In this market, good news matters and the negatives are mostly ignored, Jim Cramer told his Mad Money viewers Monday. Some days, it seems like stocks can only move in one direction: higher. But there are good reasons for that, Cramer told viewers, and none of those reason are going away anytime soon.
One of the biggest factors driving the markets is index funds. New retirement savings flow into stocks every day and that money needs to go somewhere. In the past, there was competition from bonds, but today, stocks are the only game in town. Retirement money is rarely traded, Cramer noted, so index funds are bought and held for the long term.
That index money is chasing fewer and fewer stocks, Cramer added, as there are fewer publicly traded companies and fewer shares of those companies to go around. In 2014, Walmart (WMT) - Get Report had 3.4 billion shares outstanding. Today, thanks to buybacks, there are only 2.9 billion shares remaining. 3M (MMM) - Get Report reduced its share count from 649 million to just 596 million. And these two companies are not alone.
Another reason stocks are heading higher? The global economy. With so much of the world expanding all at once, shares of Caterpillar (CAT) - Get Report , United Technologies (UTX) - Get Report and other industrials are in even greater demand, especially because they will benefit most from lower tax rates and new tax rules for capital expenditures and depreciation.
All of these reasons explain how stocks like Tesla (TLSA) - Get Report can disappoint on earnings by a mile and still see shares up 20 points a week later. Investors are willing to wait for those Model 3 sales to arrive no matter how long they take.
All of these factors -- index funds, buybacks, a strong global economy and tax reform -- are creating a bull like we've never seen before. That doesn't mean you should rush out and buy into strength, Cramer cautioned, but it explains why the bull remains so strong.
Cramer and the AAP team are talking about Nvidia (NVDA) - Get Report , Intel (INTC) - Get Report , Alphabet (GOOGL) - Get Report and more. 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: Exact Sciences
For an "Executive Decision" segment, Cramer welcomed back Kevin Conroy, chairman and CEO of Exact Sciences Corp. (EXAS) - Get Report , the biotech that saw its shares plunge 13.2% today after reporting what Cramer said he thought were excellent results, especially ahead of the company's presentation later this week at the annual JPMorgan Chase (JPM) - Get Report Healthcare Conference.
Conroy said this time last year, they estimated $160 million in revenue for Cologuard, Exact Sciences' screening test for colon cancer. The team delivered $266 million in revenue and they're now approaching their one millionth patient screened with the technology.
When it comes to treating cancer, early detection is crucial, Conroy said, which is why the easier, non-invasive Cologuard test is rapidly gaining adoption. There are 85 million patients in America that should be screened, he said, and Cologuard only has 2% penetration so far.
Exact Sciences is not stopping with Cologuard, however. Conroy said that their technology is being applied to lung and liver cancers and the someday hope to be able to screen for all of the top 10 cancers. Education is key, he added, and their commercials are working to help spread the word.
Cramer called today's weakness in Exact Sciences a buying opportunity.
How to Calculate the Risk
When it comes to speculative investing, you need to calculate the risk, Cramer told viewers. That means understanding what you could lose as well as what you might gain.
When it comes to legalized marijuana, Cramer said, he's worried about a Justice Department crackdown that could stunt that industry's growth, at least here in the U.S. As for bitcoin and the other crypto-plays, Cramer said he just doesn't trust anything where the prices are different depending on where you look. They're not going away, he conceded, but they're also not sound investments yet.
Finally, there's semiconductor maker Micron. Cramer said he's seen this commodity player collapse three times in his career, and when shares trade at just five times earnings, that's a sign the estimates are too high.
Clever speculating is always smart, Cramer concluded, but that means doing the homework, knowing the risks and not always taking the obvious choice.
Executive Decision: Alkermes
In his second "Executive Decision" segment, Cramer spoke with Richard Pops, chairman and CEO of Alkermes (ALKS) - Get Report . Earlier today, Pops said that 2018 will be a transformative year for his company.
Pops explained that in biotech, it can take 10 years and a billion dollars to develop a drug. Some years, you work with apparently nothing to show for it, but other years the data come in and the world can see your progress. He said 2018 will be the latter type of year for all of their programs.
On the opioid addiction front, Pops said that Vivitrol is growing beautifully and now that more data is being released on the drug's effectiveness, Vivitrol's best days are clearly ahead of it.
Meanwhile, Alkermes' drug for schizophrenia, currently known as "3831," is in Phase III testing and has shown an ability to block the weight gain associated with current treatment efforts. How a drug works is only part of the equation, Pops said, and if a patient gains 50 pounds on a drug, they won't take it. That's part of the reason more than half of all schizophrenia patients don't stay on their medication.
In the Lightning Round, Cramer was bullish on Deere & Co. (DE) - Get Report , Analog Devices (ADI) - Get Report , Mercadolibre (MELI) - Get Report , Seattle Genetics (SGEN) - Get Report , AbbVie (ABBV) - Get Report , Teradyne (TER) - Get Report , LAM Research (LRCX) - Get Report , Antero Midstream Partners (AM) - Get Report and DowDuPont (DWDP) - Get Report .
Am I diversified?
In the "Am I Diversified" segment, Cramer spoke with callers and responded to tweets sent via Twitter to @JimCramer to see if investors' portfolios have what it takes for today's markets.
Cramer said this portfolio was great and properly diversified.
The second portfolio's top holdings included Alibaba (BABA) - Get Report , Raytheon (RTN) - Get Report , Goldman Sachs (GS) - Get Report , Scotts MiracleGro (SMG) - Get Report and Boeing (BA) - Get Report .
Cramer felt this portfolio was also diversified.
Cramer said this portfolio was "fantastic."
This final portfolio was also perfectly diversified in Cramer's book.
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At the time of publication, Cramer's Action Alerts PLUS had a position in NVDA, GOOGL, JPM, ABBV, DWDP, AAPL, ABT.