Skip to main content

tv   Mad Money  CNBC  April 4, 2013 6:00pm-7:00pm EDT

6:00 pm
but i still like jpmorgan, but buying some citigroup here. >> guy? >> david was spot on with the dollar/yen. i think toyota motors is the best way to play it. >> i'm melissa lee. thanks for watching. see you tomorrow at meantime, don't go anywhere, "mad money" with jim starts right now. i'm jim cramer and welcome to my world. you need to get in the game. going out of business and he's nuts! they're nuts! they know nothing! i always like to say there's a bull market somewhere -- "mad money," you can't afford to miss it. hey, i'm cramer. welcome to "mad money." welcome to cramerica. other people want to make friends. i'm trying to save you a little money. my job is not just to entertain you but to educate and coach, call me 1-800-743-cnbc. first thing we do, let's kill the economists. okay. when shakespeare wrote that line, he was referring to the lawyers not the economists. but in terms of the usefulness,
6:01 pm
i'm going with the bard. no matter what happens to the averages today, dow gained 56 points, nasdaq advanced .2%. don't provide the value added we need to invest in the stock market. they've got other purposes but keep trying to be in our territory. by this time, you know most of the commentary comes from those with economics, they sift data and reach conclusions about the overall stock market's direction from the data. they come into our zone. they see japan devaluing its currency to make a negative judgment about our exporters. they see europe teetering on the brink and draw conclusions. they see payroll taxes increase and gasoline go higher and decide we as a nation aren't spending and the consumers are getting crushed. they think the s&p 500, well, right? >> the house of pain. >> they always try to relate their big picture view to
6:02 pm
stocks, to our territory in order to reach conclusions that are allegedly helpful to you at home. given how wrong they are, though, i think it's time they ask why the heck they're allowed to reach these stock market conclusions without being brought up short because of the actual events. who are they to keep opining without admitting that while their inputs might be right in their own book, their stock investing input doesn't hold up under any close scrutiny. . put simply, these economists can't often invest their way out of a paper bag or one of the plastic ones you might like instead of a paper and always seem to reach the most dire and negative conclusions -- >> the house of pain. >> when upbeat ones are warranted. >> the house of pleasure. >> first, let's -- let's do this. let's talk about the common sense positives, these economists seem oblivious to and are not listening, are not -- and weigh them against the
6:03 pm
negative they spout nonstop. let's put these unseen, unspoken positives on a scale and pit them directly against the negatives, the economists are always ranting about. we hear, for example, the whole bull market is on borrowed time. and that nothing's really gotten much better than four years ago, what's the point? that's just not true. if you have a house, you know it's gone up in value in whatever city you live in. you also suddenly have mobility, you can sell your house, move elsewhere, take a better job without taking a beating. and because of the rising price of your home, the bank is letting you finance your $200,000 mortgage maybe as much as a third lower and the 6% you might have been paying. if you own stocks your ira or 401(k) "mad money" investments and invested badly, well, maybe you're only up half as the market, you're still up 8% year-over-year. in the meantime, the cost of your food hasn't gone any higher anymore and looks to be headed lower if you consider how grains are doing, particularly corn which is at the heart of the american diet. if you travel, the strong dollar
6:04 pm
makes overseas a bargain. the price of goods could go lower again courtesy of this dollar. your heating bill, sure natural gas 63% of all homes heated by that, spiked the dollar in the last month. you know what happened, the winner, how about that, your heating bill, major variable. might have come down as much as a third versus the previous year. what do the dismal scientists, by the way, that's accepted have stacked up against all those positives that i just rattled off. the arguments that make them conclude that you're nuts to own a stock here and that the market didn't really go up today, oh, what do they got? what's exhibit "a" for them? oh, how about an increase in capital gains and dividend taxes that was barely noticeable? 98% of americans stayed the same. how about a spike in gasoline -- i added this up even for a gas guzzler, you're talking about $400 a quarter if you're driving 30,000 miles a year in an
6:05 pm
average car. by the way, oil's headed lower too. you're going to go getting a break at the pump come may. every single time i try to calculate how hard the consumer has really been hit, i come back and say that unless you've chosen not to refinance, you drive an 8 mile to the gallon gas guzzler, you like your rented apartment or house heated at 85 degrees and another kid in college as i do, you are much better off now than you were a year ago. no wonder the scale tips in the bull's direction. is it really a puzzlement that macy's hit a new high today? macy's, that's a large department store. should we be so shocked that panera, cramer fave panera reached a new high ground? is it so strange you find time warner on the list on the division that helps charge you extra the game of thrones or my case not watch it because i think it's medieval pornography.
