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ka. I will build and educate, to explain everything that is happening. So call 1-800-743 -CVC or tweet me . The skeptics had the microphone all along . They will never stop hating this market, will they? And on days like today, when the Dow fell 98 points, the S&P fell 0.12% and the Nasdaq fell 0.41%.
Well, that only adds to their enthusiasm. Listen, we're expecting a rollback. I already said this. We keep a lot of cash in my charitable foundation. CNBC Investing Club members know this all too well, especially after our annual meeting. But we liked this market throughout its growth. Many critics hated him all the way up.
At first they hated it because of the inflationary cycle caused by the pandemic. Then they hated him because of the mini- banking crisis that had started a year earlier. Oh, they hated him because the Fed was relentlessly raising rates and they saw the economy heading for a hard landing. They hated him because much of the market power was concentrated in the Magnificent Seven.
And now they hate him because of what they call the " AI bubble." All this time, they couldn't acknowledge the incredible victories of the market. They ignored the end of the period of high inflation. They ignored what looks like the end of the Fed's tightening cycle. Not only was there no hard landing—one could even say that the plane never landed due to such a strong increase in employment.
And they didn't care when the Magnificent Seven began to unravel, handing over the baton of industrial leadership to small- and mid- cap stocks, which are still cheap after hitting a yearly high last week. So I ask myself: what the hell is wrong with them? Why can't they admit that the market deserved to rise, even if it may now fall .
Everything that has happened so far makes perfect sense to us, and I believe that the move towards AI is entirely justified in the context of the global growth of technology . First, however, let 's focus on the fact that this is an election year. The Supreme Court just confirmed that former President Trump will easily win the Republican nomination.
This removes a lot of uncertainty about this election. Of course, there are other court cases, but we have a predominantly conservative Supreme Court, and I'm sure they can delay anything that could interfere with the election. This is important for the market because, as I have already hinted, Trump is probably the most pro-business and pro-market president in history.
Hey, he uses the Dow Jones Industrial Average as his approval rating. President Biden is much less sympathetic to big business, to put it mildly, frankly. But to be fair , the political agenda of pouring trillions of dollars into infrastructure has been a huge boon to many companies, especially our industrial enterprises, which are simply magnificent.
Now that that's out of the way, let's look at the so-called "bubbles" directly. The first and most obvious bubble that critics never mention is not the stock market at all , it's crypto, which has no real basis for its value. However, its relative value against the US dollar is quite tangible. People view cryptocurrency as a hedge against potential inflation caused by cosmic government debt.
But when we really had high inflation, crypto performed horribly. It doesn't matter. People still see it as a protection against inevitable inflation from the government, and we've gotten to the point where there are exchange-traded products for Bitcoin, and there will be the same for Ethereum. And hedgers are in full force.
That makes sense. Meanwhile, it seems like there are no Bitcoin sellers at all. That's what's so " bubbly" about it, even at this level. So I see crypto continuing to grow. Just don't forget to jump out when inflation really spikes. By the way, the jump in gold prices confirms the bullish trend and the exit from crypto.
You see, crypto drives all speculative assets that are hedges, because gold above 2000 is speculation. Next, what about the “non-bubble” in artificial intelligence? Let me start by saying that, of course, there are some stocks in the AI cohort that are overvalued, but that doesn't mean they can't grow further.
I didn't really like the addition of Super Micro to the S&P 500. It's breaking through the levels at such a pace that it seems like it's creating something extremely unique, but it's not . Super Micro can and does have competitors. But let me focus on Nvidia, which has risen sharply today . It is now the third largest company in the world with a valuation of $2 trillion .
I've been telling you for a long time: own Nvidia, don't trade it. Now I often get recognized on the street because of it, and it's just great. I like it. And I could criticize Nvidia when the shares were ten times cheaper than they are now. Uh, why not trade them? Well, it's simple. The rating is too low.
And don't just look at today's price/ earnings ratio. This won't help you. I want you to think about this . Wall Street expects Nvidia to earn $24 per share this year. I think this is a realistic number, but let's use it. With that figure, the stock looks a bit expensive, trading at around 35 times annual earnings.
But let's go back a year. Exactly one year ago this week. Back then, Nvidia shares were trading at $238, and many people hated them. They were thought to be incredibly overrated. But they were overvalued only because profit forecasts turned out to be too low. Do you know how that works? They were selling for only 10 times the current price forecast for this year.
That's right. When they were worth $238, that was a 10% gain. We just did n't know they would bring us so many positive surprises. Now let's move on to October. The shares were worth a little over $400 apiece, as we see now. They were still selling for less than the average S&P 500 company when looking at 2024 projections.
Time and again, it turns out that Nvidia was selling at absurd prices. Madness. Absolutely, absolutely low. So if Nvidia continues to beat forecasts, I bet it will look cheap again. Isn't that the opposite of a bubble? Okay, now let's take Jensen Huang at his word, shall we? I mean, isn't he trustworthy ?
He believes that the entire digital world will be turned upside down by generative AI. Not just servers, not just data centers, not just PCs, not just factories, not just cars. I mean everything. Here's what's really happening. We don't even know how big AI will become. We get bits of information from Meta, Amazon, Microsoft, or Alphabet.
