Jim Cramer talks positioning your portfolio amid uncertainty in Venezuela

Mad Money: Cramer's 2026 Game Plan

Key Concepts:

• Long-Term Investing vs. Trading: The core philosophy of owning individual stocks for compounding gains versus short-term speculation.
• Price-to-Earnings (P/E) Ratio: A key valuation metric used to identify undervalued companies.
• Compounding: The exponential growth of investments over time through reinvestment of earnings.
• Heavy Crude: A type of crude oil that is difficult to refine and requires specialized refineries.
• Scalping: A trading strategy involving making numerous small profits from tiny price changes.
• M&A (Mergers and Acquisitions): The consolidation of companies through various types of business combinations.
• IPO (Initial Public Offering): The first sale of stock by a private company to the public.

I. Introduction & Cramer’s Core Philosophy

Jim Cramer begins by outlining his 2026 investment game plan, emphasizing the importance of individual stock ownership over frequent trading. He advocates for a “buy and hold” strategy, leveraging the power of compounding, as detailed in his book, How to Make Money in Any Market. He stresses that most investors err by selling winning stocks prematurely, succumbing to short-term market fluctuations. Cramer’s approach is rooted in his 20 years of experience in sales and trading before Mad Money, and aims to demonstrate the superiority of owning over trading. He encourages viewers to contact him via phone (1-800-743-CNBC) or Twitter (@JimCramer).

II. The Venezuela Situation: A Cautionary Tale

The segment initially addresses the political developments in Venezuela, specifically President Trump’s stance towards Nicolás Maduro. While acknowledging the news event, Cramer cautions against chasing short-term profits based on geopolitical events. He argues that while the situation could create opportunities, the potential gains are likely to be long-term and speculative. He specifically mentions Chevron’s existing Venezuelan interests (currently pumping around 900,000 barrels per day, with potential to increase to over 100,000 more) and the possibility of breaking contracts with China (to whom Venezuela owes approximately $50 billion).

He highlights potential beneficiaries like Valero, Phillips 66, and Marathon Petroleum, due to their ability to process heavy crude oil, but notes the dilapidated state of Venezuela’s oil infrastructure, requiring significant rebuilding efforts potentially involving companies like Halliburton, KBR, and SLB (formerly Schlumberger) – mirroring the situation in Iraq. However, Cramer warns that these stocks already “zoomed” upon initial news, making entry points unfavorable. He draws a parallel to the Iraq invasion in 2003, where expectations of a rapid increase in oil production (from 2 to 12 million barrels per day) took nine years to double to 4 million, and hasn’t significantly increased since. He emphasizes the long timeframe and potential for losses, particularly given declining oil prices and the need for privatization and upfront investment. He concludes that the potential gains are limited and largely already realized by early investors.

III. The Superior Alternative: Undervalued Bank Stocks

Cramer pivots to a more promising investment strategy: focusing on undervalued bank stocks. He argues that these stocks offer better potential for long-term gains. He specifically highlights:

• JP Morgan & Citigroup: He identifies these as “outrageously cheap” based on their valuations.
• Goldman Sachs: Trading at 17 times earnings, below the S&P 500 average, and positioned to benefit from a predicted surge in mergers and acquisitions (M&A) and initial public offerings (IPOs). The stock rallied nearly 4% during the broadcast.
• Capital One: Trading at 12 times earnings, particularly attractive given the anticipated rate cuts and the recent acquisition of Discover, allowing for expanded reach and stock buybacks.

He advocates for a strategy of buying more when these stocks decline, emphasizing that the key is to identify companies trading at a discount to their intrinsic value. He stresses the importance of the Price-to-Earnings (P/E) ratio, a concept he elaborates on in his book.

IV. Identifying Opportunities Through Declines & Specific Stock Picks

Cramer advises viewers to “watch the declines” to find good entry points. He points to the pharmaceutical sector as an example, specifically:

• Johnson & Johnson (J&J): He recommends buying J&J after a $5 decline, anticipating a valuation increase following the spin-off of its orthopedic business (DePuy Synthes) and its over-the-counter drug business (Kenvue), mirroring previous successful spin-offs.
• Affirm: He strongly recommends buying more Affirm, citing its 30% year-over-year increase in active merchants, strong consumer growth, and a “phenomenal underwriting department.” He notes the company’s expansion into the UK and its 40 million American users, predicting the stock could reach $100 (currently around $80). He praises Max Levchin, Affirm’s CEO.

V. Viewer Interaction & Closing Remarks

Cramer addresses viewer questions. He expresses caution regarding ServiceNow, citing its high P/E ratio (42 times earnings) and its vulnerability to competition from hardware companies, despite being an AI leader. He acknowledges a viewer’s positive feedback on his book and investment advice.

He concludes by reiterating his focus for 2026: investing in “terrific companies that are trading at a discount,” rather than chasing speculative trades. He previews upcoming segments focusing on the best and worst performing stocks of 2025 from the S&P 500 and NASDAQ, and a deeper dive into Costco’s recent performance. He encourages viewers to follow him on X (formerly Twitter) and contact him via email or phone.

Notable Quote:

• “I want you to own individual stocks, not trade them, own them, and let the power of compounding do its work.” – Jim Cramer
• “History shows us that that’s how big money is made. Not theoretical, not endless trading, but actual investing.” – Jim Cramer

Technical Terms Explained:

• P/E Ratio (Price-to-Earnings Ratio): A valuation ratio of a company’s stock price to its earnings per share. Used to assess whether a stock is overvalued or undervalued.
• Heavy Crude: Crude oil with a low API gravity, making it viscous and difficult to refine.
• M&A (Mergers and Acquisitions): The consolidation of companies through various types of business combinations.
• IPO (Initial Public Offering): The first sale of stock by a private company to the public.
• Scalping: A trading strategy involving making numerous small profits from tiny price changes.
• Compounding: The exponential growth of investments over time through reinvestment of earnings.

Logical Connections:

The segment flows logically from a broad overview of Cramer’s 2026 investment philosophy to a specific example (Venezuela) illustrating the pitfalls of chasing short-term gains. This negative example then serves as a contrast to his preferred strategy of investing in undervalued companies, particularly in the banking sector. The viewer interaction reinforces his core message and provides specific stock recommendations.

Data & Statistics:

• Dow Jones Industrial Average increased by 595 points (0.64%).
• NASDAQ Composite increased by 0.69%.
• Venezuela currently pumps around 900,000 barrels of oil per day, most of which goes to China.
• Venezuela owes China approximately $50 billion.
• Iraq’s oil production took nine years to double to 4 million barrels per day after the 2003 invasion.
• Goldman Sachs trades at 17 times earnings.
• Citigroup trades at 12 times earnings.
• Capital One trades at 12 times earnings.
• Affirm has over 40 million American users.
• Affirm’s stock is up almost 20% in the last month.

Synthesis/Conclusion:

Cramer’s 2026 game plan centers on a long-term, value-oriented investment strategy. He cautions against speculative trading based on geopolitical events and emphasizes the importance of identifying and owning undervalued companies, particularly in the banking sector. His core message is clear: consistent, patient investing, leveraging the power of compounding, is the key to building wealth, while short-term trading is often a losing proposition. He stresses the importance of the P/E ratio as a key metric for identifying investment opportunities.