CNBC’s “Mad Money” host Jim Cramer says that Big Tech – Apple, Facebook, Amazon, and Microsoft – are the “Fort Knoxes of our era… These stocks are the new repositories of wealth.”
“This year we’re witnessing the passing of the torch: Bonds were the safest assets back in 1982, back when Treasurys yielded double digits. Now they’re risky assets,” Cramer said. “The truth is, for many companies that we follow, the equity side is … a much better repository of wealth for you, the individual, than the credit side. Not all [stocks], but a surprising number.”
Cramer highlighted Microsoft, Apple, Facebook and Alphabet as being a wiser choice for wealthy investors looking to find investment options that are even better than predictable returns provided in the debt markets. The four companies, or “FAAM,” as Cramer calls the group, are valued at more than $4.7 trillion combined.
Of the four tech giants, Apple has the largest amount of cash on hand, with $192 billion set aside. Microsoft has $138 billion in the bank, and Google-parent Alphabet has $133 billion. Facebook, the smaller of the bunch, has $55 billion tucked away, Cramer noted.
“If you’re a young, wet-behind-the-ears broker at Goldman Sachs, I would tell you to forget all of those bond ideas, just tell your clients to buy the stocks of terrific companies with fantastic nation-state-sized balance sheets,” the host said. “You’ll do much better with a heck of a lot less long-term risk and more dividends.”
MacDailyNews Take: As Cramer has long said of Apple stock, “Own it, don’t trade it.”
AAPL finished out the 20th century in the year 2000 with a 73% loss in stock value (it was a bad year all around, but AAPL had been up 149% the year before). Since then, AAPL has had four non-consecutive negative years (avg. loss: approx. -27%). But the average annual return on AAPL from 2001-2019, including those four negative years, is +46%. (I’m just averaging the annual percentages, not compounding or accounting for dividends.) APPL closed on the last day of trading in 2000 (12-29-00) with a split-adjusted share price of $0.27 (that’s right, 27 cents). Today it closed at $118.69. Show me a bond or a mutual fund with that kind of return. If you jumped on the AAPL train at any of the stops along the way and gazed out the window at the passing scenery while you relaxed in your increasingly luxurious accommodations, you’d be riding high.
I bought 20k of Apple when Steve Jobs retuned to Apple in 1998. BOOM… I followed Jobs from Pixar to Next and back to Apple. ITs been a great ride.
But regardless of your politics, if the senate goes blue, then my bet is its time to exit the USA stock market. 40 percent capital gains will sink the market. Smart money will flee from dumb taxes. CCP China as a Capital gains tax of 20%. Hong Kong 7-15% Switzerland 0% Belgium, Luxembourg, Slovakia, Slovenia, Switzerland, and Turkey all have 0% capital gains tax. Average country is 19.5 % … So it make zero logic to raise USA capital gains tax to 40% … sure fire way to crash the market. I will hedge my bet and lock in my profits at 15% tax rate .. finger on the sale button… when the market settles in a few years I might jump back in …. buy low sale high
dems will say its only for people over 400,000k but who do you think owns most of the stock. Smart money will move to safe places…
Please do that. Do it today. Biden is scary. You should be very afraid. Boo! (Also, you’re confusing income taxes with capital gains taxes.) Don’t look behind the curtain that shows that the market consistently does better under Democratic administrations than Republicans. I’ll be happy to buy more shares (maybe even yours) while you sulk in your prolonged tax exile in China, or Hong Kong, or Switzerland, Belgium, Luxembourg, Slovakia, Slovenia, Switzerland, or Turkey. Because, really, the only reason anyone would move elsewhere is because of their tax rate.
if the senate stays in the hands of republicans we should be safe, But with GA doing the run off on 2 senate seats anything can happen.
Giving a Tax cut to big corporate America comes out the back end with a cost to the retail small investor no surprise there. 🙂
Dear Catalina: What you say happens under Dems is because they (always) cause an end result of high inflation rates and higher prices of everything. Look at what their record shows. Mortgage rates under Jimmy Carter were up above 20% (and don’t ask me how I know—I had to pay them). When Reagan facilitated a sharp, short recession to get back to reality we recovered and had banner years of innovation and growth. Reduced tax rates and proper tech incentives were the major contributor to the tech boom.
Your opinion is right, bonds are not as profitable as they used to be
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