With Wall Street abuzz about Apple’s new product launch, which included a new, high-end iPhone model, CNBC’s Jim Cramer wanted to clear the air for those wondering if they should trade or invest in the tech giant’s stock.
“Investing and trading require two very different mindsets. When you invest, you’re going in for the long haul,” the “Mad Money” host said, reflecting on his 21 years as both an investor and a trader. “You don’t want to buy all at once. Instead, you buy gradually, in stages on the way down.”
Trading is totally different. It’s event-driven, meaning traders search for a catalyst in order to sell a given stock. Whether or not the catalyst works out in their favor, they end up selling the stock.
The second cardinal rule of trading is to not reach for a trade. Cramer called the traders who bought Apple in the days leading up to the launch “clowns” because they wrongly assumed one of three things would happen to the then-$162 stock.
First, they assumed that the iPhone X would be so great that it would shock people into buying the stock. Second, they assumed those people would buy them out of their positions. Third, they may have had no idea what they were doing.
“Any of those buyers are almost certain to be shaken out now, and that’s the worst thing you can do as a trader,” Cramer said. “You’re at the mercy of everyone else in the market. Many of these people are now thinking, ‘I’m an idiot, but you know what, I’ll just own Apple for the long haul.'”
But that’s the wrong strategy for a trader, because if Apple’s stock declines, that trader will inevitably lose money, Cramer said. Traders should focus on not being shaken out instead.
Apple’s new iPhone may be the talk of the town, but Cramer found a related story investors seem to be missing: better phone cameras mean more selfies.
“Thanks to the rise of the selfie generation, high-definition cameras all over the place mean one thing: If you’re going to take zillions of photos of yourself and your friends, well, you’ve got to look a lot better than I do without makeup,” Cramer said. “So for a generation of people who are committed to posting pictures of nearly everything they do online … cosmetics, for everyone, have become a must.”
That’s why Cramer took to reviewing three makeup manufacturers — Estee Lauder, Coty and e.l.f. Beauty — to find the leading cosmetics play of the bunch.
Retail stocks are slowly coming back after weeks in the doghouse, and Cramer wondered if one high-profile deal contributed to the bounce.
“Now that it looks like Nordstrom could soon be taken private by the Nordstrom family aided by the leveraged buyout guys at Leonard Green, will there be a re-valuation of all retailers in the stock market?” the “Mad Money” host asked.
But perhaps some retail stocks were already climbing. Two months ago, shares of Dollar Tree were $66. The stock has since climbed to $84, making Cramer question why Wall Street was so worried about Dollar Tree in the first place.
Finally, Cramer sat down with Brad Jacobs, the chairman and CEO of XPO Logistics, to get a fresh take on the state of his transportation business.
Jacobs said the company is looking forward to doing mergers and acquisitions that would boost earnings and make its established logistics infrastructure even more powerful.
“We have 1,600 full-time IT professionals on staff, including over 100 big data scientists. This is our secret sauce,” Jacobs told Cramer on Wednesday. “This is our ability to do predictive analytics. This is our ability to do predictive pricing. This is our ability to do load optimization, do route optimization. This is our ability to share information quickly and efficiently. This is how we get things done quickly.”
And when it comes to autonomous driving, a trend that could wholly reshape the trucking and shipping industries, Jacobs expects efficiency there, too.
“Within 10 years maximum, there’ll be fully autonomous cars on the highway,” the CEO said. “We’ll start off with platooning. We’ll have one truck that’s got a driver and then two trucks following that with drivers not doing very much. And then over time, you won’t have drivers in the second and third one[s]. This has fuel savings. This also decreases the overhead cost. And then eventually you won’t even have a driver in the front. So that’s where it’s going.”
In Cramer’s lightning round, he shared his take on some callers’ favorite stocks:
Arconic: “Alcoa ran a great deal because aluminum prices are up. Arconic traded down as low as $17 and now is at $25. I think you want to hold on to Arconic. Why? Because when I saw that Rockwell Collins buy by United Technologies, and Arconic doesn’t really have a real CEO yet, I think Arconic could be for sale, too.”
AbbVie/Walgreens: “I’m not crazy about Walgreens anymore, but I’ve got to tell you, AbbVie, even though it just had that big spike, they’ve got such a good pipeline. I don’t want you to sell AbbVie, even up here.”
Disclosure: Cramer’s charitable trust owns shares of Apple.
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Source: Tech CNBC
Cramer Remix: Investors who bought Apple at 2 are clowns