Legendary investor Jim Rogers: 'All-time lows excite me'

Legendary investor Jim Rogers: ‘All-time lows excite me’

Is there such a thing as being over diversified?

Diversify, diversify, diversify! It’s the call of the modern investment adviser. The risk-management strategy allows you to protect yourself from huge losses by putting your investments into different asset classes, funds, geographies or stocks.

While one asset class may perform better than another in a given year, a diversified portfolio will deliver relatively consistent returns over time.

“Diversification may have hurt you this year since emerging markets and international markets haven’t done as well,” says Brian Face, of Face2Face Financial Planning. “But for the average investor, if you diversify correctly, diversification is going to be a smoother ride in the long run.”

Here are some ways to determine if you are getting what you want out of your diversification strategy.

Diversification can be cheaper

“If you are not diversifying you are not investing — you’re gambling,” says Roger Healy, principal of Hibernian Financial Planning.

“You can’t overdo this,” he says. Any added investment to your portfolio is going to increase your diversification, he says, and will ultimately lower your risk for the same return or increase your return for the same risk.

However, he says, the ‘over-diversification’ problem arises when you increase complexity without lowering your risk or increasing your return. This will increase your cost, as well, in the form of extra fees.

Keep it simple, he says, and buy diversification wholesale, at a lower cost through mutual funds or ETFs.

“You probably need no more than 30 well-chosen stocks to have a diversified portfolio, but it is cheaper to buy a basket containing all 500 S&P index stocks, so save time and money and buy the index,” Healy says.

Diversification is a strategy that is put into place after your asset allocation, he adds. Buy a basket (or baskets) of securities in the proportions that make sense for your level of risk tolerance.

Redundancies don’t diversify

Many estimate the point at which over-diversification occurs is when a portfolio has over 20 stocks, says Samuel Wieser, investment adviser at Northman Financial. But it isn’t just about the raw number of investments you hold.

“Just buying a bunch of stocks, bonds, mutual funds, ETFs doesn’t necessarily mean you are diversifying,” he says. “You can hold five different ETFs or mutual funds that track the S&P 500 and you won’t be any more diversified than just holding one of them.”

Since they all track the same index, they will all have very similar, if not identical, returns over time. Proper diversification entails buying a mix of securities that differ in size, style, sector, and region of the world.

And just because you have funds with multiple custodians (like TD Ameritrade, Vanguard, Fidelity and Charles Schwab) does not mean you’re diversified. You may ultimately be invested in similar funds and are just paying more in fees.

Check your work

The most common way to measure if holding two or more securities will provide your portfolio with diversification is to look at the correlation between their historical returns, says Weiser.

“One key mistake many make when looking at correlation is that they use a static figure,” he says. “Two securities may go through periods in which they are highly correlated and others in which they are relatively uncorrelated. So if you just look at the correlation over the past 12 months or past 36 months, it can be misleading. A better approach is to look at the rolling correlation over a long period of time.”

Alternatively, you can look at the returns of your various holdings over time, says Weiser. “Many will likely grow together or decline together, but you are likely only over-diversified if they are growing and declining at the same rate over the long term.”

Have an investing question? Ask us here to be included in a future column.

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Investors who purchased shares of cannabis play India Globalization Capital Inc., or IGC, in the past month are likely pleased with the stock’s more than 500% surge, but can it hold those gains?

A review of the company’s

IGC, -27.57%

history and regulatory filings has uncovered an alarming number of red flags that undermine some of the claims made by the company and demonstrate the importance of due diligence when investing.

The stock’s move came after the company announced its plan for a line of CBD-infused drinks, or those containing cannabinoids, ingredients in cannabis that are said to have health benefits. With Canada gearing up for full legalization of cannabis for adult recreational use on Oct. 17, the sector has become a hot market for speculators, with investors jumping on every announcement of a planned product, alliance, distribution agreement or deal.

IGC has benefited — its market capitalization has ballooned to $295 million on Thursday from just $78 million on Sept. 25, the day before the drinks announcement.

In its most recent quarterly earnings report, IGC posted a loss of $512,296 on revenue of $1.5 million for the three months to end June. Cost of revenue came to $1.4 million, while SG&A costs came to $553,645, which exceed its revenue.

“Marijuana or any form of products including CBD oil is illegal in Malaysia.”

Erny Sabrina Mohd Noor, counselor for agriculture, Malaysian Embassy, Washington, D.C.,

MarketWatch has spent several days calling and emailing IGC, its executives and the scientists whom it names as advisers on its website. Founder and Chief Executive Ram Mukunda returned a call on Wednesday, before asking for time to read the questions we had emailed him with the promise he would call back. On Thursday, the company said it would provide answers to our questions. It has not done so at this time.

Here are 10 potential red flags for investors to be aware of:

MarketWatch/Steve Goldstein

Photograph taken Oct. 2 at the address in suburban Washington, D.C., listed by India Globalization Capital Inc. as its headquarters.
Made in Malaysia?

