Transcripts For CNBC Mad Money 20170810 : vimarsana.com

CNBC Mad Money August 10, 2017

Overvalued is the market extremely dangerous . On a day when the dow lost 205 points, the s p sank 1. 45 , the nasdaq tumbled 1. 3 . The worst day for all three averages since may the second worst day overall this year for the s p, its worth wondering whether the endless parade of incredibly Bearish Hedge Fund managers are right when they say that weve gotten too greedy and too complacent after all, every few weeks some oldtimer comes on air and yells, fire in the theater and today the theater did get seared 200 points is not an inferno, okay but its searing again, look, these statements about the market being too high roll off the tongue too easily i can say it all the time. The bears were sure right today, right . They could be right again tomorrow that doesnt mean they could be right over the intermediate term that i like to think about im no more comfortable with the nuclear icbm armed north korea than you are and im not a big fan of appeasement. But i like Nuclear War Even less, which is why the president s increasingly vel i koes rhetoric is so frightening. I do worp ri about the debt ceiling not being lifted, because theres so much bad blood between the president and Senate Majority leader mitch mcconnell, which grows worse by the tweet. Those are two legitimate fears i have them, and you have them you should have them but there are still plenty of illegitimate ones that get trotted out on an almost daily basis. Consider, for example, we hear the market is so overvalued, just look at tesla which is now amazon the market is overvalued look at netflix which disney is backing away from. What happens if everyone backs away look at apple. Going up in a straight line. Of course, faang a reason to be cautious. Because everyone owes them everyone owns them i get that i dont think its true, but i get it one of my favorites. We hear the market is so overvalued that jim cramers name is a dog, nvidia. Something will come up tomorrow im sure while my dogs report was strong, one of the businesses data centers had weakness ahead of a new product cycle. Im sure after it gets hammered, buyers will circle back to my dog, knowing that the new product will drive sales back above consensus. Meanwhile, me . Im getting a new dog. And im calling him intel. Lets deal with these myriad overvaluation issues one at a time i certainly think that many stocks are overvalued. I can make the strong case that the big Consumer Product names are way too expensive versus the historical levels. Many sell at 20 times, some 25 times earnings that is way too expensive. But their dividends are often much higher than treasuries. Treasuries give you no upside whatsoever if you choose to hide in treasuries, im talking about clorox, procter gamble, you missed out on a big run. I call that a mistake. Some tech is overvalued. Faang was meant to signal overvalued hot stocks. But theres always some group of stocks that are overvalued and hot. Always at times, biotech has been overvalued not lately, given the amazons. Sometimes its the software, sometimes the cloud. They all take their turns at being anointed and expensive are all the groups overvalued now . Most of the drug stocks sell at 15 to 17 times earnings. One of the biggest five times earnings, that doesnt mean that the earnings wont be there. Intel is 12 times earnings yes, the cloud stocks, adobe, sales force. Com, now microsoft, they are expensive lets stipulate it but theyve been expensive for years. And then years, and years before that last year, this week, the stock of adobe was at 100 ismtss now at 145 was it expensive at 100 . Absolutely is it expensive at 145 you bet. Does that mean you were suckered to get the last 45 points . Or did you get it right . Facebook, it was at 98 two years ago. One year ago it was 126. Today its at 167. Oh, but look out, it was down hard, sell, sell, sell ring the register and make a profit i like to take a little longer term which by the way mr. Hedge Fund Managers out there, thats been the right way to think about the stock of facebook. Its been expensive the whole time how about amazon, two years ago at 478 last year 790. 956. Sell, sell, sell maybe expensive doesnt mean sell sell sell so heres the issue. The most disciplined thing you can do is stay long through the jeremiahs. You have to tune up the sirens of skepticism who said they were dangerous. Isnt that empirical some of the people back then were dead wrong, now tell us that were being glib to own them and foolish foolish for pulling the trigger as they go down. What do they want us to do own really cheap stocks that keep getting cheaper like the Department Stores or oils. Should we have owned treasuries the whole time and sat out this entire run was that smart let me tell you, im not allowed to own stocks, so i own a ton of treasuri treasuries according to the bears thats supposed to be a genius move but the truth is, i feel like a total idiot. Ive loved many of the stocks i just mentioned but i personally cant profit from them because of contractual obligations ive had to sit out the moves in all the stocks, including the colossal runs at apple and facebook and amazon. But unlike these negative managers, i didnt have a choice whats the point of owning stocks if youre not going to invest in Great Companies . You can say, wait a second, the market is obviously overvalued and due for a fall, and today one of the big runin, get out now. Heres the problem we dont know when it will be cheap again. You hear the guys say, yeah, i want you to get back in. Its like, whoa, its scary. Hey, maybe we start going back up you want to miss that . Fine lets look at it another way think about all the companies that have gotten takeover bids that were expensive. Xp semi was expensive. All overvalued before they got bids i can go on and on but i keep coming back to one major issue, even as i expect the market to go