Business
The tyranny of technology is over. Here are the stocks that drive this market
Never have the bulls been more shy and timid. Never have the bears been so upbeat and so wrong. Sure, the bears nailed Meta Platforms ( META ) and knocked Microsoft ( MSFT ) out of the park. Amazon (AMZN) flopped. So did Alphabet (GOOGL). But when the bears — with the help of everyone in the media I know — tried to take down Apple ( AAPL ), they failed. Apple had a fantastic quarter, but you had to actually understand something about Apple outside of the direction of the chart to get it right — and buy it hand over fist when the reporters took it down. Or let me put it another way: A month ago, as we entered October like slaughtered lambs, my friend Larry Williams, our greatest market historian today, said the bear was toast. He predicted one of the biggest rallies we would ever see, led by the Dow Jones Industrial Average. And he was just dead right. Shockingly right. Now he saw historical parallels. I tried to incorporate as much of his thinking as I could, but what I missed was clinging to some classic stocks that had made me so much money over the years, even decades. With the exception of Apple, they had to go. They still do, I fear, unless China changes, and China has become a horror show of a totalitarian nightmare. What did I miss? Simple: devotion. The unwillingness to part with companies that are simply the best we have. But that turned out to be my biggest conundrum. The one thing I was sure of, for example, is that Nvidia (NVDA) has the most powerful chips in the world. The only thing I didn̵[ads1]7;t see coming is that President Joe Biden would know and ban them from China. I was sure that when I talked offline with consumer packaged goods companies about who they were advertising with, the answer was simple: Amazon and Google. But it was only a small piece in the puzzle. And costs. I got these wrong. Amazon’s and Google’s costs are too high, but I understand it’s over. You are selling them now, you don’t realize that these companies are mad at themselves; they couldn’t complete hires and that’s what they have to do. Apple: It should have been a terrible quarter. China is a nightmare. iPhone 14 should not be special. Service income would be weak. Here’s what was missing: All of this was true, and it didn’t matter. They are the masters of 900 million subscribers and about a billion and a half happy customers who buy everything else that comes with the Mac or the iPhones, the two biggest Trojan horses on earth. They are remarkable. When will people realize the greatness of Apple’s management team? Sure, there is better technology, but it is enterprise technology. We want batteries that last longer. They have them. We want watches that can last two days without charging. Finished. We want fantastic programming. Sure, coming right up. We want privacy because we believe that everyone takes us for granted and sells us out to advertisers. Okay, Apple will stop that too. Here’s what Apple is: The good guys. Now let’s go over what else happened. A couple trillion dollars came out of a handful of stocks, and not all of it went into the 2-year Treasury. Some of the money went to companies that are indistinguishable from stocks like tap water. They went to companies that know what to do when a recession hits, and they batten down the hatches before the storm, not after. The money went to the shares of companies that buy their shares in the open market as Silicon Valley issues them. These companies pride themselves on paying big dividends even if it means they aren’t growing as fast as they could. Talk about getting the zeitgeist. Oil, the commodity, has been butchered within an inch of its life. But the oil stocks? They have been fantastic. And they will get even better to the point that they will have enough money to send to SLB and Halliburton (HAL) to extract more oil and sell it for twice what it costs. Now let’s just get away from scrum entirely. This market is made up of healthcare and economics. Old-fashioned healthcare such as Merck (MRK) and Eli Lilly (LLY). How did these get so high? Some great new fabrics and some the coming deflation that you get when you have a downturn. Notice I wrote decline, not nightmarish recession or depression. Just a bad slowdown where drugs thrive. Banks? They work here for a simple reason: They can make so much money that they can buy back shares and raise dividends like never before. Industry? They are doing so well because they are so cheap compared to their historical prices. Retail? Sure, promotional. That’s why you buy TJX Companies (TJX) and Costco (COST). And if you want real winners, anything infrastructure-related, because the Democrats gave us so much money that the federal government will be the buyer of pretty much everything made by our industries. I wish we owned Caterpillar (CAT) and Deere (DE). Both could party from the bottom for ages. Finally, there is space travel. We will be traveling like never before after this Covid war. And we can’t get enough of these stocks. For years we have been under the tyranny of technology. That tyranny is over. It has given everyone else freedom. They take it. We have to take it too. There will always be some good technologies. This is not 2000 when only Amazon was left. But we are in a manufactured moment, where the Federal Reserve is going to get its layoffs, the war in Ukraine isn’t going to last forever, and the Chinese will figure out a way to save face and end their Covid lockdowns. Do we live happily ever after? No, but the bulls won’t be shy for long. And the bears? They’ve had a fantastic run haven’t they? (See here for a complete list of the stocks in Jim Cramer’s Charitable Trust.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive an exchange alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a share in his charitable fund’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE INVESTMENT CLUB INFORMATION ABOVE IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY, TOGETHER WITH OUR DISCLAIMER. NO OBLIGATION OR OBLIGATION EXISTS OR IS CREATED BY YOUR ACKNOWLEDGMENT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTMENT CLUB. NO SPECIFIC RESULTS OR REWARDS ARE GUARANTEED.
A worker washes a Caterpillar crawler dozer at Ideal Tractor in West Sacramento, Calif., Monday, Aug. 1, 2022.
David Paul Morris | Bloomberg | Getty Images
Never have the bulls been more shy and timid. Never have the bears been so upbeat and so wrong. Sure enough, the bears nailed it Meta platforms (META) and press Microsoft (MSFT) out of the park. Amazon (AMZN) flopped. So did Alphabet (GOOGL).