6:06 pm
best buy may be the last man standing, but you only get on the 52-week high list today because people are spending for better entertainment centers, home entertainment centers, why not? you bought a new house, why not get the best stereoequipment? hey, it means i can turn off the stereo, right? what else does it do? some stocks so confusing. the utilities hit all-time highs today. that was puzzling, you've got pfizer and hitting multi-year highs. you might say, oh, recession's coming, lily at the high. but here's where you're wrong. one of the most economically senseless sector is the real estate group and a group with a huge presence on the 52-week high list, the real estate investment trust, including kimko as well as tanger factory outlet stores. a bunch of medical reits
6:07 pm
including medical properties trust all of which have been pushed endlessly hard on "mad money" because i'm trying to make you money, i'm not trying to be an economist. if things were that challenging, the economy couldn't get this kind of action, these are economically sensitive companies. they are doing incredibly well. in many ways the investment trust the ideal stocks to own right now. the average reit yields double the s&p. industry paid out $29 billion in dividends last year. these companies have been able to refinance. and like you can at home, taking advantage. they've harnessed what people want, a stable and growing dividend stream attached to a consistent stream of revenues. that's why i featured them over and over again. and the reits are the best risk/reward since the show began. a little notice initiative that the president is backing the ability of foreign pension funds to buy our real estate without the huge tax penalties that the foreign investment in real property tax act of 1980 codified. this is going to ignite commercial real estate. i believe the europeans and
6:08 pm
asian pension funds going to overweight because of this change. watch the regional banks off this thing and no one's talking about it until now. why is it i'm able to figure out it's reasonable for the market to go up. deny it's going higher or mystified by the way the market shrugs off the bears' initiatives. i'm no genius, here's what i do, i have served stocks. i believe they accurately reflect the value of the enterprises looking out a few months. i figure out, who are the customers? who buys northface? which companies run from kimko, who eats at panera? who shops at best buy? yeah, i'm approaching this the way sherlock holmes would. using the pieces of the stock market puzzle to create the mosaic of what's occurring and then match those conclusions against what the dismal scientists have come up and try to figure out where they might be wrong. the consumer is stronger than we think, richer than we think, more bullish than we think. that's why despite european
6:09 pm
central bank stupidity or the japanese devaluation, all this high-minded, things i could talk about including the federal sequester, our stocks can defy what the economists tell us is really happening. those who only look at the aggregate data or try to divine the impact of bank failures, where was that cyprus in the mediterranean? chinese property controls, japanese devaluations. you know what, these would be terrific insights if we weren't trying to make money. they know more than i ever will about econ 101. they have a much better read on the gross domestic product and what it might be. they got it all over me about the capital inflows and the ten-year and 30-year, they got me smoked on that. but the bottom line, keep these economists the heck away from our zone! they don't know jack about st!in fact, they will throw youf every time. which is fine if this were a classroom! and you're trying to get a b.a.
6:10 pm
but it's just plain lousy if you're trying to make money. joey in florida, joey? >> caller: boo-yah, jim cramer. >> boo-yah, skee-daddy. >> caller: do you think the epa will continue to hold down refiners like cvr refining? or do you think this is a temporary hiccup? >> what pro fossil fuel? you went to college to get stupid? come on, it's the epa, they're against these guys, never going to take their foot off the juggler because these are fossil fuels we're talking about. we've got to find other ways to make money. economists, you are not welcome here, stay away from our zone. don't come into our zone or we will tackle you and take you down! you're just a fan running from the field on -- running in the field! we're going to go down there and give you the business. stay away from them, stay with us. "mad money" will be right back. coming up -- apple aftermath. if the maker of all things
6:11 pm
"i"continues to underperform the market, could it mean trouble for the rest of tech? or is apple's pain everyone else's gain? the signals you need to know about and he reviews them in a new edition of "off the charts." and later -- wonder drugs? all this week cramer's checking up on the strongest trends in medical science. and tonight, he's focusing in on companies with powerful treatments that could help curb cancer. is it time to join the fight? plus -- buyer beware, leveraged atfs promise more fire power. but wondering why the numbers don't always add up? stick around, cramer's opening your eyes to a potential solution. all coming up on "mad money." don't miss a second of "mad money." follow @jimcramer on twitter. have a question? tweet cramer #madtweets. send jim an e-mail to or give us a
6:12 pm
call at 1-800-743-cnbc. miss something? head to this is america.
