In today's Daily Rundown, Jim discusses the financials (Citigroup (C) , JPMorgan Chase (JPM) , and Goldman Sachs (GS) , which reported earnings on Wednesday), why Apple (AAPL) should buy Epic Systems (a privately held provider of electronic health records), Nordstrom's (JWN) holiday sales shortfall and why we took the big win on that position but kept the consistent Kohl's (KSS) , and more!
As a reminder, our January members-only conference call will be this Thursday at 11:30 a.m ET. For more information on how to access the live event, please see here.
Katherine Ross: Good morning. I'm Katherine Ross of Action Alerts Plus. I am here on the floor of the NYSE with Jim Cramer. Jim, there are so many headlines out there today and yesterday.
Jim Cramer: Yeah. Well, this is the beginning of that period. There's 12 weeks a year where you're buried, the three weeks of earnings. This is really the beginning of the thick of things. These are very convincing earnings from the banks, and I've been in so many earnings periods where the banks really stunk up the joint. We stuck with Goldman Sachs, and we're going to be rewarded big time. We stuck with Citi. It's going to be a major, major run here. And we stuck with J.P. Morgan, so I think you go to new highs. We didn't own Bank of America. Bank of America was very, very good. But these are the sweet spot, and I am proud that we stuck with them during a period where everyone told us to sell. We did not do well in them initially. Remember, we had sold a lot of them higher, then we bought them back, and as we bought them back, we were kind of annihilated. But now we're making the comeback, and I really like it.
Katherine Ross: Well, okay. Let's parse through these headlines real quick. What should investors be paying attention to?
Jim Cramer: I think they should be paying, price/earnings ratios, because I was doing some work today on Goldman. There's 30-some odd companies that are valued the same like Goldman, and not one of them you would ever work at or one you would be ... I mean, like Freeport, which is a copper and gold company, is valued more highly than Goldman. Gold valued more than Goldman. I've never seen this in my career. I worked at Goldman. My stepson's been working at Goldman this summer. Full disclosure, did it on his own. I look at what Goldman's doing and how well they're doing in a bad moment under Solomon. What could they do in a good moment?
Jim Cramer: And I say to myself, how did that get at seven times earnings? And the answer's because it was wrong. I mean, sometimes you just say the market got it wrong. I often say that never underestimate the power of the stock market to do something really stupid, and the valuation for Bank of America, J.P. Morgan, they're wrong, because they've all become derivatives of Jay Powell, and they've all become derivatives of ETFs.
Jim Cramer: This is the beginning of the breakup of the ETF-ization. The ETFs, I think they've fooled a lot of people. I think that they've made you feel that if you own the best of breed, it's become single stock risk. I have always preached best of breed, and best of breed works, and J.P. Morgan, best of breed. But you're seeing a lot of others now vying for best of breed, and I think that the real takeaway so far of this earnings season is, how did stocks get to be so cheap? And that's my major theme.
Katherine Ross: Let's talk more about Goldman Sachs. We just talked about it on our Facebook Live video, but for Action Alerts Plus members, what's important in the earnings report?
Jim Cramer: Well look, we wanted to have Malaysia covered. I feel that they're fully ... I think that they basically have the money sequestered. Now, one of the things that anyone who's been involved in complex lawsuits, if you say I have seven billion reserved, then you're going to end up paying seven billion. That's the way it works. Obviously, in a very major lawsuit that I can't talk about the results of, but it became a question of how much the insurer had insured. What was the limit? They're going to go to the limit, and then they're going to pay it, okay? Goldman's going to go to the limit and pay it, but they didn't want to say listen, we have seven billion reserved, because then people say oh, Jesus, seven billion, they think that. But the fact that they've reserved for it, and they've mentioned this kind of sub rosa, makes me feel like that those who think that Goldman can't pay it are wrong.
Jim Cramer: In the meantime, Goldman, you look at what they can make in a really bad environment, you say maybe they're more of a bank. Banks get more consistent multiple. And that's a big theme for me, is that Goldman's more of a bank. I like what I see. The stock is way too cheap, even here, because it was at 220, 240, and we bought some in that level. So I feel great about Goldman.
Katherine Ross: I want to switch gears and talk more about your Mad Money segment from last night, because I watched it, and I loved it.
Jim Cramer: Which one's that?
Katherine Ross: The Apple one.
Jim Cramer: Oh boy. Yeah, it's funny, you go on Twitter and people say it was thoughtless. There was one guy who said, "a real clown." He said something like, "I guess you could say whatever you want on TV without doing any research." Ben Stoto and I, we did so much research on this.
Katherine Ross: I was going to say.
Jim Cramer: I'm going to clarify this again. The idea is not that we want Apple to own your medical records. The idea is kind of like, if you go read Steve Jobs's biography, Walter Isaacson, great, you'll see that what he realized was that he had to beat the record companies. He had to own ... In order to be able to get the music store, to get iTunes going, he had to roll all of them. Well, I'm talking about the iTunes of medical, meaning that right now, it's very fractured and it's very siloed. Epic doesn't talk to Cerner, doesn't talk to Allscripts. So what you're looking for is, if Epic gets bought by Apple, they can roll the other guys and say, "Listen, we're going to just mimic you, so that you can make it so the customer owns the data."
Jim Cramer: Right now, you think you own your data, but if you're different places, you don't own your data, because they don't talk to each other. You go to the wrong hospital, they won't have your data. What I'm trying to do is get Apple to be the company that makes it so that there's a standard, and if you have your watch, and it has all the medical records, you're in an accident or whatever, you got your watch, they just press it and they see wow, okay, I've got everything. That's what Tim wants, and that's why he should buy Epic. Judith Faulkner's, who's 75, and she's been incredibly good at Epic. It makes all the sense in the world.