We know that last week Dell detailed what happens when you get all the high-performance Nvidia H100 chips you need. We know that Broadcom will mention this on Thursday. AMD, Nvidia's real competitor, will be talking about this at the HP conference. These are all huge companies that benefit from a commitment to AI.
Without a doubt, Nvidia is the king of AI. Undoubtedly , this company has repeatedly demonstrated better results than expected. So let me ask: how the hell are we supposed to evaluate it, other than by projections? And what is left for the skeptics? What do they have? What is their advantage? The third so- called bubble.
These are GLP-1 weight loss drugs from Novo Nordisk. You know, look , we have a global obesity epidemic. Just last week, the prestigious British medical journal The Lancet raised its estimate of the number of obese people on the planet from 897 million to 1 billion. Diabetes has reached epidemic proportions.
Fortunately, we have reason to believe that these GLP- 1 drugs reduce hypertension and help with fatty liver, in addition to treating diabetes and weight loss. I believe this is the most important new class of drugs, perhaps after antibiotics. How should we evaluate them? It would be madness to let Lilly stock remain cheap now.
But skeptics want us to make them even cheaper. We can't . What usually happens is that we see a sale. I'm ready for this. We're not that overbought. A reliable oscillator confirms this. We have no problems with bonds. The jobs report comes out on Friday , and I'm still expecting strong numbers, which Wall Street doesn't want to see.
Strong employment figures could cancel out the summer rate cuts and cause serious concern, leading to a sell-off. We see what is happening with Apple. It looks like she's starting to lose ground. You know what I think. Own them, don't trade them. I'm not worried. I'm just waiting, and I have a shopping list for the charity fund in case prices drop.
You are never prepared for a big drop unless you are in a short position. We may be playing bearish for the fund, but we have built up a lot of cash, and you can see that by joining the CNBC Investing Club. We make everything public before we do anything. But the main conclusion: I will be ready to buy if the market goes down.
Not immediately, I won't act so hastily. I don't take the first steps. But haters will be ready to express their disdain. They will say, "I told you so." I will answer: "Thank you for nothing." You didn't tell us anything. Just save some cash and be ready to buy when the market experiences the inevitable pullback after this incredible rise since November 2023.
Ed from California, Ede. Hi Jim, this is Ed from Eureka, California. I've been in your club since the first day you could sign up, and I love it. And thank you for all your hard work. We work for wear and tear. I really appreciate it. Here is a person who knows how hard we work. Uh , thanks, Ed. Thank you very much.
My question is about the new diabetes medication from Lilly, which, as you know better than I do, suppresses appetite and the desire to consume food and alcohol. How will this affect Constellation Brands? In the short and long term? Okay, that's a great question. Here's the thing: beer sales haven't been affected.
This is harmful to hard alcohol, but not so much to beer. We don't know why this doesn't affect the beer so negatively. We think it's because beer has a social component that hard alcohol doesn't. We monitor it, we observe it, but it doesn't have the same impact as what we call " brown" and " clear" drinks.
Let's move on to Sandy from Arizona, please. Sandy. Professor Kramer, how are you? I'm fine, Sandy. How are you? Perfectly. I was a little kid and I drove my uncle's DeSoto. Wow, that was a long time ago. I saw this big Cadillac and said, "Oh, Uncle Joe, wow, what a great car." And he turns to me and says, "They're for other people." Mr.
Kramer, your wisdom and mentorship make the rest of us become those " other people," and I thank you very much. Oh, thank you. My God, these viewers make me feel good. I worked so hard yesterday. This is great. Let me get to work for you, sir. Yes, sir. Okay, I'm a retired data security director. I opened my platform this morning and what I saw regarding Palo Alto Networks just made my blood run cold.
Essentially, Palo Alto faced a slew of lawsuits. Uh, there's a verdict for 152 million, an investor is suing them because of a big drop in the stock. Three law firms are suing them for security violations, fraud, and more. Is Mr. Nikesh not proving something to us? No, no, these lawsuits—that's all I want to say directly.
I see lawsuits like this every day, every time stocks go down, and I wish someone, some judge, would stand up and say, " Look, we're done with this ." When El Sugar made the change, the lawyers worked hard for years so that at the beginning of the conference call they...these people didn't know what was going to happen and just had to say it; however, these law firms are not stopping.
This is a shame. This is a national disgrace, what these law firms are doing is simply disgraceful. Well, I'll be ready to buy if this market starts to fall. Haters will be ready to insult and say, "I told you so, I told you so, " and I'll say, " Thank you, no need." Remember, today in "Mad Money": oil prices are rising for the second month in a row, and natural gas prices are falling for the fourth month in a row.
I will find out what is really happening in the energy sector together with the CEO of Cotera. Plus, it's that time of year when I like to take a look at the best dividend companies in the S&P 500. Is there anything that's a good fit for your portfolio? I'm highlighting the top ten. And Nextracker was one of the most successful IPOs of 2023 .
So what does this solar company have in store for this year? Don't miss my exclusive interview with the CEO. . Any questions? Tweet to Kramer with the hashtag # .
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