colosis run for years by a man that's now chairman and who many people had faith in that they would do the right thing.
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largest, smart people. all last year, rich repeatedly told us he was going to be raising his dividend regularly for about as far as the eye could see at least in this business. it was pretty much gospel that he knew what he was doing. he was perhaps the most revered oil man in america. when someone in his position can be this wrong about the health of the oil and gas markets and take down so much debt to capitalize on the growth of an industry that's now seriously lacking we can only sit back astonished at just how wrong so many others might be too. maybe they be one of just a hand full of people that will have to slice the dividends so aggressively and the others are safe but this cut was devastating to many individuals who bought the stock and it's left a whole cohort of income seeking people simply crushed. when someone you believe in so much screws up, you can't even imagine what the other guys are doing. now kinder stock went up almost 7% today.
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that the company might have to raise more debt and try to issue equity or literally cut the dividend even larger to please the bond holders and they demand more equity. and kinder morgan is still down 60% for the year and it's shaking the confidence of many of the individuals that relied on the stocks for high yields at a time when there's very little income coming from bonds. disaster. now all fossil fuels are innocent until proven guilty and why not as negative as others i don't see a need to own any of the names but right mow the market feels the opposite. they're saying they're guilty until proven innocent. it means a combination of things. i say you're going to have to sell them but only industry. i never want to sell because
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have to tell you, sound is worth a thousand words, this is not a strategy for how to make money. fourth we've seen a big move in a bunch of tech stocks over the last few weeks and with that new information they can't keep going up every day. that's not natural. i have been talking about a scarcity of high growth stocks as per is on identified by fang. facebook, amazon, netflix and google. we have end dured endless price target bumps for analysts on all of these stocks on no real news. hardly a day doesn't go by that i don't see amazon raising price. but stocks can't continually climb without new data. even these love stocks. they're all getting progressively more expensive with no reason to raise estimates, no sign posts that say they should make more money next year than we thought. plenty of people have profits in
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to ring the register before the rate hikes again. again who can blame them. nailing down a profit is always a beautiful thing. finally some of the best of the best operators are screwing up or at least that's how it hooks. one of my absolute favorite retailers since i started to show -- that's right, since we started the show is costco and costco reported sub-par earnings last night. like with rich kinder and oil there's a belief that if costco can't make the estimates who can? maybe nobody. so retail that should be benefitting from lower gasoline prices those stocks got killed today. my charitable trust owns costco. we're itching to buy more. why? the company has a long history of coming back. coming back quickly after a miss. a think this time will be no different but the stock had been up over 20% going into the quarter so it has to join the retailers now in price declines before it snaps out of this tail spin.
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federal reserve that might raise rates multiple times despite weakness in the economy as expressed by commodity declines does make a ton of sense. when it's rationalist sell who can criticize people for selling. even if it ignores all the value being created, say like a dupont, china merged with dow. something to show you that managements aren't going to take their stocks lack of performance lying down. more on that merger later in the show. to me, it's a tough moment. why? the trader -- i ran a hedge fund for 14 years, traitor me would like to say i'd like to do what many institutions are doing. locking in gains. got to be careful. individuals licking their wounds. but the investor in me says stocks have had a big move up into this rate hike. you can never blame anyone for taking profits since you never want to turn gains into losses. still i say if you pull out now
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or raises them once and says it will be sometime before they do so again then you'll have to scramble back into the market. maybe it at a lower level in this one but maybe eight higher level because so many people have already stepped aside or taken profits. unless you're a professional trader, you simply can't be nimble enough to get out and then get back in. i shouldn't say that. many professionals aren't that capable. what should you do? i say, look, take some profits if you want to, lock in some gains, raise some cash, but not all of it. here's the bottom line. almost all the damage rate hikes cause to the stock market happens before the hikes. like right now. and if you sell into this moment you're simply joining the crowd on the way out betting you can get back in without a problem. based on my experience of more than 30 years that's not a very smart bet to make. let's go to sue in florida.
