Mad Money: Key points from October 3, 2024 (Thursday) Episode=Cramer’s Wall Street to English Dictionary =

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2024-10-05 at 12:47 AM #8363

Keymaster

CNBC “Mad Money w / Jim Cramer” broadcast on Thursday, October 3, 2024 was a rerun of Monday, October 16, 2023. Therefore, links to the CNBC site where the video clip and transcript (in English) of October 16, 2023 (Monday) are listed again below.

(1) Jim Cramer’s guide to investing: cyclical versus secular (https://www.cnbc.com/2023/10/16/jim-cramers-guide-to-investing-cyclical-versus-secular-.html)

CNBC’s Jim Cramer explained that cyclical companies rely on the overall health of the economy to perform well, while secular ones do not.

“Investing ain’t easy, but it doesn’t have to be mystifying. You just need to learn the language,” Cramer said. “Know the difference between cyclical and secular growers, and always stay diversified.”

Cyclical — Needing a strong economy in order to grow; Dependent on the business cycle (= any raw materials, home builders)
Secular — Earnings keep coming readdress of the health of the economy (= anything you eat, drink, brush your tooth with or use as medication), (eg. PG, GIS, PFE, MRK, LLY)

(2) Jim Cramer’s guide to investing: What’s a price to earnings multiple? (https://www.cnbc.com/2023/10/16/jim-cramers-guide-to-investing-whats-a-price-to-earnings-multiple.html)

CNBC’s Jim Cramer told investors it’s important to understand the basics of terminology used to describe a company’s value, including price-to-earnings multiples.

A price-to-earnings multiple, or just a multiple, is the ratio of a company’s share price to its earnings per share.

Price-to-earnings multiple (AKA P/E multiple) :

Value of a stock: Where it is trading, relative to earnings per share
Share price (P) = Earnings per share (E) x Multiple (M)

Multiple Expansion: Paying more for same amount of earnings
Multiple Contraction: Paying less for same amount of earnings

Bottom Line: Company’s earnings, profits, or net income; bottom figure on a company’s income statement
Top line: Company’s revenue or sales
Gross margin: Profitability metric; result from subtracting costs of goods sold, from the sales

(3) Jim Cramer’s Guide to Investing: Assessing risk and reward (https://www.cnbc.com/2023/10/16/jim-cramers-guide-to-investing-assessing-risk-and-reward.html)

CNBC’s Jim Cramer stressed the importance of understanding risk and reward when picking stocks.

“Know what you own, and know what others will pay for it,” Cramer said. “That means you need to understand the risk-reward, the potential downside and potential upside, before you purchase anything, by figuring out where the growth investors put in the ceiling, and where the value investors create a floor.”

Risk-Reward (= Growth-oriented investing vs Value-oriented investing)
- GARP (growth at a reasonable price): When a stock is growing faster than the broader market and maintaining a reasonable valuation.
- PEG Ratios (price-to-earnings growth rate): calculated by dividing a stock’s price-to-earnings multiple by its long-term growth rate.

(4) Jim Cramer’s guide to investing: The difference between a trade and an investment (https://www.cnbc.com/2023/10/16/jim-cramers-guide-to-investing-trade-vs-investment.html)

CNBC’s Jim Cramer said it’s important to understand that a trade is not the same as an investment.

Trades are made with a short-term goal in mind, while investments are for long-term gains, he said.

Trade: Buying for a specific catalysts, has a limited shelf life
Investment: Based on a long-term thesis; makes sense to buy more as long as fundamentals are sound

(5) Jim Cramer’s guide to investing: Understanding rotations, corrections and execution (https://www.cnbc.com/2023/10/16/jim-cramers-guide-to-investing-rotations-corrections-and-execution.html)

CNBC’s Jim Cramer defined Wall Street terms for investors, including correction, rotation and execution.

“Don’t be afraid of rotations and corrections; don’t be intimidated by people who use the words,” he said.

“And remember, even though it’s hard to quantify, execution is as crucial factor when it comes to picking stocks—you want companies with proven, seasoned management teams that are less likely to drop the ball.”

Correction: A market decline, usually of as much as 10%
Execution: Management’s ability to follow through with its plans
Rotation: When money flows out of one sector or group into another

(6) [No Video Clip for non-Club members] Jim Cramer and Jeff Marks answer questions from Investing Club members (https://www.cnbc.com/video/2023/10/16/jim-cramer-and-jeff-marks-answer-questions-from-investing-club-members.html)

‘Mad Money’ host Jim Cramer and CNBC’s Investing Club’s Jeff Marks answer Investing Club questions.

What tax considerations should investors make when investing in equity & bond (harvest loss and buy back 30 days?) –> I wouldn’t sell a stock I thought would be great for a wash sale. If I though it would improve, I don’t want to sell any stock based on because you might be long term/short term
What technical factors should investors consider when evaluating a company? –> oscillator, moving average, etc.
How to balance taking profits and building a position in a company? –> building on the way down, don’t want to chase price
How do you address the weighting of different sectors, S&P, market weighting, sector weighting, macro trends, etc. –> look for a best companies and don’t care about the sector

Other Topics Discussed (Calls with Audiences):

Should investors incorporate the 60/40 rule wen balancing their portfolio (=how much should be in cash)? –> 60/40 when balancing their portfolio, 70% stock (30% cash), then 20% depending how you feel about.
How parents investing for their children look toward a 529 plan –> low fee 500 S&P index fund
Rolled over old employee IRA into a brokerage account now it’s a money market account, how to invest? – Every month take 1/12 of the money put it to work, not all at once; in a bad month – double down with 1/6th in; should be stock, not bond but over time
How should young investors who are building their portfolio approach selecting stocks –> go with high risk, potentially high reward stocks
How could mortgage rates affect investments in REITs that specialize in family housing unites? –> Do not recommend any of those stocks

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