6:13 pm
we don't let frequent heartburn come between us and what we love. so if you're one of them people who gets heartburn and then treats day after day... block the acid with prilosec otc and don't get heartburn in the first place! [ male announcer ] one pill each morning. 24 hours. zero heartburn.
6:14 pm
6:15 pm
every market has its generals. important stocks that lead the troops and the averages higher or lower. that's why we always pay close attention to the leadership here on "mad money." but sometimes these generals get demoted. sometimes they fade away, douglas macarthur style. and sometimes very rarely the troops actually mutiny against the generals. and the generals get taken out back and shot. when i look at what's happening in tech and more broadly at the nasdaq 100, a tech heavy index that includes the 100 largest nonfinancials on the naz, i see a mutiny, a mutiny against the leadership, the dominance of apple. we know that apple, thanks to the massive market cap makes up about 13.5% of the nasdaq, and it's been pummelled viciously.
6:16 pm
since last november, the nasdaq has been working its way slowly but steadily higher, mutiny. what the heck is going on here? has the nasdaq 100 mutinied against apple's lousy leadership? and if so, where is it headed? so tonight we've got to find this out. going off the chart to answer this question with the help of tim collins. my colleague at i love reading his stuff. fundamentalist with tech skills. on the way up, when apple was roaring higher on the road to 700, we know this stock was one of the most important leaders, not just in the nasdaq, in the entire market, in the entire world. now, though, get a load of this. take a look at the chart that shows the percentage change in the nasdaq 100 as demonstrated by the power shares and apple going back six months. this illustrates the correlation between apple and a long time back. in mid december the correlation
6:17 pm
completely changed. you'd go from periods of five or six weeks where apple didn't matter followed by a few weeks where it would matter and back to not mattering again, she loves me, she loves me not, she loves me. and at this point, looking like apple simply doesn't matter to the nasdaq 100. this stock has been plummeting. it's now down about 36% since the beginning of october, down 19% year-to-date, meanwhile, the qqq, the etf that reflects the nasdaq 100, basically flat, flat since the beginning of october. can you believe this? it's up nearly 5% for the year when apple's going down, this thing is doing okay. collins is saying that apple has been removed as the leader. that's what this chart shows of the nasdaq. and if you try to take your cue from apple as you can see from this chart, you're going to get burned. looks like to collins this is almost like a correlation that money is flowing out of apple and right into the nasdaq.
6:18 pm
as people exchange this loser tech for stocks that feel more like winners. however, just because the qqq has been beating apple pretty low bar if you ask me, that doesn't mean this tech heavy index is poised to go higher after here, not after the communication stocks are getting hammered. check out the daily chart again, this is the etf that reflects the nasdaq 100. the chart doesn't appear too troubling, but on closer inspection, a 3% to 5% pullback could be in the works on these levels. if the nasdaq bulls don't get their act together quickly, that's when things could happen. specifically the qqq looks like to collins that it is in a topping out process. the index is making a double-dip pattern that collins considers one of the most bearish in the book. we've seen this happen twice since december and now looks like a third time could be at hand. what is this double dip? this is a pattern all about the
6:19 pm
momentum indicator i talk about. tells you whether a security has gotten overbought, gone up too far, too fast and might be due for a fall or oversold when it's going down too far too fast. could get a bounce. this indicator is considered an overbought level right now. it's above 80. collins double dip is when they go from overbought reading above 80 and then drop below 80, which is what it's doing right here. see that? then subsequently return to overbought territory in short time frame without being oversold or close to oversold. doesn't stay overbought, though, this indicator quickly falls off a cliff. see that's what's happening. it's overbought, oversold. this, he thinks is going to fall off a cliff and take the underlying index with it. so far, we've seen this pattern play out twice in the qqq, it's not unheard of. first happened in december, okay, the index fell from the ceiling of resistance as these
6:20 pm
told you it would. that's a 5% move lower. then did the exact same thing, okay, did the same thing again. right here. and the qqq fell from resistance to support. but since the floor and the ceiling were closer around that time, you only got a 2.5% decline. much bigger decline here because of the floor and ceiling. right at the start of this month, we've gotten another double dip in the stochastics. however the qqq has fallen from the ceiling to its floor. and even shorter distance this time, decline of just 1.5%. why in the heck is collins so concerned, right? we bounced, right? aren't we going to bounce again? the last two times this happened, the nasdaq 100 held it for support. this time collins is worried it might break down below the floor support. why? the reasons, first of all, the qqq trading range has gotten tight. to collins, looks like it's made a big rising wedge formation.