down. Almost every winning stock ive mentioned was overvalued basically overvalued, before its run. You know what was the most overvalued stock of alltime apple when tim cook came here at 93 holy cow, that was ridiculous, right . I can show you analyst after analyst who showed you that stock would get crushed, because the earnings are going to be down in 2017 oh, yeah, thats right the stock went to 160. But they were smart. Years and years ago when karen cramer was running the trading desk, karen, who had no formal training whatsoever, did not go to Harvard Business school, was not a Computer Scientist from stanford or whatever, told me something really important she said, sometimes you need to discipline to hold on to the stocks of Great Companies. The hardest money she said, and she was a tremendous short seller, the hardest money to make was the kind of money made when the bigtime Hedge Fund Managers came on tv and told you to sell or short the stocks of companies that were about to have fabulous runs why . Because they reinvented themselves, theyve done great things or had new management or she would put it right to me in my face, you listen to those rich people who come on air and tell you everything is too expensive. You know what . Theyve already made their money. Weve got to find winners and stick with them. Stop listening to them and start listening to yourself. If these stocks go higher, and you let them scare you out of them, you know what should happen you should be fired. Bottom line, listen to yourself. Do your own work but understand that it takes a ton of discipline and conviction to own a facebook or amazon or apple through these runs and you arent an idiot if you do youre smart in fact, i have one more for you. Congratulations. Mark in maryland mark caller booyah professor cramer thank you. Caller this is mark from columbia, maryland jim, i have been learning from you on mad money since your very first show. Thank you im as fired up as ever. Everybody else is stale. Caller youre my professor of all things investing. I have become a much better investor because of you, so thank you. Thank you, man. Thank you. Caller hey, jim, my question is about elf beauty. They reported a gross margin expansion. Even today an analyst commented that e. L. F. May of a partnership with the Boots Walgreen Alliance does elf meet your thesis that invest in companies that serve millennials . Not only do they cater to the younger generation, but diverse Millennial Women first of all, thank you for the kind comments. Second, i spoke with elf last night. I wanted them to raise numbers after that quarter they said, no, were fine with our guidance because they didnt beat and raise, and raise being the operative term, people did not come in and buy the stock. Lets think of it this way, okay you do need to beat numbers, top and bottom line, and then you need to raise forecast for a stock to go up its cutanddried i talked about it in this book they didnt do it. So the stock didnt go higher. Some stocks are overvalued, thats stipulated, fine, okay . Theyve been overvalued since they were created. They were overvalued in the womb doesnt mean theres no opportunity. The most disciplined you can do sometimes is to stay long and ignore the haters. Do your own work hold on to the ones you have conviction about its more important than ever to feel good and look good. Stop by Planet Fitness get your portfolio into shape i sit down with the ceo. Live nation may be one of the best plays in this market. You know what they say if you build it, they will come and they being the mad money production crew. I got to check out the u. S. Concrete plant im showing you what i learned thank kate coleman for lining that up. Stick with cramer. Dont miss a second of mad money. Follow jim cramer on twitter. Have a question . Tweet cramer, mad tweets. Send jim an email at madmoney cnbc. Com, or give us a call miss something head to madmoney. Cnbc. Com. Troubling trend for ipos the second round of quarterly numbers. Squawk alley tomorrow, cnbc. So new touch screens. And biometrics. In 574 branches. All done by. Yesterday. Banks arent just undergoing a face lift. Theyre undergoing a transformation. A data fueled, security driven shift in applications and customer experience. Which is why comcast business delivers Consistent Network Performance and speed across all your locations. Hello, mr. Deets. Every Branch Running like headquarters. Thats how you outmaneuver. Thats why at comcast were continuing to make4 7. Our services more reliable than ever. Like technology that can update itself. An advanced fibernetwork infrustructure. New, more Reliable Equipment for your home. And a new culture built around customer service. It all adds up to our most Reliable Network ever. One that keeps you connected to what matters most. Last night i talked about how the millennials are taking over the world im tired of that. These days the rest of us need to adapt to them for example, everybody wants to look like the selfie generation. Look at that age group hence, we diet and exercise and why its so popular even with older people like yours truly. Which brings me to Planet Fitness, the largest and Fastest Growing chains in the u. S. More than 10 million members 1,403 locations. When Planet Fitness became public two years ago, they took over the New York Stock Exchange for a day. Handed out tons of purple tshirts, with the motto judgmentfree zone they want their gyms to be places people can feel comfortable, not selfconscious, as opposed to the gyms that everybody looks like theyve been pumping iron. The stock has performed very well since the ipo today it went higher again on a lousy day. Planet fitness with a 3 cents earnings beat, with higher than expected revenue phenomenal 9 increase in samestore sales the stock rocking up over 9 wasnt pulled down by the rest of the market. Chris is the ceo of Planet Fitness. Lets find out more about the quarter. Welcome to mad money. Good to see you. Thank you for having me how do we get judgmentfree how do we get it so we dont feel like we are the only people who are not in shape first, we start with culture. We live it every day, day in and day out. The purples and yellows, even our pens write purple. We have the right equipment, olympic benches, squat racks, tons of cardiovascular equipment. So lets say i walk into a gym, all right and i look around and i see that there are a lot of people in their 50s and 60s, and im a younger person do i still want to be at a Planet Fitness absolutely. You talk about millennials 49 of our partners are millennials, 18 to 80, and everybody in between members who make over 100,000, some make under 50,000. How do you make it a franchise . We have 7,000 members per store. 