Mad Money 8/01/25 | Audio Only

Key Concepts

• Earnings season caveats (trade talks, Berkshire Hathaway transition)
• Specific stock analysis (Palantir, DuPont, Caterpillar, Pfizer, Marriott, Disney, McDonald's, Dutch Bros, E.L.F. Beauty, Eli Lilly, Warner Brothers Discovery, MP Materials, Wynn Resorts, Pinterest, Wendy's)
• Investing rules (pigs get slaughtered, pay taxes, never buy all at once, buy damaged stocks not companies, do the homework, diversify, avoid panic, defend selectively)
• Importance of discipline vs. conviction
• Dividend reinvestment strategies
• Sources of information for stock analysis
• P/E multiple considerations

Earnings Season Game Plan

Kramer discusses the ongoing earnings season, noting that the peak of growth stock reports has passed. He outlines a game plan for the upcoming week, including several caveats:

• Trade Talks with China: Uncertainty remains regarding a breakthrough in trade negotiations.
• Canada: Hopes for positive news regarding trade with Canada.
• Mexico: Impact of Mexico's 90-day reprieve on trade agreements.
• Berkshire Hathaway (Saturday Morning): With Greg Abel taking over, performance is under scrutiny. Kramer defends Berkshire, emphasizing its valuable properties like Burlington Northern railroad. A good quarter could drive the stock up.

Stock-Specific Analysis

Kramer provides insights on several companies reporting earnings:

• Palantir Technologies (Monday After Close): Predicts a "total blowout" due to strong business growth from consumer package goods to the federal government, fueled by AI. Expects shorts to be "smoked."
• DuPont (Tuesday Morning): Owned by the travel trust. Focus is on the progress of the company's breakup. Kramer believes DuPont is undervalued and the parts are worth more than the whole, making it an ideal breakup story. Breakup stocks often experience a "purgatory funk" requiring patience.
• Caterpillar (Tuesday Morning): Sees Caterpillar as a smooth secular grower due to infrastructure spending and reshoring. Expects another good quarter.
• Pfizer (Tuesday Morning): Needs to show dramatic results from clinical trials acquired with CGN at the end of 2023. Concerns about shareholder restlessness and potential government action against the industry.
• Marriott (Tuesday Morning): Stock often declines after good earnings reports, presenting a potential buying opportunity, but advises waiting a day.
• Disney (Wednesday Morning): Stock has moved up nicely. Expects good results from Disney Plus, improved old-fashioned TV (sports), and strong theme park performance. Cruises are highlighted as a potential money-maker.
• McDonald's (Wednesday Morning): The stock is out of sync with the company, which has improved with new offerings. Kramer considers it a buy.
• Dutch Bros and E.L.F. Beauty (Wednesday After Close): These "renegade" young companies are disrupting the coffee and cosmetic businesses, respectively. They have significant room to grow and take market share.
• Eli Lilly (Thursday): Focus is on the impact of Novo Nordisk's price cuts on MGOI (a GLP-1 drug). Concerns about potential dilution due to Novo's actions. The Investing Club sold some Lilly stock this week for a gain.
• Warner Brothers Discovery (Thursday Morning): CEO David Zaslav's reorganization and debt reduction efforts are improving the company. The stock is moving up as the balance sheet improves.
• MP Materials (Thursday Night): Focus on the deal with the US government regarding rare earth minerals. Expects positive news as the White House aims to reduce reliance on China. Apple is also buying recycled minerals.
• Wynn Resorts: Kramer likes the story and also likes the lias.
• Pinterest: Expects a number that puts it in the elite online advertising formats with Reddit. It is the most family-friendly social media site for advertising.
• Wendy's (Friday): Last report showed weak numbers and a dividend cut. The competition is fierce, making it difficult to predict results.

Investing Rules

Kramer outlines several key investing rules based on his 40 years of experience:

1. Bulls Make Money, Bears Make Money, Pigs Get Slaughtered: Avoid excessive greed in both bull and bear markets. Take profits and don't push bets too aggressively. The NASDAQ more than doubled from March 2020 to November 2021. If you didn't feel greedy up there, you need a psychiatrist.
   • Example: Amazon. Kramer gave up on Amazon after an incredible run, but it continued to move up another 50%.
2. It's Okay to Pay the Taxes: Don't avoid taking profits due to tax concerns. Capital gains rates are relatively low. A profit on paper is not the same as a profit in your bank account.
   • Example: Macy's. Investors who refused to take profits due to taxes saw their gains disappear when the stock declined.
3. Never Buy All at Once: Stage your buys over time to get the best price and avoid the risk of a sudden decline.
   • Rationale: Acknowledges fallibility and allows for buying more at lower prices.
4. Buy Damaged Stocks, Not Damaged Companies: Distinguish between stocks that are down for temporary reasons and companies with fundamental problems.
   • Examples:
     • Damaged Companies: Zoom Video (growth evaporated after COVID vaccinations), Upstart (credit risk skyrocketed).
     • Damaged Stocks: Stocks that sell off for reasons unrelated to the company's performance.
   • Strategy: Develop a "bullpen" of stocks you like and buy them when the market declines.
5. Do the Homework: Conduct thorough research before investing, including listening to conference calls, reading research reports, and staying informed about the company.
   • Buy and Homework: A new concept, which is buy and homework instead.
   • Alternative: If you don't have time, invest in a low-cost S&P 500 index fund or join the CNBC Investing Club.
6. Diversify, Diversify, Diversify: Control risk by diversifying across at least five different sectors.
   • Sector Risk: Stocks in the same industry tend to trade together.
   • Faux Diversification: Owning multiple stocks in the same sector (e.g., FANG) is not true diversification.
7. Nobody Ever Made a Dime by Panicking: Avoid making impulsive decisions during market downturns. Wait for a rebound before selling.
   • Example: Spring of 2020 (COVID-19). Larry Williams advised buying into the panic, which proved to be correct.
8. He Who Defends Everything Defends Nothing: In a negative market, focus your efforts on your best stocks and sell the rest to raise cash.
   • Strategy: Rank your stocks and prioritize those with the highest potential.

Q&A with Jeff Marks

Kramer and Jeff Marks answer questions from viewers:

• Dividend Reinvestment Strategies: Reinvest dividends to take advantage of compounding, unless you need the income.
• Sources of Information: Utilize research reports and the Mad Dash.
• P/E Multiple Considerations: Consider growth rates and future earnings when evaluating P/E multiples. Avoid value traps.

Conclusion

Kramer emphasizes the importance of discipline, homework, and diversification in successful investing. He encourages viewers to join the CNBC Investing Club for further guidance and insights. The key takeaway is to manage emotions, avoid panic, and focus on long-term strategies.