Jim Cramer on how to make money in this market

Transcript:

Caroline Woods: Joining me now Jim Cramer, host of Mad Money and author of How to Make Money in Any Market, and also the co-founder of TheStreet. So a very important person to TheStreet's legacy. Jim, Thank you so much for joining me at the desk.

Jim Cramer: Thank you for having me. It's a joy to watch you on the floor, and it's a joy to be back to something, of course, that feel very near and dear to.

Caroline Woods: We are so happy that you're here to talk about this new book. I have to say, it's your eighth book.

Jim Cramer: Yes, it is, but first in over a decade.

Caroline Woods: So tell us why now. What needs to be said that needed to take, what, 12 years to say?

Jim Cramer: Thank you. This is a book that reminds me of random walk or one up on Wall Street. It was meant to be a book, which just says that it's written for my mom and dad, which is that people who my dad who bought hot tip stocks and lost everything, and my mom, who didn't understand that a $50 stock isn't necessarily better than a $25 stock. People don't know enough to invest, and they're scared. This answers that this book is for everybody, and it's not for the trader. It is not for a person who's just young. It's not for just old. This is about the great $100 trillion transfer from baby boomers to younger people. And they need this book.

Caroline Woods: And in the book, you say, I'm going to help you get rich?

Jim Cramer: Yes

Caroline Woods: But you go against conventional financial advice and say you're not going to get rich buying index funds, which is, what we hear Warren Buffett touting?

Jim Cramer: Oh, boy, you should have just bought Warren Buffett's stock instead of buying the index fund. I find that he's not hypocritical, but would have done better. I think 50% of your money should be in index funds, because I don't think there's anything wrong with them. But I think people have tremendous curiosity, and it's never been easier to research a stock with ChatGPT and all the current documents. So why don't you pick five stocks. And then I show you how to pick those five. I even give you some, although I say at the end that I wish I hadn't done that. But I want people to be vested and invested, and the way to do that is to do homework. And I show you how to do it, even down to how to read a conference call. And then you add every single month to them $5, $10, $50. I lived. I put money in when I lived in the back of my car. I put money away every month and I ended up with $2 million.

Caroline Woods: Yeah no, it's really impressive to the Magellan Fund and Contra fund by having a compound. Yeah the book was a good combination of some of your personal stories and how you got to where you are, but also a lot of tips on how to stock pick and how to do your homework. The title of the book is how to make money in any market. That's because I want you to trust the market. But I'm curious about how you would describe the current market and how do you make money in this current market, given how much money has already been made?

Jim Cramer: OK it's funny, I'm doing a piece right now about Micron, AMD, sandisk, Seagate and Western Digital. These stocks are up huge. And I say, look, if you just decided that the money's been made you don't recognize that these are cyclical businesses. I don't tend I say don't buy cyclical business. I will help people learn how to do it. Cyclical businesses work multiple years not multiple months. So when Micron gets on allocation and this is the first quarter of allocation, it may be allocation for several years. And that means that supply constraint means price increase. Price increase means beat earnings. Beat earnings means stock go higher. And that's what's happening.

Caroline Woods: What's your advice for the next generation of investors? The most invested generation because they're used to pretty lofty returns at this point. And they're still seeing them right now.

Jim Cramer: Well I think they should find next generation should find three stocks companies that are very comfortable with that. They are let's say I mean, right around here I see Apple, I see Yeti, I see television equipment, I see keyboards, I see PCs. Spot them. Yeah be curious then examine, you know. So observe and examine and then pick two specs. Because Nvidia was a spec I mean the greatest pick I've ever had was NVIDIA. And I talk about that. It was a $2. And it was because I saw things I saw dogs that mechanical dogs that tried to pick up jello and were rewarded by Jensen Huang, the CEO, when they were able to do it. I saw things. And I asked questions. Now you could say, Jim, I'm not going to be able to be in Nvidia, but you're going to see things. And you can ask questions and you can decide, you know what. I like Coke more than Pepsi. And Coke has a good dividend. And I looked up Coke. ChatGPT perplexity. Grok I think grok is very good right now. And I learned all about it. Or Tesla just the other day. Tesla was down $30. Now it's up 50 from then. I mean, that was because if you really read the conference call, you would have known.

