Mad Money w/ Jim Cramer 10/20/26

The Procter & Gamble Company

• Jim Cramer · CNBCBullish

  Procter & Gamble is a best-of-breed long-term buy: industry leader, strong balance sheet, dividend growth.

  Cramer recommends Procter & Gamble as the best-of-breed alternative to low-quality stocks. He says it may not offer short-term excitement, but it is a long-term story investors can count on. His support is that it is an industry leader with a great balance sheet, a long history of dividend increases, and some of the best brands in the world.

  “P and G might not give you any short term pyrotechnics, but it's a kind of long term story that you can count on. It's an industry leader with a great balance sheet, long history of dividend boost, and the best brands on earth.”at 4:51

NVIDIA

Across the shows: 19 speakers in other episodes, 15 bullish and 7 bearish calls, past 30 days

• Jim Cramer · CNBCBullish

  Nvidia looks expensive on trailing multiples but has repeatedly proven cheap as Huang beats expectations.

  Nvidia has looked like a super expensive stock on a price-earnings basis for the past decade, but it has always turned out to be cheap in hindsight. Cramer credits CEO Jensen Huang, who consistently delivers much higher than expected numbers, and says this is why Nvidia became one of the biggest winners of the generation. He also says a late-2022 sell-off was a buying opportunity, since the stock rallied more than 800% over 2023 and 2024, and calls it his best pick ever.

  “For the past decade or so, NVIDIA's always looked like a super expensive stock, for instance, on a [price-earnings] basis. But it always turned out to be cheap when you look back at it”at 5:58

Johnson & Johnson

• Jim Cramer · CNBCBullish

  Johnson & Johnson is a buy for children's portfolios, with a AAA balance sheet that he calls nearly unique.

  Asked for stock picks for children's investment accounts, Cramer says to buy tech and healthcare and names Johnson & Johnson. His only stated support is its AAA-rated balance sheet, which he says may be the only one of its kind. He gives no further evidence on its business or valuation.

  “I think that you can buy a stock like Johnson and Johnson, triple a balance sheet, maybe the only one.”at 47:59

IPOs, M&A & deal activity

• Jim Cramer · CNBC

  SPACs were used to list hyped EV companies on made-up forecasts; investors should avoid SPACs entirely.

  In 2020 and 2021 many electric-vehicle and EV-adjacent startups went public by merging with SPACs, using forecasts projected many years out that Cramer calls made up. He argues a real IPO with such projections could land someone in prison, and that a bank would refuse such a loan. Wall Street allowed the deals because bankers wanted fees, and the SEC was asleep at the wheel. The most egregious SPAC operators were prosecuted only after they had cost investors fortunes. SPACs are still legal, and he concludes they are terrible investing.

  “And often, their only watchwords are that the sucker is born every minute. This is just terrible investing. I don't want you in any SPAC, any SPAC.”at 39:39

• Jim Cramer · CNBC

  Takeover bids go to strong companies with cheap stocks, so speculating on takeovers of weak firms is a mistake.

  Cramer argues that bad companies rarely get acquired, because few CEOs can turn a bad company around, so buyers come for good businesses with cheap stocks. Owners of poor-fundamental companies who hope for a bid can wait forever while the stock keeps falling and may sell for less than they paid. He allows speculating on takeovers only when the company is well run, since a good business can win without a deal and its dips can be bought.

  “Funny thing about bad companies, they rarely get bids. In reality, what gets acquired are great companies with cheap stocks, not crummy companies with stocks that seem cheap, but are in fact pretty expensive.”at 44:38

US Treasuries & yields

• Jim Cramer · CNBC

  Rising 10-year Treasury yields make stocks less attractive; watch the 10-year as a warning for equities.

  Cramer argues the bond market is much larger than the stock market and drives its direction, so investors should watch it. Bonds compete with stocks: when Treasury yields become more attractive, stocks become less attractive. He says the 10-year Treasury yield is the one to watch when long-term rates rise, and that this should make investors wary the whole market may be worth less. He adds that inflation-driven rises are especially damaging because they erode the value of long-dated equity earnings, hurt growth stocks most, and make bank lending more expensive. High short-term Fed rates also hit high-yield dividend stocks.

  “When long term interest rates rise, the one to watch is the yield on the ten year US treasury. Then you have to start being wary that the entire stock market might be worth less.”at 17:37

US stock market outlook

• Jim Cramer · CNBC

  A Market Edge Oscillator reading of +5 signals overextension and a likely sell-off; -5 and -10 mark buying zones.

  Cramer uses his proprietary Market Edge Oscillator to flag overbought and oversold conditions. A reading of plus five or above means the market has risen too far too fast and a big sell-off could come, so he would pull back and raise cash. Minus five means the market is oversold and due for at least a short-term bounce, and minus ten, which preceded the October 2022 bottom, often precedes massive moves higher. He also argues corrections are most likely when everyone is euphoric, citing the late-2021 rally that preceded a near-year-long bear market.

  “Whenever this oscillator, ... registers plus five or above. That tells me we've come up too far too fast to the point where it's gotten dangerous. We could have a big sell off.”at 27:12