6:21 pm
and at this point on the wedge, you either get a breakout or breakdown and collins doesn't see how the stochastics could go overbought to oversold without falling below the floor of 68. second reason, he's looking at money flow, mfi, this is right here at the bottom. this measures the volume to gauge the money going in and out of security. the last two times we saw this double dip pattern. here we go again. the qqq fell to its floor of the support on the money flow index and held there. this time it's fallen through that floor. see, there's the floor and it's already broken the floor. these are all very -- look, i know these are small things right there, right here. but he's basing everything on these little inflexion points. it's powerful stuff. look at the qqq's weekly chart, okay. you can see the rising wedge formation much more clearly on this one. and collins thinks that the breakdown from this pattern could be very negative. see the rising wedge, okay.
6:22 pm
that's not good. on the other hand, collins also sees the outlines of a "w" formation. these charts can be looked at for multiple ways. and a lot of the charters often interpret that formation as a bullish formation. so how does collins resolve the bullish "w" with the breaking out of the wedge to the downside? he looks at another index. he goes to the relative strength index or rsi. the momentum indicator at the top here which has been making a -- what's called a bearish divergence with lower highs and lower lows. >> see, didn't get up to where it was. collins points out that the last two highs near rsi, again, they mark short-term highs on the nasdaq 100 followed by declines of 10%, which also coincide with sharp drops in the stochastics. right now the stochastics in the weekly chart are severely overbought territory and could be due to a fall. this is looking similar to past moments where the qqq has taken a nose dive.
6:23 pm
if the qqq closes below this wedge, okay, which could -- would mean only mean falling about 50 cents below where it was and judging by the set-up overnight, collins would get out or get this, collins wants to short him even if there's no breakdown. the nasdaq 100 seems to have that much potential upside or so it's a case of a lousy upside right to here and a very big downside. classic risk/reward in favor of the bears. so here's the, you know, just looking at a couple of the others breaking down. wow, he's going to put the short end at the opening. here's the bottom line, thanks to tim collins' chart work, we know that the nasdaq 100 is no longer following apple's lousy leadership. however, at this point, that might not be such a great thing anymore. the money may not be flowing back in the nasdaq since the charts is interpreted by collins just the nasdaq 100 could be at
6:24 pm
risk of taking a big haircut from here. i'm a fundamentalist not a chart follower, but i don't like it when the charts are against you. and this is one more reason to be wary of tech. it's a mutiny all right. and collins says the bounty is going to the bears. after the break, i'll try to save you more money. coming up -- wonder drugs? all this week, cramer's checking up on the strongest trends in medical science. and tonight he's focusing in on companies with powerful treatments that could help curb cancer. is it time to join the fight? i know what you're thinking...
6:25 pm
transit fares! as in the 37 billion transit fares we help collect each year. no? oh, right. you're thinking of the 1.6 million daily customer care interactions xerox handles. or the 900 million health insurance claims we process. so, it's no surprise to you that companies depend on today's xerox for services that simplify how work gets done. which is...pretty much what we've always stood for. with xerox, you're ready for real business.
6:26 pm
only hertz gives you a carfirmation. hey, this is challenger. i'll be waiting for you in stall 5. it confirms your reservation and the location your car is in, the moment you land. it's just another way you'll be traveling at the spef hertz. the little details. the little moments that make life truly amazing. that's why southwest worked hard on the little and big things to build a better in-flight experience featuring access to wi-fi, live tv, and updated cabins. getting there just got better. we are southwest. welcome aboard.
6:27 pm
for over a glorious week now, i've been taking you on a tour of the drug companies, the ones that represent the future of the pharmaceutical industry. why? because i can remember a time when big pharma, the stocks that everybody thinks of now as fixed income vehicles was one of the hottest sectors in the market because it had great growth. oh, that was during the '90s, the golden age of old-fashioned pharma. while that era is over, there's plenty of lessons to be learned from it. and the most important lesson, the reason i've been highlighting these biotech stocks is when drug companies are innovating, when they've got deep pipelines of truly new products, not just reformulations of old drugs meant to serve as patent extenders, then their stocks tend to perform fabulously.