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big booyah to you and your team. you're awesome. >> our team is so great. and i was talking about him and every single day. >> is it a hold or a sell? >> you're done there. keep it on the sidelines maybe we get more of a hit before the fed meeting and we can do some buying of stocks. and there are companies we like that we woen get a sell off in otherwise. so if you sell, right now, maybe you won't be able to get that without paying up or getting some pain. on mad tonight, maybe your wallet or home used to be a nightmare scenario. no longer. have the exclusive with paypal ceo to talk changes in the payment space. maybe i'll send you some money. then five below is, you guessed
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could it's 30% decline signal a time to buy? this market may not be bullish but knows good news when it sees it. you know what, it may not be done. i where have an idea. stick with cramer. >> don't miss a second of "mad money" follow @jim cramer on twitter. have a question #madtweets. send jim an e-mail or give us a call, 1-800-747-cnbc. miss something? head to mad money.cnbc.com. ever since darryl's wife started using gain flings, their laundry smells more amazing than ever. (sniff) uh honey, isn't that the dog's towel?
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it's been an interesting few months for paypal. the newly public mobile and digital payment technology company spun off from ebay this past july. they had the misfortune of coming public right before a pretty ugly period for the overall stock market but after bottoming around $30 in late august and touching that again in late september the stock is roaring back. to the point where it's now 17% from its lows. more important i'm still a big fan of paypal the stock. you can follow our moves before
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it's my kid's favorite form of commerce and millennials inherit the earth and your portfolios. i got a chance to sit down with the president and ceo of paypal at business insiders ignition conference in new york city. take a look. >> you are at the intersection right now it's mobile and payment and credit. you're able to control of what makes dollars in all retail worldwide. what can you do with that space. >> first of all, i'm a big fan, you do a good job at it. thank you for having me. >> paypal is a solely focused digital and mobile platform right now. we have 173 million people
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platform and importantly over 13 million merchants that count on paypal to expose them to all of these different consumers and the world is moving toward mobile right now. the distinction between off line and online is moving and our platform is what we have with paypal and brain tree and what we have with an instore application. all of that together puts us in a really good position to be able to serve merchants and consumers in this new world. >> what's it like not to have the legacy where you have to please the old school people. these other guys are not pure digital. they're trying to adapt to that world but that's not their world. what advantage does that give you? >> being an independent company gives us a tremendous amount of
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first of all, all 17,000 paypal employees are solely focused on mobile and digital payments. and compliance to multiple regulatory regimes around the world, it's 8,000 people these customers service. in the digital world it's the same thing. if you have a problem with the payment you want to be able to call somebody. it really matters to you so some of the foundational things that most people don't think about when they get into digital payments are crucial to establishing trust and security. so we have all that we've done this for 15 years, we have great risk algorithms to protect people from bad guys coming in so that focus has enabled us to grow and year over year we're
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the e-commerce rate. so every quarter we're taking incremental share right now. >> my kids and every other kid i know says paypal is their credit card. of course credit card is an old term. how did you get so much trust with millennials and how do they know there is more cyber security. >> well if you think about it we were among the very first to offer digital games and the younger generation naturally adapted to online and they're moving toward mobile as well. so they had experience with paypal. we offer a thing called tokenization which said you
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company. that was only between you and paypal. your user name and password. by the way, we're able to do with that now. simply log in and one touch you can check out and then you never had to add in your information again. so we made it simple, safe, easy and secure and that was the key to paypal's early success. >> now you also have for older people that get tired of putting in their same information over and over again we had a private company that said something like 80% of the people won't go through the whole shopping cart. paypal you just type it in. another advantage over everybody else? >> a great point you're raising and it's even a more important point when you think about mobile. when you are on your desktop and you're adding information and you have a pretty large screen
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that. conversion rates on mobile are low because you have such a small screen and you're trying to add in all of that information and it's very difficult to complete the order so what we started off with is all of your information is kept secure and safe and we populate that to over 13 million merchants on check out so you don't have to add any of that information but this year we took check out another step further and we introduced a kwer sis called one touch. because we had very sophisticated risk algorithms we did over 5 billion transactions this year. we take the data from that and we do those to say is it really you?
