There's a lot more to investing than just owning index funds, Jim Cramer told his Mad Money viewers Tuesday. Anyone who tells you picking individual stocks is a fool's game is just plain wrong, Cramer said. It's a lot easier to find winning investments than you think.
There is certainly a place for index funds in your portfolio. If you're just starting out, your first $10,000 should be in an index fund. And if you don't have the time or inclination for a little homework, then index funds are the place to be. But for everyone else, there are better ways to make money.
The problem with owning everything is that not every stock is worth owning, Cramer explained. Back when he was growing up, dividend paying stocks like Merck (MRK) - Get Report made millions for individual investors who reinvested those dividends year after year. But during that same time, there were also plenty of high-flying stocks that crashed and burned. Knowing the difference between these two types of stocks is the difference between gambling and investing.
So what's worth owning today? Merck is still around, and still pays terrific dividends. In fact, there are dozens of high-paying dividend stocks in the S&P 500. There are also momentum stocks, like those Cathie Wood of ARK Invest is known to prefer. As Cramer outlined last night, there are also quality IPOs and SPACs, if you do your homework.
Over the years, Cramer's identified stocks like Facebook (FB) - Get Report, Paychex (PAYX) - Get Report, Shopify (SHOP) - Get Report and Nvidia (NVDA) - Get Report on Mad Money. All of these stocks have seen huge gains and all of them were hiding in plain sight. With a little time and research, investors can find winners just like these.
Cramer and the AAP team are looking at everything from earnings and politics to the Federal Reserve. Find out what they're telling their investment club members and get in on the conversation with a free trial subscription to Action Alerts PLUS.
Executive Decision: Shopify
In his first "Executive Decision" segment, Cramer spoke with Harley Finklestein, president of Shopify (SHOP) - Get Report, the e-commerce platform helping thousands of small businesses sell their wares online. Shares of Shopify have risen 42% in just the past three months.
Finklestein said Tuesday's new product and feature announcements were all about giving merchants more flexibility, scalability and performance. Whether they need to sell just a few items or hundreds of thousands of items in just a few minutes, the Shopify platform now has the tools merchants need.
Shopify is also enhancing its checkout experience, which was used more than 450 million times last year. Finklestein said the new customization features allow for more payment options than ever before.
The Shopify ecosystem continues to grow. Finklestein noted that partners generated more than $12 billion from their platform last year. Shopify is partnered with Facebook, Google (GOOGL) - Get Report, TikTok, Pinterest (PINS) - Get Report.
Cramer said Shopify turns hopes and dreams into real money for thousands of small businesses.
Executive Decision: Paychex
For his second "Executive Decision" segment, Cramer also spoke with Marty Mucci, president and CEO of Paychex, the payroll and HR services company that's celebrating its 50th anniversary this month.
Mucci said that technology and innovation continues to drive Paychex and their focus will always be to service their clients with everything they need including HR, payroll, retirement and insurance services.
Over the past year, Paychex has helped countless companies apply for and secure over $65 billion in government assistance, loans and grants to help them weather the pandemic. They are currently hard at work helping businesses apply for employee retention tax credits. Mucci said they have already crossed the $3 billion mark with that government program.
Overall, Mucci said that Paychex continues to see strong demand for all of its services and as they hold down expenses, gross margins continue to improve. While unemployment remains high, consumers continue to have stimulus money in their bank accounts and seem well positioned to weather the summer months and into the fall.
Off the Charts
In the "Off The Charts" segment, Cramer checked in with colleague Larry Williams for another read on the trajectory of the market. Williams' last prediction, just two weeks ago, correctly identified the selloff that preceded this week's end-of-quarter rally.
Williams noted that history is on our side and July is a seasonally strong month for stocks. In fact, if you bought the S&P 500 on the first trading day of July and held for eight to 12 days, you made money nearly every year.
Holding onto the S&P 500 for just a day or two made money between 78% and 82% of the time, Williams showed, but holding on for 12 days, while only 69% accurate, saw much larger gains overall.
There is one stock in the S&P that worried Williams, and that stock was Microsoft (MSFT) - Get Report, which has seen its current rally happen on very light volume. This will be one stock to keep a close eye on, he said, as strong volume often tells you a rally is for real.
On Real Money, Cramer keys in on the companies and CEOs he knows best. Get more of his insights with a free trial subscription to Real Money.
The Government Isn't a Reason to Sell
In his No-Huddle Offense segment, Cramer opined on the court ruling that dismissed the Federal Trade Commission's antitrust complaint against Facebook. He said the ruling acts as a stark reminder that regulatory actions are not a reason to sell big tech stocks.
Being powerful doesn't mean you're hurting consumers, Cramer reminded viewers. The court's ruling called into question just about every aspect of the FTC's case, including who was hurt, and how, and what the FTC would do to fix it.
Surely, the government will try again to rein in Facebook and the other big giants. But today's ruling proves that in order to be successful, you need to first build a solid, thoughtful case.
Here's what Cramer had to say about some of the stocks that callers offered up during the Mad Money Lightning Round Tuesday evening:
Reinvent Technology Partners RTPZ: "People like this stock and I'm not going to fight it."
Baidu.com (BIDU) - Get Report: "This is my second favorite Chinese stock behind Alibaba (BABA) - Get Report. I also like Didi," which reportedly priced its IPO shares Tuesday night at $14 a share.
Mariner Energy ME: "I think this one is bankable. It's a really good company."
Search Jim Cramer's "Mad Money" trading recommendations using our exclusive "Mad Money" Stock Screener.
To watch replays of Cramer's video segments, visit the Mad Money page on CNBC.
To sign up for Jim Cramer's free Booyah! newsletter with all of his latest articles and videos please click here.
At the time of publication, Cramer's Action Alerts PLUS had a position in FB, NVDA, GOOGL, MSFT.