6:28 pm
what am i talking about? well, let's go over them. i'm talking about stocks like celgene, regeneron. last week i reiterated my call. the important thing to remember was that regeneron was the best performer in the s&p 500 last year. and that was after the stock ran from $5 to $55 over the previous 6 1/2 years. i still think it can go higher. but the truly massive gains here have probably already been made. i first recommended as a speculative stock trading for less than $5 in the spring of 2005, not long after "mad money" began. probably our first guest. and while we've been doing this week is looking for the biotechs that can be the next regenerons, that's what we want and don't forget the orphan drugs base, the companies developing these kinds of drugs. and last night we looked at the game changers. changing the way diseases are treated.
6:29 pm
people have been tweeting me @jimcramer saying these are the stocks you want. remember, i like to have a lot of stocks. i'd like to highlight the stocks going up against a particular illness, fighting the good fight against cancer. and creating revolutionary new drugs in order to win it. i'm talking about immunogen, seattle genetics and onyx pharmaceuticals. let's start with immunogen. you've seen them on this show a bunch of times. it's already given you more than a double since i first recommended it in 2009. it has more room to run and i'll tell you why. it's developing targeted cancer treatments, a big difference between how we treat cancer with chemotherapy and radiation. the cancer cells get hurt worse
6:30 pm
than the healthy tissue. and it's developed a big step up from this by using what they call targeted antibody pay load technologies taken them two decades to figure out how to do this. basically using antibodies to hunt down cancer cells, like a guided missile after the cancer cells and they hit the cancer with a highly toxic payload. that's anywhere from 100 to 1,000 times potent than traditional chemotherapy. it is a brilliant technology, people. and other companies know it. which is why immunogen has deals that allow them to bring in cash while they develop their pipeline. as much as i like immunogen, this is not an earnings story, at least not yet and probably not for a while. immunogen is still about the pipeline, the future. back in february, the fda approved, on the front page of the "new york times," a breast cancer drug that immunogen created in partnership. possibly doing as much as 6.7
6:31 pm
billion in peak sales by 2020 if it gets all the additional approvals that the companies are working on now. but -- it's a big negative. most of the money from these sales go to roche. because the royalty scheme on this drug, well, frankly it's not that favorable to immunogen and the ceo admitted as much on the show. however, the fda approving isn't meaningless. it validates the whole thing. immunogen's technology. and that's important because this company is a pipeline full of drugs it owns outright. they've got a small cancer treatment, we should get phase 2 data on that in the second half of this year. and then immunogen with early stage drugs. one for lymphoma, head and neck cancer, but these will all take years before they're ready to be submitted to the fda if they ever are. this stock has unup since the
6:32 pm
beginning of the year. now, i got to wait for a pullback. the company has a big analyst coming on friday of next week, april 12th. you know what, we've got a big downturn off a company you never heard of did something to the bond market, that may be the opportunity you want to get in ahead of the catalyst of the analyst meeting. how about the seattle genetics? here's another stock that rallied hard, 50% gains since i recommended it just after interviewing the ceo last june. just like immunogen, they've got the same thing, the targeted antibodies to select and target the cancer cells. i want you to think of these drugs as smart bombs programmed to detonate when they hit a tumor. i think that gives you the clarity. baaing in 2011, got fda approve for the drug that treats different types of lymphoma. right now accetris is approved as a second line therapy. testing the drug for additional indications, including four late-stage trials. looking at the two types of
6:33 pm
lymphoma the drug's approved for right now, maybe $600 million in peak sales in the u.s. that seattle genetics would keep 100% of. other candidates approaching trials and a host of partnerships with larger players to develop antibody based cancer drugs. altogether, these partnerships could potentially bring in $3 billion worth of milestone payments. why don't people talk about these stocks? they are so important. however, just like immunogen, seattle genetics only has one drug on the market, no major approvals for a year. this stock is very hot right now. again, a pullback. but i try to bring these to your attention because i don't think anyone else is. which brings us to onyx pharmaceuticals, best for last. onxx for all you home gamers. the big brother of the group, it's a $6.2 billion company, it has three products actually on the market. which are approved for five different indications. onyx's big drug is approved for