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device and you see something you like and you're a paypal member with one touch, literally one touch in seconds you can check out on your mobile phone and for merchants this is great, right? because conversion rates go way up. instead of dropping they go up. and for u.s. consumer it's simple, fast, easy. >> i was on the long island railroad and someone didn't have enough money to be able to pay the ticket and i reached in my pocket to give them cash and the person next to me said do you have it and boom, in the account. i didn't know it was paypal. i'd like to think that i'm a little sophisticated. this was during the summer. i of course now have done research. but this is the quarter perhaps where people will know that paypal is venmo because it's rapid growth and loft. >> yeah. venmo is one of the jewels of paypal. it came with our brain tree
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brain tree. and it literally is the way that the generation pays and manages and moves their money. it's become a verb. will you venmo me. we did over 2.1 bmds worth last year and growing over 200% year on year and what we'll start is trials where you'll not only be able to send money from one person to another but you'll be able to buy at different merchants paying with venmo so we're extending that service right now so that somebody cannot just transfer money person to person but also use it at retailers and that's going to be tremendous. >> including macy's. >> macy's will be one that almost every paypal merchant
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of the millions upon millions of venmo users that will be avid shoppers as well. >> in the time we have left, there's a hedge fund contingent that owns paypal. you have to be bound by the four walls in the quarter. how can we think bigger and have individuals recognize that this quarter or that quarter is not the way they should look at paypal? >> obviously we pay a lot of attention to our guidance and what we put on the street and we have beaten that guidance on a consistent basis and that's important to us. but the way i think to think about paypal is its in the middle of the digital revolution that's happening right now. it's so interesting. black friday was the first time that more people shopped online than went in store. and i talked to a lot of friends at retailers from walmart to
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them said that this year was kind of this turning point where mobile is the way that people start to shop. and that plays into the long-term strengths of paypal. so i think that not only do we want to ride that digital and mobile feature and not just be online and in app mary but move in store which opens tremendous opportunities for us where we can be fully on the channel. but i think that's just our focus as to what we do and i think as long as we stay focused an we execute on a game plan. >> i was always hoping they would spin you off i like that pure play in mobile because i like what my kids tell me they like. dan, thank you so much for
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standing there's another company out there with a fairly similar business model. it's called five below. it's 430 stores where everything costs $5 or less. five below is more teen and child focused than the dollar stores but represents the same value proposition and for a long time it seemed as though people couldn't get enough of this concept. when five below came public it's stock took off like a rocket. 52% higher and then another 20% and then another 35% in 2013 but after that the stock started to cool off. and by the time we get to 2015, five below, pretty ugly down trend. so exactly what is going wrong here. maybe it makes sense to use this pull back as a chance to revive it into weakness. put it another way, what's better?
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more? let's take a closer look. when five below became public it was low. it was viewed as being similar to the dollar store. same nice name brand merchandise. very good store level economics how did this once red hot stock turn into a dog that's now a couple of bucks above it's 52 week low. some of it has to do with the geographic footprint. they have a ton of exposure so when the weather is bad in the northeast, 5 below it takes a hit. when this company came public in it's same store sales growth it's 8%. five below same store sales have been trending lower. 2 to 3% next quarter. on top of that five below is a very single customer base given how heavily they cater to teens and preteens. they're not like the dollar store where most of the business
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that's a very consistent consumer. teenagers are the opposite and there's nothing they need to buy and while and you never know how long those are going to last. for the last two years the holidays were very soft for five below. and unless they have done something drastic to improve performance i wouldn't be surprised if 2015 isn't any different. however last week the company managed to beat wall street revenue and earnings estimates. it had a solid same store sales growth. i'm starting to think that's better than the 3% number the analyst is looks for and five below is cross margin expanding more than we thought it would. five below same store sales is more important than what
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to 3% forecast. on top of that management said that they're up against difficult comparisons right now. a year ago five below had very strong sales for frozen related merchandise and now those sales are witherred. to be fair though five below does have a plan to ill prove the holiday sales this year. they rolled out a big advertising campaign and they feel the impact of new merchandise initiatives that should help the number next quarter and they'll open five new stores next year. excellent growth narrative. plus new stores tend to be very lucrative. where do i come down on this one? on the one hand it's easy to argue despite the underperformance of the stock, this is a story about opening up new locations all over the country. that's regional and national. they have plenty of room to expand. plus a year ago the company brought in new ceo joel anderson. he used to run walmart.com.
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same store sales are still decelerating. and given that historically 40% of five belowe's annual sales come from the fourth quarter, oh, man, it's a make or break period and i worry that right now there's just too many negative headwinds and the company's performance is anything but consistent. in an environment where the great ones seem to have screwed up do you want to mess with a company like five below? and dollar general at 16 times earnings. here's the bottom line. sure it's been hammered. it has a lot of things going for it but it doesn't have enough to recommend the stock. yeah, this is it. i'd rather own dollar general until five below starts developing consistent numbers or
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where it was now and maybe becomes a true bargain. mike in west virginia, mike. >> jim, what's up buddy. it's mike from west virginia. how are you doing? >> pretty good day. real busy today. how about you, mike. >> same here, buddy. >> i was on the subway for all day. all day riding the subway. >> sounds like fun, man, i want retail group, wanted to get your outlook on them. i bought them and they have been getting it. >> i thought the quarter was good and the stock sure doesn't act like that but that's because retail is so hard and i just think that, you know what, when costco goes down so big, i do like costco and when it goes down like this it's real tough to own. looking for bargain, i don't think you'll find it with five below. dollar general is worth more here.
