Analysis: JNJ LRCX

In today's Daily Rundown, Jim discusses the positive Johnson & Johnson (JNJ) news related to asbestos not being found at its baby powder plants in India, yesterday's selloff in the MCOs (which we wrote about in our Alert here), the market, trade with China after this morning's interview with Larry Kudlow, and more!

Plus, Jim answers a club member question about when we will buy Lam Research (LRCX) next through a lesson on how to scale into a position.

Katherine Ross: Good morning, y'all, I'm Katherine Ross with Action Alerts PLUS. I am joined on the floor of the NYSE by Jim Cramer, Jim, J&J's got some good news today.

Jim Cramer: I'm so glad you brought this up because India has now said, listen, there is no asbestos in talc. When India said that there could be, the stock took a second leg down. Now a whole number of countries have tested this, this finding that there is no asbestos. It's getting pretty definitive that is was the plaintiff's part that influenced a lot of these. Now look, as Alex Gorsky said on Mad Money. Yes, there are memos. People who were worried about the asbestos. And he said what kind of company would we be running if there weren't people worried, given the headlines? But then when they did the testing, they came out and said no, there isn't. And I thought that was very interesting, because what he said is, a real company debates the issue and then solves the issue. It doesn't sweep it under the rug. J&J is a real company, and that's what we're discovering. India I think's the beginning of the tide, tide turning. Stock was at 148. Take a look at where Merck got to, J&J's better. Well, it's better at 136, 137, so this was very, very significant. I'm glad you brought it up. J&J has a weak dollar, strong dollar problem. J&J has a medical device not solved yet, but they did make a great acquisition.

Jim Cramer: But look, we all know it's talc. And this was a very important decision because when India said that they're worried, it was thought to be ... It's one of the largest markets. It was thought to be the beginning of countries that would pull out. Now if you're another country and you're thinking about saying that there is asbestos, what you would do is say well India checked it. I don't need to duplicate that. It's very important, I'm glad you brought it up. Very important.

Katherine Ross: Well, and to roll with that, Christopher is wondering, with all of this asbestos headlines, which now that India is saying that there is no asbestos in talc, should he sell J&J? Should he hold?

Jim Cramer: No, I mean look, here's the ... J&J, we bought some a little bit lower from here, we bought some higher, because it happened we bought some before. I think that, as the market goes down in this consolidation period, it's a good one. Because I think you're going to get a series of good headlines.

Katherine Ross: And we've got these announcements about new Medicare. What are your thoughts there?

Jim Cramer: Yeah, I think that Larry Kudlow talked about how we're not going to have any socialization when I interviewed him on Squawk, saw him on the street. And Larry is going to be right, and I think the stocks, we're going to have another day down, I think, with the HMOs, because what happens is that when a UNH is down 12 and it rallies a little, there are people who say, "Oh, my god, there by the grace of God, I can get out of UNH now." That's classic bad investing. But I do think that the narrative's going to change. That was the peak of that issue, too. Look, the Republican senate, Republican president, and now people are saying well this thing's definitely going to happen in 2020. I mean, what's definite about anything? 2020? I don't know. I mean this president's popular. I know a lot of people hate him, but I'm just talking objectively, he's popular. Big parts of the electoral college.

Katherine Ross: And with a day like today where we keep seeing the markets switch from up to down, up to down.

Jim Cramer: I know, is my tie wrong? My bullish Hermes tie? Is that wrong? I don't know. It's Hermes. I had to work in Hermes. Go ahead.

Katherine Ross: Okay, so I'm wondering, what's your advice to members today? What should they be doing?

Jim Cramer: What's in your hands? Show your hands. We're going to be a series of little trades because this is ... March 1 is when we distribute the money. Remember, we don't keep our capital gains and we don't keep our dividends, you have to get rid of them. It's one of the reasons why, again, how performance is so distorted. The incredible rules we have that make it so we can't do much contemporaneous with the news. The fact that we have to send out or dividends, capital gains. The fact that we're so hamstrung. But you'll see us make some small trades just to ... We don't like to ... What we typically have done ... No, typically we do every year, is we don't like our cash position to be changed as a percentage from the distribution. So if we were 10% cash, say, after the distribution, which might be 2% of our capital, 3% of the capital, we have to then get back to 10%. We don't want to go into 7% just because we had to make distributions, so you'll be seeing those. And don't confuse them with sell. We have to raise capital in order to send out money.

Katherine Ross: And what about the North Korea news that the US is coming home?

Jim Cramer: Well, you know I thought that when it was announced, I happened to be up pretty much all night, don't ask why, I don't know.

Katherine Ross: So you didn't sleep soundly?

Jim Cramer: No. And what was interesting to me was that you got a kind of a classic story that no one cared about. They didn't care about Cohen's testimony, either, from what I can tell. What they care about is earnings and GDP.

Katherine Ross: All right, I've got one final member question for you, which is Bob is wondering when you guys are planning on buying more Lam.

Jim Cramer: Talked about it yesterday. We said 173, 74 would make a difference. I think the company's in there buying every day. I'm watching Micron break down. And that's a corollary to Lam. I wish we owned more tech. It looks like we can get an opportunity. And Lam is our natural to buy, but we're not going to buy it, that 73, 74 is our level. And I have to stick by that. Because discipline says, like Palo Alto, which we did right. Don't keep buying at the same level. This is an educational tip for today. When you're building a position, the temptation, whether it be CVS, which break down horribly, I admit that, whether it be a Lam, the temptation is, you know what? Let's buy some more. Let's buy some more. You must always wait until the next level down. It is undisciplined to keep buying at the same level. I would come in at my old hedge fund and I'd say, we should buy more Lam, and Karen Cramer would say, we just bought it at 177. I said no, no, no, we should buy some more. It's really good, I really like it. She'll say nothing's changed. You liked it when we bought at 177. You'll like it when we buy it at 175. That's my take.

Katherine Ross: All right, Jim, before I let you go, is there anything else you're watching in the markets today?

Jim Cramer: Well again, I'm thinking we're going to go down a little. But I keep coming about what Larry Kudlow said. Larry's never been that bullish about the trade talks. He also said that there's no distance between Lighthizer and Trump, very, very important. And if you think Larry is on the money here, use his weakness, not here, yet, remember, sit on your hands, but look at the end of the day and maybe make some decisions. People will be worried about the employment report, maybe it'll break.

Katherine Ross: All right, Jim, thanks for joining me. Thanks for joining us guys. We'll see you tomorrow.