6:34 pm
liver and kidney cancer and being studied for thyroid cancer and cancer. it is a remarkable drug because these cancers have stymied doctors for years. and onyx has a multiple myeloma drug, celgene went down big. that was an opportunity. this one could be worth $2.3 billion in sales by 2018. in september, the fda approved a colorectal cancer drug. this one could be a billion dollar drug and onyx gets a 20% royalty. right now onxx is a triple threat and that doesn't even include this pipeline. at the moment, they're developing a breast cancer drug with pfizer that's in phase three trials. this could do peak sales of $5 billion. comes to $400 million. plus, at $86 and change, onyx is unlike almost all of these others, down from its high, six points off the high, should be bought at these levels. here's the bottom line, when you're looking to future the
6:35 pm
fight against cancer, both have revolutionary technologies, but their stocks have run. they need to consolidate the gains, consolidate, do nothing for a while, go down a bit before they take off for a while. i like immunogen ahead of the analyst day. okay. you know that i think onyx is the right one. let all these stocks cool off. but if you had to buy one and you want to buy one tomorrow and you've got spare cash, onyx may be one of the best new drug companies in the world. let's go to rudy in louisiana, rudy? >> caller: jim, boo-yah from new orleans. >> that's where boo-yah's from, and so is my daughter. what's going on down there? >> caller: oh, yeah? >> trust me on that. >> caller: so phmd, good fourth quarter earnings, what do you think? >> oh, boy. you know, this is one i can't cough because i do not know it. i've got to come back because i
6:36 pm
have -- you know these laser stocks have been very difficult. we're going to have to know more and get that opine later. let's go to california. >> caller: boo-yah. >> boo-yah. >> caller: hey, you know i've been keeping this stock. vivos. what do you think, brother? >> no. it's like yesterday we had -- there are just a couple -- there's a handful of stocks i don't want to opine on. why? because they're such battlegrounds you can't get a line on them and you've got one that i say -- >> don't buy, don't >> way too hard. way above my pay grade. all right, we're almost done with our mystery tour, it's immunogen, seattle genetics sgen, and onxx, onyx, the big daddy and the best of the bunch. stay with cramer. the "mad money" back to
6:37 pm
school tour is in session. and this time we're headed to the city of brotherly love. if you're a student at villanova university and want free tickets to see cramer do the show love on campus thursday, april 25th, visit (announcer) at scottrade, our clients trade and invest exactly how they want. with scottrade's online banking, i get one view of my bank and brokerage accounts with one login... to easily move my money when i need to. plus, when i call my local scottrade office, i can talk to someone who knows how i trade. because i don't trade like everybody. i trade like me. i'm with scottrade. (announcer) scottrade. awarded five-stars from smartmoney magazine.
6:38 pm
6:39 pm
6:40 pm
it is time -- it is time for the "lightning round" on cramer's "mad money." i don't know the callers or stocks ahead of time, play until this sound and the "lightning round" is over. are you ready skee-daddy? it's time for the "lightning round" on cramer's "mad money." i'm going to start with freddy in my home state of new jersey. freddy? >> caller: thank you for helping us little guys and i've got a stock acad. >> we like this. we like this because of the hope of the parkinson's formulation. >> buy, buy, buy. >> ronald in california, ronald? >> caller: professor jim. what do you think about sd. >> i like sd.
6:41 pm
a video with me at the, he thinks this is the right speck at this price. me, i'm holding back. i prefer magnum hunter. let's go to joe in michigan. joe? >> caller: yeah, jim, go blue. what do you think of ticker wen, wendy's. >> that's syracuse, partner. we don't want to bet on syracuse, we like mcdonald's if it's fast food, with like panera, we don't need to go down to wendy's and the biggy fries. george in arizona, george? >> caller: boo-yah, mr. cramer. >> boo-yah. >> caller: love your show. >> thank you. >> caller: my stock is svrl. >> i'm blessing seadrill. and i'm going to paris. but it's in california. paris. >> caller: how you doing, jim? i wanted to know what you thought about pxp. >> congratulations, but ring the register. and that, ladies and gentlemen, is the -- you have to put the
6:42 pm
philly's record here? that, ladies and gentlemen, is the conclusion of the "lightning round." >> the "lightning round" is sponsored by td ameritrade. coming up -- buyer beware. leveraged etfs promised more fire power, but wondering why the numbers don't always add up? stick around, cramer's opening your eyes to a potential solution. ♪ [ cows moo ] [ sizzling ] more rain... [ thunder rumbles ] ♪ [ male announcer ] when the world moves... futures move first. learn futures from experienced pros with dedicated chats and daily live webinars. and trade with papermoney to test-drive the market. ♪ all on thinkorswim. from td ameritrade.