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>> this market may not be insanely bullish but it knows how to react to good news. here's a small drug company focused on women's health that maybe you never heard of. they're all about developing advanced hormone replacement drugs and on monday there's clinical trial results for the company's drug that treats some of the symptoms. these numbers suggest this drug could be a big one and wires shot up on the news. plus given everything they're working on i wouldn't be surprise first degree the stock has more room to run. don't take it from me. let's check in with tommy thompson who also happens to be the chairman of the board here along with robert who is the ceo of therapeutics md and find out more about their company's prospects. >> thank you very much for having us.
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>> it's always a pleasure. >> i interviewed you many times. first i want to ask, the market is big but it's been difficult because the fda has always been worried about side effects to a medicine. what is this rejoice study you're doing giving you such hope? >> the data on our new drug was incredibly positive and what we're trying to do here is compile that data and file a new drug application with the fda in the first half of 2016. the indication we're going after to lead to the answering of your question here is for symptoms of vulvavaginal atrophy. it's chronic. it's progressive. it gets worse if not treated and the current products on the
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are treated with prescription therapies. $1.5 billion no generics. >> now when you weigh these historically there have always been some issues that in order to get rid of some of the symptoms, i know that you would not affiliate yourself with the company where the risk is like that. how does the government work on this? if it's not life threatening why would they approve something that could have those side effects? >> the reason i'm with this company is because they do everything so correctly but when i was secretary if you remember correctly, the women's health initiative was started and they made the report, i was on my way to nhi to give the speech when they cancelled my speef and cancelled the study. and i think it was misdiagnosed in many areas that this hormones
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causing some cancers, some heart problems, and as a result of that it absolutely destroyed the hormone market for wil. and as a result of that there's been really nothing out there to help women. >> until this. >> until this was here and that's why i joined the company. because i wanted to join the company to really do something for women and that's why i became chairman of the company. >> and i know your record because i used to interview you as part of my old show and you mean it when you say it. when i hear something this special i say it to myself, are they going to charge some outrageous price because wealthy women might want to take it or others can't afford it or maybe a health care company will pay for it. >> absolutely not. we're here for women. we're here to make a difference and i'll talk about what our data suggests in a bit which we think is exciting but we'll price -- our current plan is to price it in line with current products on the market today. >> even though those aren't as effective. >> it's an investigative new
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of benefits. but we plan on not taking the typical innovator 2 to 5 x increase. we plan on parking the price right where all the current products fda approved are and we think that's best for women and on top of that with a boss like hill i have to watch my act. >> speaking of that have to tell you, i was so excited you guys wanted to come on the show but i have seen, i know you can't tell me right now but i've seen spikes in stocks where companies come on the show and do a gigantic equity offering afterward. why didn't you ask them about it? >> as of september 30th we have 80 million in cash. which is what i think you're asking. we currently have no plans to raise any money. we have about 10,000 data points. we have to dig through the data and find out what the best way
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asset is before we even consider financing anything. so we have a ways to go. >> but the study is closed. >> study is finished. it suggests a number of special things. as you are aware some of the older legacy product with 32 million women in the u.s. that suffer from this issue, only 7% are being treated. as we said that's a $1.5 billion market today. the other 30 million women not getting treated is a large, untapped, underserved and growing market. 7% of the women taking it, there's three major products to make up a billion 4 of that. there's two creams which they stop every 43 days and a vaginal tablet stopped use every 103 days. could you imagine a disease like diabetes where everyone stopped every two or three months? and we designed our product to specifically overcome the issues
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from the current product. >> that sounds good. i want to ask you this last, a lot of articles about price gouging. there is some price gouging. >> there is. >> what should the government do wr can it do nothing because we're free market? >> well, the government is having a study today and they're having a hearing on capitol hill really to get to the bottom of this and i think there has to be regulation and that's why i am so proud to be connected with txmd because it's an ethical company and we're out there to serve women and the price is going to be very much in line and we are not going to increase the price just because we got a very novel drug. >> excellent. big market, small company. do some work. he's the ceo of therapeutics md and tommy thompson the chairman of the company and a great patriot and servant at one point. i remember. so i want to say that because you always were. "mad money" will be back after
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it is time -- it is time for the lightning round. we play this sound an then the lightning round is over, are you ready? time for the lightning round. tim in florida, tim. >> yeah, i'm calling about juno therapeutics. >> i'm going to go with biogen over juno. joshua in florida. >> hey, booyah, thanks for taking my call. >> absolutely.
