Don't stray too far from the beaten path, Jim Cramer told his Mad Money viewers Monday. There may not be very many winners in this market, but the winners are likely to keep on winning.
Typically, a market that rallies on the backs of just a handful of stocks is a bad thing. Narrow breadth is never sustainable over the long term. But market breadth isn't among Cramer's top worries at the moment, because money managers are going to stick with their winners at least until the first of the year.
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Cramer has long preached the value of diversification. In fact, he advises your first $10,000 investment always be an S&P 500 index fund. But as the year draws to a close, money managers circle the wagons around the market's biggest winners, which makes them a safe bet until New Years.
After the first of the year, Cramer advised sticking with tangible companies, those that make actual things, and not conceptual ones, often in technology. You want stocks that trade on earnings, not future sales. It's possible to get lucky in stocks like Arena Pharmaceuticals (ARNA) - Get Arena Pharmaceuticals, Inc. Report, which soared 80% on a takeover bid, but Arena is the exception, not the rule.
Investors should look for stocks like Bank of America (BAC) - Get Bank of America Corp Report, Ford Motor (F) - Get Ford Motor Company Report and Pfizer (PFE) - Get Pfizer Inc. Report and not put all of their money into high-fliers like Apple (AAPL) - Get Apple Inc. Report and Tesla (TSLA) - Get Tesla Inc Report.
As long as we have good earnings and the Federal Reserve isn't carpet bombing us with interest rate hikes, a strong, diversified portfolio will serve you well into 2022.
Executive Decision: MoffettNathanson
In his first "Executive Decision" segment, Cramer spoke with Craig Moffett, founding partner and senior analyst at research firm MoffettNathanson, which today announced it is being acquired by SVB Financial Group (SIVB) - Get SVB Financial Group Report, parent of Silicon Valley Bank.
MoffettNathanson began as an analyst firm covering the media and telecom industries, Moffett explained. Over the years, they've been growing and adding talent, which has afforded them a lot of success.
When asked why they chose to merge with SVB Financial, Moffett said the combination is a "dream fit" for the organization. He explained that the innovation economy is the big story right now, and SVB has relationships with the small startups that are making things happen. Now, these companies can be discovered even earlier.
When asked about larger telecom providers like AT&T (T) - Get AT&T Inc. Report, and whether they need to acquire the red-hot startups in order to compete, Moffett said that even with shares of AT&T trading for half of their historical multiples, it's still not an attractive investment over the long term. The wireless business has always been slow growing, he said, and AT&T is only losing market share.
That's not the case with the cable providers, however. Moffett said that adding wireless to their portfolios is helping stem the slowdown in broadband adoption.
Executive Decision: MongoDB
For his second "Executive Decision" segment, Cramer also spoke with Dev Ittycheria, president and CEO of MongoDB (MDB) - Get MongoDB, Inc. Class A Report, the database provider with shares up 38% for the year.
Ittycheria explained that MongoDB is built to help companies work more easily with their data. It was built for the way developers code so they can build modern data applications quickly and at scale.
For customers like 1-800 Flowers (FLWS) - Get 1-800-FLOWERS.COM, Inc. Class A Report, which has a very seasonal business, it doesn't make sense to keep high-throughput applications running year round, which is why MongoDB allows them to scale up and down in the cloud to balance cost and performance. MongoDB's platform also gives 1-800 Flowers the flexibility to add new products and services quickly.
MongoDB currently has over 31,000 customers and recently added a new pay-as-you-go service on Amazon's (AMZN) - Get Amazon.com, Inc. Report AWS Marketplace that lets new customers get started with Mongo for just a few dollars a month.
Ittycheria noted that in an environment where labor is hard to find, having tools like MongoDB helps companies be more productive so they can do more with fewer developers. That's why the platform is so popular with customers.
Ahead of the Fed
In his No-Huddle Offense segment, Cramer said Wednesday will be a watershed moment for Federal Reserve chair Jay Powell. All eyes will be watching to see how the Fed plans to tackle rising inflation.
The fact is that even three or four rate hikes won't be enough to slow the red-hot housing market, nor the auto market. It also won't do anything to reduce the prices at the supermarket.
What rate hikes can do is cool off the stock market and reduce the wealth effect, as the ultra rich will start slowing down their spending.
Cramer said the only thing we really have to fear are a series of lock-step rate hikes, the ones that can derail housing and autos and all of those big purchases that require financing. That's why Powell's comments on Wednesday are so important. He needs to reassure investors that the plan is for measured, data-dependent rate hikes.
The Barista's Side of the Starbucks Story
Times are changing in the labor market, Cramer told viewers. Last week, he interviewed Kevin Johnson, CEO of Starbucks (SBUX) - Get Starbucks Corporation Report, to learn more about unionization efforts at three locations in Buffalo, NY. One of those locations did vote to unionize, so Cramer spoke with Michelle Eisen, an 11-year barista at the newly-unionized location, to learn her side of the story.
Eisen called last week's union vote at her store the beginning of a movement. She explained that Starbucks has always portrayed itself as a progressive company that values their employees. And while the company does offer a lot of benefits, on paper, in reality, the cost of those benefits makes them prohibitive for many employees.
That's why Eisen's location voted in favor of the union, she said, to give them a seat at the table so they can help Starbucks return to the place of prominence they were just a few years ago. "We are their brand," she said, and many employees just can't afford the benefits Starbucks offers.
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