6:43 pm
6:44 pm
6:45 pm
hey, don't tell me i haven't told you so. i've warned you many times about the dangers of owning etfs that don't behavior the way you think they would. you have commodity etfs where the performances can get crushed when they roll over the futures contracts every month. you have the ultra short etfs that are supposed to let you bet against a given sector. you might expect them to move in the opposite direction they're shorting over in the long-term, increasing in value when the sector's going down the tubes. that's not how the financial products are engineered. the leveraged etfs are not designed to be invested in, traded in, day traded in, something the retail customer
6:46 pm
doesn't know about or doesn't understand. for example, in 2008, when the real estate index was crushed down 42%, if you bought the pro shares ultra short real estate etf, thinking you were making a bet against the dow jones real estate index, you ended up being down even more. you were off 50%. these etfs don't work the way people intuitively assume they do. even the people that sell them have disclaimers about the fact their products are day trading vehicles. accushare has tried to fix this problem by releasing etfs for investors that work the way you'd expect them to. this is a really important issue. i want to bring them on -- because -- to show that somebody up there is attempting to do the right thing by you. that's why i'm thrilled to have the ceo of accushares, a close observer of our endless criticism of these products. here tonight to talk about the etf business and how his company plans to be different. welcome to "mad money."
6:47 pm
>> thanks, jim. thanks for having us. >> absolutely. so it's true, right? these current etfs that when you speak to regular people, they think they're investing in something and they're not getting what they think. >> it's true. they -- they don't really work for anybody. we think they're really not practically usable. i think the industry sets it up as it's a day trading vehicle and a vehicle for professional investors, our view is professional investors have better alternatives than the high-fee funds and retail investors generally, their investing is i would describe as off label. that is they're not using them, i think, as the disclosure would suggest. >> what i think you point out here is that in periods with a combination of up and down days, the mechanic almost universally causes underperformance. explain that to people. >> that's correct. if you think about how the daily rebalancing works, it's the worst kind of investing. it is -- it forces you when you have gains during a trading day forces you to compound up those gains, you're buying more of the asset. when you have a down day, deleverage or sell out losses,
6:48 pm
you're always buying high and selling low. >> right. >> if you sit in these funds or let these run over time, they tend to zero because it's just whittling away at that process. unless you have a market that's one direction, always up, might work for you, always down might work. as soon as you get a series of days which are the typical market where the market goes up and down, it's a problem. >> and when people say i want to play natural gas with the ung and tends to not relate to natural gas, how does that work? >> that's a big problem, as well. i think the -- using the etf is a bit misguided. it it isn't an energy etf, but holds a future trading strategy. and it's a bad future trading strategy because it's going to force you to buy a contract at a high price that has futures and spot prices decoupled from each other. let that contract expire as it's expiring, sell out of that contract and buy the new one.
6:49 pm
lots of problems. we think futures are great for people -- >> for investors. >> or people doing futures against something else or need the commodity. not so great for a role strategy and etf. >> one of the things that always astounds me. we have a lot of smart viewers and yet they always seem to get caught up because you call it off label, but it does sound like if you want to bet against chinese real estate, there's nothing better than buying one of these double shorts. >> that's a great question. what we think is we think the etf industry is -- it's gone down an odd path in that there are too many choices. there are now roughly 1.5 billion in assets and probably about 1,500 etfs. all with these fancy names and each one of the names seems to be the one you want to do. what we think that's done is let investors rather than do their due diligence on the etf is say, hey, that is the fund. short china, that's the fund i want, they hit the buy button. >> how do you propose to do it
6:50 pm
differently? >> you get rid of -- the way we looked at it -- >> this is accushares, your solution. >> we look at -- we looked at bad practices and we looked at why the heck are the worst design worst-performing funds still attracting assets and investor money? >> yes, this is what we complain about on the show. >> then you look at -- flip the coin and say what are the best practices in the etf market? and we look at things like the original spider, the original s&p 500 spider. the reason why we think that works, why the rest of the spider family including the gld, the gold, what we describe as three best practices. it holds very highly liquid stock only. it holds it consistently, doesn't trade around it, doesn't rebalance it and it's very transparent. you know what you're going to get and you know what it's going to cost you to get it. take the stuff we've been talking about. so take the energy sector -- >> right. >> take the liquids, take the commodities. the funds right through -- right down the board, they don't hold
6:51 pm
highly liquid stuff. >> right. >> they don't hold it consistently. >> right. >> whether it's futures sort of as a rolling or it's daily rebalancing and they're not transparent. you look at the stated fees within an etf and a stated fees might be 50 basis points. >> it's huge. >> it's even above and beyond that. the cost of actually holding the shares and running the position could be multiples of the stated fees. our message is the stated fees tell a fraction of the story of what the real cost is. coupled with the fact you don't know what you're going to get. >> what we should be looking for is when you register, come on and tell us how these are going -- right now registration, we can't do these yet, but when you do, i want to know more about this. we've got to put this to rest. too many of our viewers have lost too much money. all right, jack? too many, too much. we're going to hear more when he puts out these products and maybe you will listen and stop losing money in these. the industry's got you fooled. stop it. "mad money's" back after the break. [ male announcer ] there are people who find their own path.