In the release announcing the plan for CBD-infused drinks, IGC indicates it will work with a manufacturer in Malaysia, but that country has a mandatory death sentence for cannabis possession and has no medical-marijuana program.

“Marijuana or any form of products including CBD oil is illegal in Malaysia,” Erny Sabrina Mohd Noor, counselor for agriculture at the Malaysian Embassy in Washington, D.C., told MarketWatch.

History of pivots

IGC, which started life in 2005 as a blank-check company, has a history of pivoting to new businesses as they become popular and releasing press releases to highlight those business-plan shifts.

The company’s IPO prospectus said that it aimed to acquire or merge with businesses operating in India, to take advantage of the potential of that market. In 2007, it began to acquire infrastructure assets in Asia and later started trading commodities such as steel and iron ore, leasing heavy construction equipment and managing real estate in Malaysia, according to its website. Today, the SEC-registered area of business is described as “wholesale electronic parts and equipment.”

In 2013, the company started to look into the cannabis industry, where it now claims to be working on treatments for serious diseases including Alzheimer’s and Parkinson’s, as well as anxiety and sleep disorders.

However, a review of its regulatory filings reveals that it has assigned very little funding to research and development — roughly $150,000 a year — and none to clinical studies or any of the other steps needed to win U.S. Food and Drug Administration approval.

A look at press releases from the last year shows a clear pattern of repeatedly entering the latest hot market. In late 2017, that was blockchain, while last month it was cannabis that helped push or support the stock above the $1 threshold. The latest announcement appeared to be timed with a sale of shares.

FactSet, MarketWatch

The strategy-pivot approach to capturing investor interest was used most dramatically by Long Island Iced Tea Corp., which caused a stir on Dec. 21, 2017, by announcing it was changing its name to Long Blockchain Corp.

LBCC, +7.07%

, sending the stock up 183%. The news came three days after bitcoin futures

XBTV8, -0.11%

started trading, at prices above $20,000.

From the MarketWatch archives: Nasdaq to delist Long Blockchain Corp., underlining fading bitcoin fervor

Less than a week later, IGC followed with its own blockchain initiative, saying it would use the technology to address “issues” in areas such as product identification. The stock shot up 91% to $1.26 on Dec. 26, the first close above the $1 mark since July 2014.

On Dec. 29, a proposal to approve the grant of 1.9 million shares of stock to “current and new employees, advisers, directors and consultants by the board of directors” passed a shareholder vote.

In mid-September, Level Brands Inc.’s stock

LEVB, -10.61%

more than doubled in four days, just before the company announced on Sept. 21 the online launch of five new cannabidiol (CBD) products under the Kathy Ireland Health & Wellness brand. The stock ran up as much 24% during the day of the announcement, before reversing course to close the session down 12%.

Four days later, IGC said it was entering the market for CBD-infused energy drinks, with “plans to create a branded hemp/CBD-infused version of the formulation that addresses market demand for energy drinks with the inclusion of healthy properties derived from hemp including CBD.” In other words, the product, called “Nitro-G,” was still in the planning stages. Still, the news helped kick off a near sixfold rise — the stock ran up 458% — over the next five sessions.

On cue, the company disclosed late Tuesday it had completed its at-the-market offering of 5.65 million shares at a weighted average price of $5.30, which was more than double the closing price of $2.33 on Sept. 25, when the offering commenced. Coincidentally, Sept. 25 was the day IGC said it was entering the market for CBD-infused energy drinks.

A history with the SEC

IGC went public on May 13, 2005, led by Ram Mukunda, who has since served as chairman of the board, CEO and president. Mukunda was previously founder and CEO of a company called Startec Global Communications, according to a biography on his company website. The bio fails to disclose that Startec went bankrupt in 2001, having defaulted on a $9.6 million interest payment.

IGC started in 2005 with $200,000 in assets, a $100,000 loan payable to Mukunda and an obligation to pay Mukunda’s company, Integrated Global Network LLC, an administrative fee of $7,500 a month for office space and general and administrative services. John Cherin, an Arthur Andersen alumnus, served as chief financial officer until he was replaced by Rohit Goel and Shajy Mathilakathu as co-principal accounting officers on Sept. 29, 2017.

Claudia Grimaldi became the company’s “principal financial officer” in May 2018.

The company has attracted a lot correspondence from the SEC. In March 2017, the SEC wrote to ask about a 2009 transaction with Bricoleur Capital Management, an investment adviser. The loan from Bricoleur to IGC has been renegotiated several times.

IGC’s financial statements filed with the SEC as of June 30, 2017, said the company had issued 90,000 shares valued at $36,600 to Bricoleur Partners L.P. against the outstanding $1.8 million promissory note as repayment of interest. Bricoleur’s SEC registration was terminated in December 2012, and its license was revoked by the state of Florida in 2015.

IGC has received nine late-filing notices from the New York Stock Exchange in just the past three years, prompting the SEC to ask over and over when it is going to comply with the rules. IGC received another notice of delisting from the NYSE in October 2017 and had to ask the SEC for an extension to file and hold a shareholder meeting. The company had still not held a shareholder meeting by December 2017, and it got another notice from the SEC asking when it would comply with its exchange’s rules.