Jim Cramer: I know from people within Epic that they feel it's a smart idea. I know that Apple wants to do something big that's good. This is a private company, worth a lot of money, but I think that what immediately happens, you could say, "All right, for $10 a month you have all your medical records on this. And it talks to everybody wherever you go." That would be a system, you would easily pay $10 a month. You would probably pay $15 a month. So they start at 10 and go to 15.
Katherine Ross: Especially if you have allergies.
Jim Cramer: Yes. What you would have is this jump in the service revenue stream immediately, and because people love the hospital records stuff so much, because it has no cyclicality, what would happen is you would immediately have, and they can do it all over the world, they can roll all over the world, you would immediately have the biggest service revenue stream in the world. So anybody who values Apple at 11 times earnings after they buy Epic would just be incorrect. I'm so excited about this, I'm going to revisit it and revisit it and revisit it. I did for a long time say that they should buy Netflix. That's over, but they need this deal, and they could solidify ...
Jim Cramer: It would be called the handshake. Let's say you had an EKG. Remember, this is not an official EKG. The FDA sanctions it, but you would have your EKGs on here, and it would be beaming to, let's say, the Mayo Clinic. The Mayo Clinic has artificial intelligence, which tells you whether your baseline could be a beginning of heart failure. So yes, it's not an EKG like you lay down and they put the nodes, but it would be signaling you're at risk for the seven million people who have heart failure. That's why this is so exciting. I'm going to get this done.
Katherine Ross: Maybe I should switch out my Fitbit for an Apple Watch.
Jim Cramer: Oh, you definitely should. No, that Fitbit went away.
Katherine Ross: All right, my final thing-
Jim Cramer: By the way, the Apple Watch, when I speak with them, they're acutely conscious. Remember, it is the biggest revenue watch company in the world. They're acutely conscious of something that I brought up with them, which is that I love your Hermès. You've got to be more stylized. You can't be, a little bit smaller, I don't know, but you've got to make it so that, 50% of the population are women, like it more. And Hermès is the star. We need much more fashion.
Katherine Ross: Yeah. I mean, I love my Fitbit, because it's that small.
Jim Cramer: I know. Then maybe Apple has to do that. There's a lot of people don't wear watches. We're now starting to wear watches because of this. I love my watch so much, and they know. When I was out with Tim, I mean, my watch, when it was my wife, I said, "Listen, it's Lisa, I gotta take it." Lisa thinks the world of Tim, just thinks he's the greatest guy, and we were trying to make it so that we all together when Lisa came out. She just reveres him and was very angry when people say he doesn't innovate. She threw something down, she goes, "Who is innovating? What company is innovating?" And I was like, "I don't know, Amazon?" She goes, "But who else?" And I was like, "I don't know." She goes, "And why do they pick on him? It is ridiculous. He's the best we have in the world, and he's ours, he's American. He's fantastic."
Jim Cramer: And she's going on and on, "Auburn. Her sister went to Auburn. And it's like, enough. I've had it. I've had it." And I said, "Lisa, take it easy." She goes, "No, I'm not taking it easy. I am going to defend him to the end of the earth." We had just bought the kids the new Macs, which are so-
Katherine Ross: I have one. I love it.
Jim Cramer: Oh my God, they're so gorgeous.
Katherine Ross: I love it.
Jim Cramer: Just fabulous.
Katherine Ross: So slim too.
Jim Cramer: It's so great. Yeah really, it's slim, it's fantastic. And she said, "I have ... it's enough already." She's his biggest fan. She doesn't say many good things about business people. She likes Benioff.
Katherine Ross: Okay, my final question for you today is about Nordstrom, which I interrupted you in our Facebook Live, but let's talk about that, because that's a huge win.
Jim Cramer: Oh, thank heavens we sold it. Yeah, Nordstrom's a big win. What we realized was they're inconsistent, and the stock went up big, and we didn't want to ... We know Kohl's is consistent. That stock should be at 75. But that Nordstrom hasn't been consistent, so we sold that. Again, we're always trying to upgrade. Now by the way, Kohl's, when they reported, was a guide up, not a guide down, but it was lost. It was on Macy's day. Kohl's is doing a lot of things. They have a good tie-up with Amazon. We want to see more of that. Michelle Gass is doing a great job there. But Nordstrom is inconsistent management.
Jim Cramer: It's funny, it reminds me of Dayton-Hudson. Many, many years ago, Dayton-Hudson had this division called Target. Dayton-Hudson was beautiful stores. Dayton-Hudson is gorgeous. What happened is that they recognized, you know what? Target's better. Our off-price is better. They basically got rid of Dayton-Hudson. I wonder one day whether Nordstrom has to get rid of Nordstrom and just be Rack, because if it was Rack, it would be valued much more highly. I may suggest that. Maybe I'll do a piece about that.
Katherine Ross: I would love to see that.
Jim Cramer: I've got some work to do.
Katherine Ross: Get Ben on it. All right, Jim, thanks for joining me. It's always a pleasure.
Jim Cramer: And tomorrow again, I want everyone to be on the conference call, 11:30, you're members.
Katherine Ross: 11:30.
Jim Cramer: You're no strangers to it.
Katherine Ross: Exactly. It'll be a lot of fun, 10 things.
Jim Cramer: Thank you, Katherine. Thank you.
Katherine Ross: Thanks for joining me, Jim. Have a nice day, guys.