6:52 pm
and never back down. who believe the american dream doesn't just happen, it's something you have to work for. ♪ we're for those kinds of people. because we're that kind of airline. and we never stop looking for a better way. it's how we've grown into america's largest domestic airline. we are southwest. welcome aboard.
6:53 pm
humans. we are beautifully imperfect creatures living in an imperfect world. that's why liberty mutual insurance has your back, offering exclusive products like optional better car replacement, where if your car is totaled, we give you the money to buy one a model year newer. call... and ask an insurance expert about all our benefits today, like our 24/7 support and service, because at liberty mutual insurance,
6:54 pm
we believe our customers do their best out there in the world, so we do everything we can to be there for them when they need us. plus, you could save hundreds when you switch, up to $423. call... today. liberty mutual insurance -- responsibility. what's your policy? getting blown away by this restaurant move yesterday and today as major research firms up the ratings saying it's time to get in the group. i'm flabbergasted because if the payroll tax really mattered, higher gasoline prices mattered, these upgrades wouldn't matter. raymond james said after a hiatus it's time to buy panera bread, the consumer spending is, well, increasing. because they're more optimistic,
6:55 pm
among the high-income bracket, the ones that were supposed to be wracked by taxes. and as the higher, more likely to recommend ratio than any other restaurant chain. what you read in the newspapers here on television these upgrades make no sense. how is that possible if you have confidence whatsoever? how can people spend $6 for a signature panini or that chicken salad, or $10 for dinner at chili's. how come they're not staying home? isn't that what you do when things are harder? how come they're not trading down mcdonald's which by the way solid new nutritional stuff i really like. it's simple, we're a richer country than people realize. particularly our houses and our stock portfolios go up in value. i like this goldman piece very much. i used to attack research all the time, not this piece. i think the market must agree with me because domino's is up $1.57. including the one that moved panera up $6 today are going to
6:56 pm
look smart from a few months from now because raw costs are coming down and all these companies are incredibly good at productivity and cost control. the restaurant group has an underperformer of late. right now the market wants to embrace the stocks that have underperformed as opposed to many of the first quarter winners. i think the restaurants have once again become go-to places when we get pharma related selloffs as these are domestic security growth companies, that's the ideal antidote. and remember, we are not a poor nation, we aren't a frugal nation, we're a nation of spenders and going out to dinner has been our dna, especially when we're feeling good about ourselves which is what happens when our stocks are up and our houses are increasing in value. stay with cramer. revolutionizing an industry can be a tough act to follow,
6:57 pm
but at xerox we've embraced a new role. working behind the scenes to provide companies with services... like helping hr departments manage benefits and pensions for over 11 million employees. reducing document costs by up to 30%... and processing $421 billion dollars in accounts payables each year. helping thousands of companies simplify how work gets done. how's that for an encore? with xerox, you're ready for real business.
6:58 pm
6:59 pm
what am i up to after the show you wonder? i'm watching a brand new hot off the presses "american greed." i love that show. watch a $75 million fraud flame out and see who gets burned. i kind of think it's like a wild west ripoff tonight. tonight on cnbc. all right, f-5 blows up after the bell. they're s


info Stream Only

Uploaded by TV Archive on