The company finally caught up on its filings, averting a NYSE delisting by issuing its annual report and 10K on June 21 and holding a shareholders meeting on August 6.

An SEC spokeswoman declined comment on the company.

Insiders make the most money from stock gains

The biggest beneficiaries of the news that’s pumped up the stock are IGC’s executive officers, as the following table shows:

FactSet, MarketWatch

Six of the top seven shareholders, who own a combined 16.5% of all shares outstanding, are IGC’s six executive officers and directors, as named in the company’s latest annual report filing.

Of the rest of the outstanding shares, 0.9% is owned by institutional investors and 82.6% is owned by “unknown” investors, which, according to FactSet, can include individual investors, mutual funds not covered because of nondisclosure laws, institutional managers managing less than $100 million and foreign-based institutional investors.

The sole institutional investor in the top seven is hedge fund Citadel Advisors LLC, which owned about 115,000 shares as of June 30, or 0.3% of the shares outstanding, according to the most recent 13F filing with the SEC. That’s down from about 149,000 shares as of the end of May, and up from zero shares at the end of 2017.

IGC’s business partners have issues

The Dama Pharma company in Puerto Rico appears to have been created just in time for an IGC press release, headlined “Puerto Rican Alzheimer’s Patients to Be First in U.S. to Obtain Cannabis-Based Relief” on March 26, 2018. It was incorporated three days before the press release was sent out.

DaMa Pharma says it is “a medical cannabis manufacturing company, and a Clinical Research Organization (CRO) for conducting clinical trials on cannabis-based products” and has a LinkedIn profile, but its website is incomplete. DaMa Pharma’s only employee is Stephen Inglis, who is also CEO of a company called InPortal USA.

InPortal is a facilitator, providing “Compliant Market Access through an equity capital markets (ECM) and a debt capital markets (DCM) platform with a dedicated public corporate landing site and controlled investor access to a deal data room.”

IGC shares also trade on the Boerse Frankfurt, Stuttgart, and Berlin Exchanges under the ticker symbol “IGS1” and on the Boerse Frankfurt, Boerse Berlin and Boerse Stuttgart under “XETRA2,” according to the company’s filings.

IGC’s German distribution partner was said to be ready to “distribute its formulations in Germany in early 2018,” according to a press release from October 2017.

Between Oct. 25, when the press release was issued, and Nov. 3, IGC’s Mukunda sold 200,000 shares of IGC stock. There was no further mention in SEC filings of this business partnership and no further press releases.

Medicann is a German “medical marijuana retailer website,” and its listed CEO is Carsten Siegemund. Medicann was created with just 25,000 euros in capital on May 31, 2017.

A search of the site finds no mention of the IGC product Hyalolex, which it claims can treat symptoms of Alzheimer’s disease.

The site itself is a work in progress, since the map shows the center of Central Park in New York, and the answers to FAQ questions are “lorum ipsum” — filler text often used in place of the eventual content of new website templates and other yet-to-be-published materials.

Cartsten Siegemund helps distribute productsfor other penny-stock companies besides IGC. One press release touts a 3.7 million eurosdistribution agreement, pretty big business for a company started six months earlier with a €25,000 investment.

It shared an auditor with alleged fraud Longfin

On Nov. 8, 2017, the company’s shareholders ratified the appointment of AJSH & Co. LLP as IGC’s independent registered public accounting firm for the 2018 fiscal year, according to an SEC filing. AJSH had been the company’s auditor since 2013.

On March 16, the company suddenly announced it had changed its mind and decided to dismiss AJSH & Co. as its audit firm, with no replacement named. An SEC filing said that “after five years with the same independent public accounting firm, as a matter of good corporate governance, it was appropriate to change to a different firm.”

On April 6, the SEC obtained a judge’s order to freeze $27 million that it characterized as proceeds from illegal sales of shares of LongFin Corp.

LFIN, -8.91%

, a brand-new audit client of AJSH & Co. When LongFin went public in December 2017, it was a poster child for shortcut “mini-IPO” rules known as Reg A+, according to an article in Barron’s.

There’s one additional connection between LongFin’s auditor AJSH and IGC.

Rohit Goel, based in Delhi, India, became IGC’s principal accounting officer in September 2017, according to the company’s website. Goel previously worked for AJSH from April 2014 to August 2016, according to his LinkedIn profile. That profile also states that he has runs BnA Consultancy, an accounting and management consultancy firm, from April 2015 — before he left AJSH — to the present. IGC told the SEC that Goel joined the firm full-time on Sept. 27, 2017, and would serve as a co–principal accounting officer.

Chief scientific officer has falsified data

In 2017, IGC’s chief scientific officer, Jagadeesh Rao, was caught falsifying data in scientific papers published in the Journal of Neurochemistry, the International Journal of Neuropsychopharmacology and Psychopharmacology, according to the website Retraction Watch.

The deception contributed to the resignation of Rao’s boss, Dr. Stanley Rapoport, from his work running a lab at the National Institutes of Health, who was quoted as regretting the falsifications.

