There are many different ways to watch the market, Jim Cramer told his Mad Money viewers on Wednesday. You can just look at the averages and assume it’s all bad, or you can do a little research and find that real companies with huge brand loyalty are triumphing.
Instead of worrying about broken supply chains, ask yourself, “Who benefits from fixing them?” Instead of worrying about rising commodity prices, find out who owns the brands that can drive up prices. And instead of assuming that the whole economy suffers from rising interest rates, why not ask “who makes more money with higher rates?”
The stock market is not made up of interchangeable parts, it is made up of individual companies. With a little research, you can easily find stocks like Bank of America (BAC) – Get the Bank of America Corp report, a bank with some of the best technology and loyal customers. Bank of America will make a ton of money with higher interest rates.
Then there’s Morgan Stanley (MRS) – Get the Morgan Stanley report, which was once an unreliable episodic financial company, but not anymore. Now Morgan Stanley is making money in spades and investors should take note.
Need more conviction? How about Procter & Gamble (PG) – Get the Procter & Gamble company report, the once sleepy consumer products giant that posted terrific organic sales growth and earnings on Wednesday that sent shares up 3.3%. Procter is able to offset rising costs because customers love the company’s brands and are willing to pay a little more for them.
Finally, there is UnitedHealth Group (A H) – Get the UnitedHealth Group Incorporated report, the health insurer which unlike its rival Humana (HUM) – Get the Humana Inc. report, didn’t have any issues with the Medicare benefit and once again delivered strong quarterly results.
If you just look at the Dow Jones Industrial Average and read the headlines, you won’t find great opportunities like these. But dig a little deeper, and this market sell-off creates plenty of opportunities.
Executive Decision: SoFi Technologies
In his first “Executive Decision” segment, Cramer spoke with Anthony Noto, CEO of SoFi Technologies (SOFI) – Get the report from SoFi Technologies Inc, the online lender that saw its shares soar 13.6% after receiving regulatory approval to become a national bank.
Noto said he became very emotional after learning from the Federal Reserve that SoFi’s bank application had been approved. The application process involves many regulatory hurdles and a lot of hard work, which makes this approval an important milestone for SoFi as a company.
SoFi’s mission is to be a trusted partner in all of their customers’ most important financial steps, and now with the ability to offer checking and savings accounts, they can offer new services while having the opportunity to reduce costs at the same time.
SoFi currently offers four different types of loans, Noto said, and because they only lend to high-quality applicants, their lending performance to date has been much better than traditional banks. With bank approval, SoFi will now be able to offer products in all 50 states, up from just 40 states today.
Featured Interview: Gary Gensler
In a special interview, Cramer spoke with Gary Gensler, Chairman of the Securities & Exchange Commission, about the commission’s efforts to update regulations and guidance to address rapid market changes.
Gensler said he had always been a fan of the Greek philosopher Aristotle, who postulated that similar things should be treated the same. This applies to how companies go public. For decades, this process involved an initial public offering, or IPO, which included careful review and public disclosures.
But today we have special purpose acquisition companies, or SPACs, that circumvent these regulations and often only benefit institutional investors at the expense of the public.
Gensler said the SEC has a commission working on issues with SPACs. They will soon make recommendations to require better disclosure of the risks incurred and to offer better protections to individual investors.
Similar efforts are underway at the SEC regarding cryptocurrencies, Gensler added. When you put money into a mutual fund, he says, the information is shared and you understand the risks involved. But when you invest in crypto, there is zero disclosure and the vast majority of investors have no idea what they are investing in. Those lucrative 9% returns for simply parking your money in certain tokens are suspect, he said, and need to be regulated. Similarly, crypto-trading platforms should also be required to register with the SEC to ensure that investors receive basic protections against fraud and front-running.
Beyond SPACs and cryptocurrencies, Gensler said the SEC is also considering many other rule changes. The SEC’s job is to make markets fair for ordinary people, he said, and there are many areas that can be improved.
The SEC learned a lot of lessons a year ago when GameStop’s actions (EMG) – Get the Class A report from GameStop Corp. and AMC Entertainment (CMA) – Get the Class A report from AMC Entertainment Holdings, Inc. soared into the stratosphere thanks to investors meme on Reddit and Robinhood (HOOD) – Get the Class A report from Robinhood Markets, Inc..
Gensler said they are looking at the gamification of investing, as well as the advice and recommendations that apps and trading platforms send to their clients. Many, he said, encourage trade, which brings them money, rather than long-term investment.
Commission-free trading does not exist, Gensler warned. In many cases, these “free” apps do not send orders to competitive marketplaces where customers will receive the best price. Instead, they send them to preferred partners, for a small fee, and the customer doesn’t get the best price on their exchange.
The SEC also looks at a host of “plumbing” issues in the operation of the markets. Gensler said they are looking to shorten the 10-day disclosure window for large shareholders, which gives short sellers an advantage. They are also working on rules to ensure that retail investors are not shut out of the markets, as they were a year ago at the height of the stock surge. Finally, Gensler noted that investors need comparable and consistent data when it comes to ESG disclosures for companies and funds.
Cramer praised Gensler for all of his efforts to update our regulatory system to meet today’s greatest investment challenges.
In the Lightning Round, Cramer was bullish on the utility vehicle cluster (CVGI) – Get the report from Commercial Vehicle Group, Inc., and Spirit Airlines (TO SAVE) – Get the report from Spirit Airlines, Inc..
Cramer was bearish on DuPont (not a word) – Get the report from DuPont de Nemours, Inc., Southwest Airlines (LUV) – Get the report from Southwest Airlines Co., FREYR battery (FREY) , and group of vectors (RSV) – Get the report from Vector Group Ltd..
Bullish burn on oil
In his “No Huddle Offense” segment, Cramer explained why he’s become bullish on oil, after years of proclaiming the group “uninvestable.”
Simply put, the facts have changed, Cramer said. For years, oil drillers have had no discipline, seeking profit at all costs. But recently, oil producers have found a religion, focusing on stable returns for shareholders. This resulted in a cautious approach to drilling that eliminated the boom and bust cycles of the past. The group has also taken climate change seriously and is working aggressively to reduce carbon emissions.
Cramer said companies like Devon Energy (NDV) – Get the Devon Energy Corporation report, Pioneer of natural resources (PXD) – Get the Pioneer Natural Resources Company Report and Diamondback Energy (CROC) – Get the report from Diamondback Energy, Inc., with Chevron (CLC) – Get the Chevron Corporation report have all earned a place in your portfolio.
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