7,000 members per store we have 10 million today were very refined operating model. Not a lot of fluff, the pools and basketball courts. A lot of heavy payroll we dont have the day cares and juice bars, and so on. Fixed Business Model every member, once you break even, is making a profit you guys make money three different ways, royalties, equipment and processing, the parent company, right . Yeah. We have a third party that does the processing we have the franchise company, Corporate Stores and Equipment Companies where they purchase their equipment from us. I understand that theres something thats really working well, this black card. Explain to me when i become a black card member. Starting membership is 10. But 99. 99, use any company for free. I get my app, it shows me where a Planet Fitness is, im flying out to san francisco. And i need a gym ive got a gym. You get guest privilege bring a buddy in for free, no charge you also have a black card we call in the clubs, exclusive area hydromassage, massage chairs like you see in the airports and use them all for free. Let me ask you about some of these other guys i have a friend whos got a woman who runs oh the specialty gyms where you walk in, and you do want its aspirational for me. I want to get a trainer, i want to maybe thats Planet Fitness isnt for everybody. We have a different clientele. Its pretty expensive, a lot of the things are 150 bucks a month. You need to make an appointment to work out in many cases. I do want to talk about that. In your Conference Call you talked about how there would be like one hot trader at a certain time one really amazing bicyclist whos got a spin class everybody converges at that time yours is the opposite. People dont like that what happens, you have the peaks and valleys. Every day is black friday, right . 5 00 for a class, what you do is the parking lot is full, the locker room is full. Our members are 24 hours a day they come in on their own schedules. Like a table turnover in the restaurant, very fluid, in and out. Who is your real competition . Is it pelaton . My answer is the movie theaters and restaurants. Hastings says from netflix, the competitor is time Something Else maybe using your time thats what youre up against. Youve got to work, pick the kids up at school, ballet, whatever youve got to do, and get into the gym real quick. You stop in, 30minute workout, in and out, on with your life. This 9 surge, did something happen in the country or you have good marketing . You know, people ask that a lot. One is, jd power just said highest in Customer Satisfaction if you think about our Business Model, our marketing, the marketing machine is what i call it every incremental member that joins, 9 of that dues goes to marketing. So we went public just two years ago. We had 7 million members we have 3 million more members today. 10 million members, amazing. 9 of those dues every month goes to marketing. Its like a fly wheel, it goes faster and faster. The fly wheel is the hot gym that my wife goes to the momentum. No problem. Just joking with you thats chris ryan the ceo of Planet Fitness thank you, sir. Thank you. Coming up, mad money takes a trip to the concrete jungle. Cramer mixes it up with the ceo of u. S. Concrete we can have onspeck concrete on time, day after day, minute after minute, to help our customers make money as well. From a plant in brooklyn, new york mad money will be right back your brain is an amazing thing. But as you get older, it naturally begins to change, causing a lack of sharpness, or even trouble with recall. Thankfully, the breakthrough in prevagen helps your brain and actually improves memory. The secret is an ingredient originally discovered. In jellyfish. In clinical trials, prevagen has been shown to improve shortterm memory. Prevagen. The name to remember. Sometimes you stumble on a clinic, a tutorial about what the heck is going on with the consumer what shes interested in what shes spending on and more important, whos getting more of that wallet share. Last night live nation entertainment, lyv, a company that produces tons of live music and owns ticketmaster put on one of the best clinics of the year. A triumphant presentation following the news of its truly astonishingly strong Second Quarter results. Now, ive been studying and recommending this stock since it traded at 22 bucks a couple of years ago. After i met the ceo at dream force, the annual sales force. Com showcases the future, pretty much, well, everything. Repeal outlined a plan to buy festivals around the country, something he talked about on mad money several times, hamming the new venues, along with nearly every other venue on earth. I should have been more aware of it given that john malone, the incredibly investor bought back in 2010. They continued buying, as the stock stayed low they own 34 of the company. Its always made sense to follow what malone and his group, the ceo of liberty media, and chairman of live nation do now, the Companies Plan to build the network of festivals, generating staggering numbers worldwide. With operating revenues of 29 operating income up 53

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