“In these days of complex interdisciplinary research, one depends on the trustworthiness of colleagues who use methodologies with which one has no personal experience. I regret missing the falsifications by Dr. Rao,” he told Retraction Watch.

It relies heavily on paid stock promoters

IGC pays professional stock promoters to push its shares to retail investors, alongside its own marketing via its Twitter account and its company and productwebsites.

The SEC is so concerned about investors being fooled by “paid-to-promote” sites that it has put out multiple investor alerts and highlighted recent enforcement actions against marijuana penny-stock and microcap promoters. “If a company’s stock is promoted more heavily than its products or services, this may be a red flag of investment fraud,” according to the regulator’s alert.

Beginning in 2014, the SEC noticed an increase in these promotional efforts related to marijuana stocks and put out a special alert. “Fraudsters often exploit the latest innovation, technology, product, or growth to lure investors with the promise of high returns,” it said.

The craze over marijuana stocks is at an all-time high, fueled by Canadian legalization and moves toward legalization of marijuana in the U.S. for medical and other uses. CBD oil, which strips out psychoactive ingredients, is the hot new product in states that have legalized medical marijuana.

Promotional emails and marketing materials often contain lengthy disclaimers, but the disclaimers rarely reveal that the promoters are being paid in shares, already own the stock, or plan to immediately sell their shares and profit from the increase in price and demand that their efforts generate.

A story published on Sept. 26 on the site ProactiveInvestors.com talked about the company’s plans for CBD-infused drinks. Per the disclaimer: “You understand that the Company receives either monetary or securities compensation for our services. We stand to benefit from any volume this write-up may generate.”

There’s another one in Stockhouse.com about how IGC has “targeted California as the priority market for Hyalolex, its lead cannabis-based medicine product for treating Alzheimer’s patients.” That piece, too carries, a disclosure: India Globalization Capital Inc. is a paid client of Stockhouse Publishing.”

The firm SeeThruEquity, which characterizes itself as “a leading independent equity research” but also a “corporate access firm,” put a $2 price on IGC on Aug. 23, in a post that was picked up on Yahoo.com. A disclosure on the company’s website, not the post that requires another click from the bottom, notes: “SeeThruEquity charges companies for a suite of services that may include conference presentation fees, the preparation of and distribution of initiation and/or update research reports, the issuance of press releases announcing its research reports and social media posts.”

Uptick Newswire calls itself an “investors relations firm with a dedicated social media team to engage investors.” That means IGC’s Mukunda paid to be interviewed on Uptick’s YouTube channel talking about how it would distribute its Alzheimer’s drug.

IGC shares have gained 611% in 2018, while the S&P 500

SPX, -0.82%

has climbed 9% and the Dow Jones Industrial Average

DJIA, -0.75%

has gained 8%.

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Asian stock markets dropped in early Friday trading, as a global selloff looks set to continue into the end of the week, led by sinking tech stocks.

Japan’s Nikkei

NIK, -0.80%

  fell 0.7% following an overnight rebound in the yen

USDJPY, +0.02%

 . As tech stocks sagged in the U.S., chip-equipment maker Tokyo Electron

8035, -3.01%

  dropped 3% and was at one-year lows. Electronics, consumer goods and energy stocks led the declines. Financials were higher, though, as U.S. bond yields continued to rise, causing equity-investor concerns but being seen as good for lenders and heavy bond investors. Life insurer T&D

8795, +1.78%

  was up a further 2% while bank Resona

8308, +1.86%

 rose about the same. Meanwhile, electronics maker TDK

6762, -4.29%

  and cosmetics firm Shiseido

4911, -3.22%

  were down more than 3%.

Hong Kong stocks continued to drop after Thursday’s skid left the Hang Seng Index below the Dow industrials on a closing basis for the first time since April 2013. The benchmark

HSI, -0.44%

  was down 0.8%, with Tencent

0700, -1.56%

  down 1.6% and at fresh year-plus lows. Insurer AIA

1299, -1.25%

  was off another 1.7%, putting the week’s swoon at about 10%. But HSBC

0005, +1.03%

  was up almost 1%. A number of Apple Inc. suppliers, such as AAC Technologies

2018, -2.81%

  and Sunny Optical

2382, -1.37%

 , saw their shares sink following a Bloomberg News report that China may have secretly planted spy chips in some servers used by Apple

AAPL, -1.76%

  and Amazon.com Inc

AMZN, -2.22%

 . Both American tech giants strongly denied the report.

Apple suppliers Foxconn

2354, -1.37%

 and Taiwan Semiconductor

2330, -1.77%

 fell as well, weighing down Taiwan’s Taiex

Y9999, -2.02%


South Korea’s Kospi

SEU, -0.57%

  slipped nearly 1%, as Samsung

005930, +0.11%

  shed early gains to drop into the red despite forecasting record operating profit in the third quarter.

