Investing isn't about trading pieces of paper, it's about owning a small piece of great companies that will prosper over the long term. That's what Jim Cramer told his Mad Money viewers Tuesday after a rough start to the week on Wall Street.
The pundits are still out in force, proclaiming that the Federal Reserve needs to accelerate its actions to stop inflation, even if that means destroying the economy. But rising interest rates didn't deter Microsoft (MSFT) - Get Microsoft Corporation Report from announcing Tuesday it will acquire gamemaker Activision Blizzard (ATVI) - Get Activision Blizzard, Inc. Report, nor did it stop Unilever (UL) - Get Unilever Plc Report from making a bid for the consumer division of GlaxoSmithKline (GSK) - Get GlaxoSmithKline Plc Report.
Shares of Goldman Sachs (GS) - Get Goldman Sachs Group, Inc. Report plunged almost 7% in the session, but the company just closed out a year with record revenues, earnings and earnings per share. Companies and individuals alike are still flocking to Goldman for their premium advice, and that's not going to change with rising interest rates. What has changed, however, is you can buy Goldman shares for $70 less than you could just two months ago.
Cramer also proclaimed that 2022 could be the "year of Boeing" (BA) - Get Boeing Company Report now that travel is poised to return and the company's troubles with its 787 and 737Max may finally be coming to an end.
There are plenty of stories like Boeing and Goldman and Microsoft, companies that are in far better shape now than they were two or five years ago. If you're an investor for the long term, then that's the only metric that should matter.
The Outlook for Oil
What's going on with the price of oil? Cramer checked in with his go-to oracle on all things oil, Rusty Braziel, founder and executive chairman of RBN Energy.
Braziel noted that crude prices are now at their highest levels since 2014, amid political tensions in Ukraine and refinery attacks in the Middle East. The momentum pushing toward $100-a-barrel oil is growing, Braziel said, making it likely we will hit that benchmark. Now it's only a question of when and for how long.
That means it's "party time" for oil producers here in the U.S., Braziel said, especially in areas like the Permian Basin where breakeven levels hover around $30 to $40 a barrel.
Braziel also commented on the recent oil company trend of curbing production in order to return more capital to shareholders. He said at these prices, it simply doesn't make sense to forgo drilling opportunities, which is why we will likely see production increase over the short term.
Growth Stocks Stunted?
It's no secret that the market has turned sour on turbocharged growth stocks, that's why in 2022, investors need to stick with companies that make real products and have real earnings.
One of those companies is Airbnb (ABNB) - Get Airbnb, Inc. Class A Report, which has seen its shares fall from highs of $212 in mid-November to just $154 a share today. Airbnb is still the safest way to travel, and unlike most recent IPOs, Airbnb has been making money for years.
With COVID hopefully subsiding later this year, Airbnb is the perfect reopening play as leisure travel returns in large numbers. The company is a category killer, with a moat so large that no one can challenge them in this lucrative market. Cramer said Airbnb is a tremendous growth story and one that won't be deterred by rising interest rates. He advised buying in stages as the stock finds its bottom.
Executive Decision: Sports Entertainment Acquisition
In his "Executive Decision" segment, Cramer spoke with Eric Grubman, chairman and CFO of Sports Entertainment Acquisition (SEAH) - Get Sports Entertainment Acquisition Corp Class A Report, a SPAC that will soon be merging with SuperGroup to become a major player in the beleaguered sports betting sector.
On Jan. 10, Cramer urged investors to avoid the sports betting group, after seeing untenable promotions when the state of New York legalized betting. Grubman explained that there is always a mad dash for market share in every new market where there are no established players. Sports betting is no different. However, these intense promotions are only being offered to introduce new customers to the experience and they will only be offered for limited times.
Grubman assured Cramer that over the long term, the value of these new customers will far outweigh the cost of acquiring them. As long as users are getting a great experience, they will stay for a long time, he added.
As for Grubman's pending SPAC merger, he said their recent analyst day was well attended and he's hoping to receive analyst coverage fairly quickly after the deal closes. That will give sports betting a big boost in exposure and credibility, he said as many investors are skeptical, including Cramer.
A Winning Combination
In his "No Huddle Offense" segment, Cramer opined on Microsoft's acquisition of Activision Blizzard for $69 billion, a deal he said is a perfect addition to the Microsoft family.
Microsoft is an opportunistic acquirer, finding value in damaged stocks that still have terrific companies behind them. They did it when they acquired LinkedIn for just $26 billion and they're doing it today with Activision.
Microsoft is already a big player in gaming with Xbox and adding Activision's intellectual property to their portfolio is a perfect fit.
So the next time you see money managers fretting over an uptick in interest rates, look for value like Microsoft just did.
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