Caroline Woods: Yeah you make a good point, though, especially bringing up tech, because in terms of AI, a lot of money has already been made in this current market. Very early.

Jim Cramer: Early so you don't think that this is an AI bubble. It's not even that good yet. I mean, I was on set this morning and I wanted I asked, I asked ChatGPT which company has the cheaper finding cost. Newmont mining or Agnico Eagle, and it totally screwed up. And I knew it was wrong because it said that basically Newmont was much better. Newmont stock was down big on theirs. So then I went to I went to grok, and grok had the actual numbers, and grok explained to you exactly why they missed their quarter. So I mean, there's still too much wrong to possibly trust them. If I were really one of these people at a major company. And I was trusting these things, I'd say, well, that's ridiculous. The next chip is the first chip to reason, and that's what we need. We need reasoning. So you could say, wait a second, eco is a better company. And it won't just say, Oh Yeah, I'm sorry. It will. It will get it'll say, give me the metrics. And I'll figure it out for you. But still early in terms of the technology.

Caroline Woods: What about in terms of the investments. Do you look at AI right now and think that a bubble is forming?

Jim Cramer: No, no, I think that OpenAI and Oracle together are the most fraught parts because the other guys have all got the money. These guys are borrowing money. Oracle just did a Bigbond, but not nearly big enough. Fortunately Oracle is run by Larry Ellison, who I've never bet against because it's always been wrong. OpenAI I don't know Sam Altman. I know his partner seems OK but Hock tan from Broadcom, he's in business with them. And one of my old friends Sarah Friars their CFO, and Sarah friar would never put her name on things. She was really, really smart, never put her name on things they can't pay. And I pulled up with her last week and had a cocktail, and I'm convinced she's good.

Caroline Woods: So you talk about investing in things you know, things you like. What's a stock that a ton of people like but probably shouldn't own?

Jim Cramer: Oh, OK. People like, but they shouldn't own. Well, OK. That's I think that there are a lot of people who say, I brush my teeth every morning with Crest. Yeah and I see it in front of me and that's terrific. And I'm going to buy it. And it's like, no, you see, that's a world where there's no more New Horizons. Everybody in China already has Latin America. You that you're looking at it and it's sure prevalent. And you may like it a lot, but it's not going to make you a lot of money. It's going to have a good dividend. But that's not the kind of thing I'm looking for. I need you to be able to say, Oh, Wow, OK, I want to check it and see how it's growing. What's the growth rate. If it's something that has a good growth rate and it's good gross margins, meaning it has therefore a moat that will work, a lot of your household products will fail you.

Caroline Woods: Yeah you make the case against staples in the book.

Jim Cramer: Oh my God. Everyone was taught to like the staples, and the stapes worked as long as they weren't in certain countries, like they weren't in China yet, or Europe yet, or Latin America, but they're everywhere. And therefore I can't make the case. And yet those are the ones that people say, Oh, look, I see my toothbrush, that's Colgate. I'll buy Colgate or I, I give my dog, my dog eats Hill's Science Diet. Horrible, horrible. Or, you know, I went to the supermarket. No, your mom would disagree with that. Oh, I know. And my mom didn't make any money, and well, she didn't beat the market. 

Caroline Woods: What's a stock that seems expensive now. But will ultimately be dirt cheap?

Jim Cramer: That's Apple. The network is talking about that. Apple's 33 times earnings isn't that expensive. I think Apple's going to have a much bigger earnings surprise. So therefore it turns out that the price earnings multiple I spent a huge amount of time talking about what a multiple means is actually not as high as you think. And I basically say for I taught I taught at Goldman. And the first thing I taught I wrote an m and I said, like, you know, E times m equals p price. And I said, see this equation. We will now study this for the next six weeks with just this. And it was like people are like, Oh my God. But that's the multiple on air line, the multiple born a semiconductor company and a homebuilder because I needed people to understand how stocks move up and down. And that's what I put in here.

Caroline Woods: If you had to summarize your entire investment philosophy in one line, what would it be?

Jim Cramer: Go for growth.

Caroline Woods: All right. That's a good place to leave it. Jim Cramer, we appreciate you joining us.

Jim Cramer: Of course I love being back on TheStreet. It's the first time since 20 I guess about 2021.

Caroline Woods: Well, welcome back. Thank you so much.