Australia was again the lone gainer in the region, as the ASX 200

XJO, +0.28%

  rose slightly. Benchmarks in New Zealand

NZ50GR, -0.54%

 and Singapore

STI, -0.97%

  fell, while Malaysia

FBMKLCI, -0.56%

  was about flat. Markets in mainland China remained closed for a weeklong holiday.

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Supreme Court nominee Brett Kavanaugh admitted Thursday he may have gotten “too emotional” in his testimony last week before a Senate committee.

In an op-ed for the Wall Street Journal published Thursday night, Kavanaugh expressed regret for his tone, and vowed to be a fair and “even-keeled” justice if confirmed to the high court.

“I was very emotional last Thursday, more so than I have ever been. I might have been too emotional at times. I know that my tone was sharp, and I said a few things I should not have said.”

Brett Kavanaugh

Kavanaugh wrote that his testimony “reflected my overwhelming frustration” at the sexual-assault allegations raised against him by Christine Blasey Ford and others, and “reflected my deep distress at the unfairness of how this allegation has been handled.”

Kavanaugh has strongly denied the allegations, and the Senate is expected to take a procedural vote on Kavanaugh’s confirmation early Friday morning. A full confirmation vote may come as soon as Saturday.

Read: Kavanaugh’s confirmation odds jump to highs as Senate reviews FBI report

Aside from the sexual-assault accusations, a number of Democratic senators have expressed concern over Kavanaugh’s temperament and potential political bias, after he claimed during the hearing that the allegations were a political hit, fueled by “revenge on behalf of the Clintons and millions of dollars in money from outside left-wing opposition groups.”

Also see: Democrats rip FBI Kavanaugh probe as ‘incomplete’ as Grassley says no misconduct found

In his op-ed, Kavanaugh attempted to ease those fears.

“As a judge, I have always treated colleagues and litigants with the utmost respect. I have been known for my courtesy on and off the bench. I have not changed,” he wrote.

“I revere the Constitution. I believe that an independent and impartial judiciary is essential to our constitutional republic. If confirmed by the Senate to serve on the Supreme Court, I will keep an open mind in every case and always strive to preserve the Constitution of the United States and the American rule of law.”

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Chipotle Mexican Grill’s past food safety scandals set the company back in terms of its marketing goals, but since Brian Niccol came on as CEO, it’s gotten back on track, Chipotle’s chief financial officer told CNBC.

“We’ve always been a company that’s about food — real food, real ingredients, real cooking — and people, making sure that we hire great people, invest in them so that they can run great restaurants,” CFO Jack Hartung told “Mad Money” host Jim Cramer in a joint interview with Niccol.

“We got knocked on our heels a little bit, so we stopped talking about the things that made Chipotle special,” Hartung admitted. “The great thing now, … since Brian joined and we brought a new team together, is we’re back on our front foot. We’re talking about our food.”

Niccol echoed Hartung’s remarks, saying that what he was most impressed with when he joined the fast-casual chain was Chipotle’s “commitment to food safety.”

But that commitment requires higher standards than companies like Taco Bell, Niccol’s former stomping grounds, the new CEO said.

“What we definitely are committed to doing is real ingredients, truly fresh, and that does require different food safety standards to be in place,” Niccol told Cramer.

“These wellness checks that we do and other protocols that we execute — you’re not going to find that in a lot of other restaurants because we are handling fresh food and we’re truly cooking every day in our restaurants,” the CEO continued. “So it just demands that we have a higher level of commitment to food safety and we’ll always have to be passionate about being a leader in that space.”

And even with the recently announced departure of Chipotle’s head of food safety, which Hartung attributed to retirement, food safety will remain a top priority for the company.

“We have world-class people on our food safety council and food safety’s going to be something that’s always going to be a high priority for us,” Hartung said. “That’s not going to change.”

Chipotle’s stock ended Thursday trading higher, up 2.60 percent at $447.77 a share. In June, CNBC reported on Niccol’s plans to turn Chipotle around and bring it back into favor with customers — read more about his plans here.

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Kratos Defense & Security Solutions: “This is a very interesting one. We recommended it. We got a lot of hate mail, a lot of hate-tweets. A lot of people felt I didn’t know what I was talking about. Well, the stock has been just a huge overachiever, but at this price, don’t need it. Not going to push it here. We prefer to be in Raytheon. This is the cheapest defense stock. Why? Not dependent on U.S. buying. It’s much more of an international play. They buy Patriot missiles as a way to placate our president.”

Anheuser-Busch InBev: “Listen to me and listen good: We do not want Anheuser-Busch. What we want is Constellation Brands, STZ, and I mean it. Really, partner, you’ve got to be in STZ. That’s the one that’s going higher.”

Alteryx, Inc.: “It’s up more than 100 percent. It’s almost like I should institute some rules. If it’s up more than 100 percent, we kind of let it cool. I’d say this one is one of those that I talked about at the top of the show — 7 to 10 percent pullback, totally realistic. Let it happen and then do a little picking.”

Walker & Dunlop: “It doesn’t have a good yield. It is an inexpensive stock, but I have no edge. We liked CBRE for a while. That’s OK. But it just doesn’t have what it takes right here. It just doesn’t.”