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phil frost has done so well. >> how about andy in florida. >> booyah. >> booyah. >> anything agricultural is i'm going to say is a bear market. it's not going to budge. then you sell. >> hey, jim, big booyah to you from pennsylvania. >> oh, man, right around the block. what's up. >> you think of twitter. >> all right. my charitable trust has a small position in twitter. i have to tell you, why do we keep it as a place holder? one day they'll have great momentum. we do periscope around here but that's why we hold on to it. how about mike in illinois? mike. mike [ inaudible ]
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much. >> what was the stock? >> skechers. >> oh, remember the stock is up gigantically. some 65% this year. so let's not panic when a couple of bad days. i still think you can go higher over multiple years and that ladies and gentlemen is the conclusion of the lightning round. >> lightning round is sponsored by t.d. ameritrade. it's a highly contagious disease. it can be especially serious- even fatal to infants. unfortunately, many people who spread it may not know they have it. it's called whooping cough. and the cdc recommends everyone, including those around babies, make sure their whooping cough vaccination is up to date. understand the danger your new grandchild faces. talk to your doctor or pharmacist about you and your
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that's how i feel about today's news cycle. yahoo!'s decision to stand back and not try to bring out instant value now with it's alibaba stake and down dupont's decision to give up it's legacy and become one company as both stocks roared on the news. dow and dupont have tried for years to make their shareholders wealthy. they make products hah need the global economy to grow in order to produce the kinds of earnings that shareholders demand these days. they themselves can't stimulate demand for more seeds or crop protection agents. they can't say car companies make more cars. they don't determine how much is needed by the army or how many homes are being built. they're hostage. even as they invent new products that can help them grow while also firing as many people as they can to get away with -- well let's just say in order to
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it hasn't been enough. so these dow and dupont companies decided to get together and rather than try to take share from each other competing across countries and continents where it would be helpful to have huge scale they're combining instead. both companies have had share holders and tried to appease them although dow let them in to help or offer constructive criticism than dupont did. something that caused the old ceo to lose her job. in the end they couldn't get to where theyad to go given the slow down in the world economy. not the mention the impact of globalization. it fits many foreign companies will unfair advantages against those based in the united states. so instead of competing dow and dupont decide to join forces. yahoo! on the other hand at one point had the world as it's oyster. so much opportunity. it's from providing information, community, dominating search and advertising. all of this gone away over the years.
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spurt to its value. they expressed tremendous confidence early this year. and it's ceo had been so smart and agreed not to sell more of alibaba when she had the chance with the ipo because maybe they could do it at a higher price but the advice about the ease of spinning out alibaba was suspect and the taxable consequences turned out to be too dice sy. meanwhile yahoo! failed. today when we get ceo marissa mayer, i'm a big backer of yahoo! and still a user was taken back by how little enthusiasm either had about what the company is up to. i believe there's tremendous value besides the holdings in japan but they seem to be missing during the interview with the duo from yahoo!. now to be fair the company's stock has gone up a great deal. mayer -- my advice to her, it's
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around and as a user of yahoo! daily i'm forever hopeful that mayer will do it. maybe we just caught them on a bad day. they were content that they have done everything they can to bring out value. but the ceo of dupont and dow, they weren't going to let up until they created all the value they could and then some. even surrendering their own independence of two of the oldest businesses in the country. and that is what we want from the people managing great companies. stick with cramer. (politely) wait, wait, wait! you can't put it in like that, you have to rinse it first. what's that, alfredo? no,that can go in. no it can't! what are you, nuts? that's baked-on alfredo. baked-on? it's never gonna work. dish issues? trust your dishwasher with cascade platinum. it powers... through... your toughest stuck-on food. better than finish. (to the hostess) see, told you it would work...
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we're just trying to build in the decline ahead of the rate hike. that's what's going on. i li to say there's always a bull market somewhere. promise to try to find it for you here on "mad m jeff: today we got a wild show for you on "flip my food." we're at the global wildlife center, where some of the most amazing
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