Johnson Controls International: “Johnson Controls is problematic. A series of bad quarters, a new CEO, new guy comes in after that, not demonstrably successful yet. We need to see more. The proof is in the pudding and we don’t have any proof yet. I don’t like this industrial. It’s one of the few industrials that I’m just not a backer of.”

Nektar Therapeutics: “I think it’s a great spec. It’s got a big pipeline of drugs. You know, look, the speculative stocks aren’t working that well right now, but I don’t want to sell the stock here. I think that would be a big mistake.”

Align Technologies: “Align Technologies is Invisalign. This is a stock everybody knows I like. It’s up 60 percent. It’s only down a few percent from its high. This stock is too hot. If this goes to $335, $340, buy, buy, buy. Staged buys; nothing aggressive. We don’t know how long this [sell-off] is going to last.”

Disclosure: Cramer’s charitable trust owns shares of Raytheon.

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In a broad-based sell-off of this magnitude, investors have to be prepared to wait and see how low stocks can actually go, CNBC’s Jim Cramer said on Thursday.

“At moments like this, you need some touchstones to figure out when the pain is likely to end,” the “Mad Money” host said. “This is not the time to be a hero.”

And with the major averages down sharply just one day after the Dow Jones Industrial Average hit a record high, Cramer warned investors not to be too aggressive just yet.

“When it comes to this decline, I think it’s too early to be really aggressive,” he said. “I am worried about your fellow shareholders. They’re your worst enemies right here. Many of them are people with big profits, renters who were just along for the ride. They don’t want to give up their gains.”

So, when will you know that it’s time to act? For that, Cramer laid out the 10 “telltale signs” that could drive the market to its true bottom.

One of the key signs centered on the pharmaceutical sector. Shares of the drugmakers — Allergan, Pfizer, Merck and Eli Lilly included — have been rallying for days, and until they fall back to sustainable levels, the market could endure further declines, Cramer said.

“They’re too high. Why? Because these big pharma names are bellwether inflation stocks,” he said. “They all pay bountiful dividends, and these dividends get less attractive when bond yields are rising, so they tend to get clobbered in this kind of environment and they haven’t been yet. I’ll feel a lot more comfortable when Merck goes back below $68 and Pfizer sinks below $40.”

To read the rest of Cramer’s sell-off analysis, click here.

Constellation Brands’ massive stake in cannabis producer Canopy Growth has nothing to do with the welfare of Constellation’s core business, CEO Rob Sands told CNBC on Thursday.

“This has nothing to do with the core business or defending against the potential cannibalization of beverage alcohol by cannabis. There’s really no evidence of that,” he told Cramer in an exclusive interview. “And our core business, as we’ve demonstrated in the first half of the year and this quarter, is stronger than ever.”

Instead, the move was a preemptive bet that the popularity of marijuana-based products would rise faster than expected, Sands said, adding that “the future is now” when it comes to cannabis.

“We’re playing offense, not defense,” the CEO said. “Really, what we’re trying to do is take advantage of our strong position, our growth, and invest in an aligned category, which we think … is truly a new frontier of a category that will be at least a couple of hundred billion dollars globally over the next 10 or 15 years.”

To watch and read more about his interview, click here.

Sands also spoke to how the political landscape is changing when it comes to pot. Click here for more.

Chipotle Mexican Grill’s past food safety scandals set the company back in terms of its marketing goals, but since Brian Niccol came on as CEO, it’s gotten back on track, Chipotle’s chief financial officer told CNBC.

“We’ve always been a company that’s about food — real food, real ingredients, real cooking — and people, making sure that we hire great people, invest in them so that they can run great restaurants,” CFO Jack Hartung told Cramer in a joint interview with Niccol.

“We got knocked on our heels a little bit, so we stopped talking about the things that made Chipotle special,” Hartung admitted. “The great thing now, … since Brian joined and we brought a new team together, is we’re back on our front foot. We’re talking about our food.”

Niccol echoed Hartung’s remarks, saying that what he was most impressed with when he joined the fast-casual chain was Chipotle’s “commitment to food safety.”

To watch and read more about their interview, click here.

Finally, in the wake of Thursday’s sell-off, Cramer decided to examine safety stocks like Clorox, bond-market alternatives that tend to do well in periods of market decline.

While shares of Clorox dipped on Thursday because of the rise in bond yields to levels competitive with its dividend, the “Mad Money” host argued that if you have the time and money to be patient, the gains could be huge.

“If you have a long-term time horizon, if you can afford to be patient, then you may want to think about buying the consumer packaged goods stocks oh-so-gradually into this horrendous weakness,” he said.

Cramer pointed out that since 1989, when he sold what now could be considered prime real estate in Brooklyn, shares of Clorox have gained a wild 2,000-percent return, much larger than what risk-averse investors could get from bonds.

“No rush, but remember: the appreciation stream, not the dividend stream, that’s the real pot of gold at the end of a very tortured rainbow,” Cramer said.

Nektar Therapeutics: “I think it’s a great spec. It’s got a big pipeline of drugs. You know, look, the speculative stocks aren’t working that well right now, but I don’t want to sell the stock here. I think that would be a big mistake.”

Alteryx, Inc.: “It’s up more than 100 percent. It’s almost like I should institute some rules. If it’s up more than 100 percent, we kind of let it cool. I’d say this one is one of those that I talked about at the top of the show — 7 to 10 percent pullback, totally realistic. Let it happen and then do a little picking.”

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kavanaugh testifies 0927

A version of this article first appeared in the Reliable Sources newsletter. You can sign up for free right here.

Time to vote?

The lead story for Thursday’s morning shows: The impending vote to advance Brett Kavanaugh’s nomination to the Supreme Court.

“This is it. They’re going to go to vote,” Chris Cuomo said on CNN Wednesday night. “The FBI report is all but done. Will it change votes? Probably not. Why? Time, tactics, the tenor of the whole process. This has never been a truth campaign — about ‘getting to the bottom of the allegations.’ It’s about getting Kavanaugh through at any cost. It always has been.”

Per CNN’s latest, senators will be able to read the FBI’s findings on Thursday morning. Mitch McConnell filed cloture on Wednesday night, setting up Senate Republicans for a Friday vote to end debate on the nomination. A final vote will not take place until Saturday at the earliest.

Meanwhile, here are the headlines…

— Banner on “The Situation Room” Wednesday evening: “White House denies Trump was mocking Kavanaugh accuser after Trump mocks Kavanaugh accuser.”

— Ronan Farrow tweeted Wednesday night: “The FBI declined to interview primary witnesses related to the Kavanaugh allegations it was tasked with reviewing. Some of them resorted to sending in unsolicited sworn statements.” Jane Mayer and Farrow are out with a new story…

— On CNN.com right now: “Yale roommate says Kavanaugh lied under oath about drinking and yearbook.” James Roche spoke out via an op-ed for Slate and an interview on “AC360…”

— An example of the widespread conservative criticism of the news coverage: “You Idiot Reporters Are Making It Worse,” by NRO’s Jonah Goldberg…

Thursday planner

— Anti-Kavanaugh protests will take place in DC and other locales…

— Justice Stephen Breyer will be speaking at The Atlantic Festival in the morning…

— Trump has an afternoon fundraiser in Minneapolis and an evening rally in Rochester…

“Her lasting impact”

That’s the message on this week’s cover of TIME — to be officially unveiled Thursday morning.

This week’s cover of @TIME: Using words and phrases from Christine Blasey Ford’s testimony, artist John Mavroudis (@zenpopart) “recreated her likeness by drawing each letter by hand.” pic.twitter.com/f9c6CNEZtR

— Brian Stelter (@brianstelter) October 4, 2018

“Using words and phrases from Ford’s testimony, San Francisco-based artist John Mavroudis recreated her likeness by drawing each letter by hand,” TIME says…


— There are deepening concerns about missing Saudi journalist Jamal Khashoggi, who entered the Saudi Consulate in Istanbul on Tuesday “to obtain paperwork related to his upcoming wedding” and “has not been heard from since…” (WaPo)

— Nicaragua has deported Austrian-American reporter Carl David Goette-Luciak, who had been covering anti-Ortega protests for months… (The Guardian)

— Eli Rosenberg’s latest: “Facebook blocked many gay-themed ads as part of its new advertising policy, angering LGBT groups…” (WaPo)

Connie Chung: “I, too, was sexually assaulted — and it’s seared into my memory forever”

Julia Waldow emails: Broadcast news legend Connie Chung published an extremely powerful letter to Christine Blasey Ford about her own experience with sexual assault, dating back about 50 years. Her assailant, she writes, was her family doctor. “Christine, I, too, am terrified as I reveal this publicly,” Chung wrote. “I can’t sleep. I can’t eat. Can you? If you can’t, I understand. I am frightened, I am scared, I can’t even cry.”

The letter was published by the WashPost. “I wish I could forget this truthful event, but I cannot because it is the truth,” she wrote. “I am writing to you because I know that exact dates, exact years are insignificant. We remember exactly what happened to us and who did it to us. We remember the truth forever…”


— Two Fox News personalities have books on Amazon’s top ten list right now: Tucker Carlson’s “Ship of Fools” is No. 2 and Steve Doocy’s family cookbook is No. 4. The forthcoming Trump parody book by “The Late Show with Stephen Colbert” staff is holding steady at No. 1…

— Meantime, the weekly NYT bestseller list came out on Wednesday, and Bob Woodward’s “Fear” is No. 1 for a third straight week…

Read more of Wednesday’s Reliable Sources newsletter… And subscribe here to receive future editions in your inbox…

— NYT opinion writer and editor Bari Weiss is writing a book: “The New Seven Dirty Words.” Holt will publish it in winter 2020…

Barnes & Noble may sell itself

B&N fired its CEO a few months ago. Now its board has appointed a special committee to consider a sale. It is, as CNN’s Nathaniel Meyersohn writes, a troubled company: “Sales have fallen at Barnes & Noble during each of the past four years. New tactics, such as smaller store formats and a kitchen concept, have struggled to win back shoppers.” More here…

Bianna joins “CBS This Morning”

The CBS morning show has always had a three-person format… until now. Bianna Golodryga was introduced as a co-host on Wednesday morning, adding a fourth co-host chair to the set. The move makes a lot of sense: Golodryga is already on the show all the time as a fill-in host and/or correspondent…

BTW: “She will continue to work as a contributor to various CNN programs,” Variety’s Brian Steinberg notes…

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Meet 'crazy' tech tycoon Masayoshi Son

Meet ‘crazy’ tech tycoon Masayoshi Son

SoftBank and Toyota want to change the world of transportation through autonomous vehicles and other technologies.

The high-profile Japanese companies are forming a joint venture called Monet to develop businesses that will use driverless-car technology to offer new services, such as mobile convenience stores and delivery vehicles in which food is prepared en route.

SoftBank (SFTBF) will own just over half of Monet, while Toyota (TM) will hold the rest.

The new company’s name isn’t a reference to Claude Monet, the famous French painter, but rather a shortened version of the words “mobility network.”

Toyota President Akio Toyoda and SoftBank CEO Masayoshi Son attended the announcement of the project Thursday in Tokyo, a rare joint appearance by the heads of two of Japan’s biggest global companies.

01 Toyota Softbank 1004 RESTRICTED
SoftBank CEO Masayoshi Son and Toyota President Akio Toyoda in Tokyo on Thursday.

Toyota first approached SoftBank with the idea of creating a Japanese alliance to try to catch up with global rivals that are developing autonomous driving tech.

Around the world, top carmakers and tech companies like Google’s parent, Alphabet (GOOGL), and China’s Baidu (BIDU) are pouring resources into self-driving vehicles.

Driverless vehicles have the potential to cause huge disruption in the auto industry and are also likely to transform the ride-hailing business.

Son, SoftBank’s billionaire founder, presides over a sprawling empire of artificial intelligence companies, internet businesses and ride-hailing startups, which can collect huge amounts of data on traffic patterns, passengers’ requests and other transportation trends.

The new venture taps into SoftBank’s advantages in tech and data, and Toyota’s vehicle-manufacturing expertise. Its aims include developing ways to tackle problems created by Japan’s rapidly aging society and shrinking workforce.

Over the next decade, Monet plans to roll out services like self-driving buses that can drive the elderly to grocery stores, hospital shuttles where medical exams can be done on board, and mobile offices. It will focus initially on Japan with a view to expanding globally.

SoftBank has already put money into autonomous driving. Its $100 billion tech-focused Vision Fund committed $2.3 billion to General Motors’ self-driving car unit GM Cruise earlier this year.

On Wednesday, another top Japanese company, Honda (HMC), said it would also invest $2.8 billion in GM Cruise.

Toyota has started pumping resources into driverless cars.

It set up a new company in March dedicated to the research and development of self-driving vehicles, with plans to invest $2.8 billion to develop a commercially viable autonomous car.

Both SoftBank and Toyota have invested in or partnered with some of the world’s biggest ride-hailing startups including Uber, China’s Didi Chuxing and Singapore-based Grab.

The new SoftBank-Toyota venture shows how relations between automakers and tech companies have shifted.

Twenty years ago, Son approached Toyota with the idea of connecting the company’s Japanese dealerships on the internet. But Toyoda turned him down.

Back then, Son said, SoftBank was a small company reaching out to the “giant rock” of Toyota. Today, it’s the carmaker that’s asking him for help.

— CNN’s Yoko Wakatsuki contributed to this report.

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premarket thursday
Click chart for more in-depth data.

1. The race to driverless cars: SoftBank (SFTBF) and Toyota (TM) are forming a joint venture that will use driverless-car technology to offer new services, such as mobile convenience stores and delivery vehicles in which food is prepared en route.

SoftBank will own just over half of Monet, the new business, while Toyota will hold the rest.

It’s the latest in a series of driverless development partnerships announced by tech companies and carmakers. SoftBank’s $100 billion Vision Fund, its tech-focused investment arm, had already committed $2.3 billion to General Motors’ self-driving car unit GM Cruise.

On Wednesday, Honda (HMC) and General Motors (GM) said they were teaming up to create a new generation of fully autonomous vehicles. BMW (BMWYY) has joined the board of Apollo, an autonomous driving project from Chinese internet firm Baidu (BIDU).

2. Facebook under investigation: The Irish Data Protection Commission has launched a formal probe into a Facebook (FB) hack that affected as many as 50 million accounts.

The commission will investigate whether the company complied with its obligations under new European data protection laws that came into effect in May. Facebook said last week that it closed the loophole, but 90 million users were forcefully logged out of their accounts as a precaution.

Irish regulators are investigating because Facebook’s international headquarters is in Dublin.

There are still many unanswered questions about the hack: Who carried it out? And what were they trying to access?

3. Bonds sell-off: The yield on 10-year US Treasuries has spiked to the highest level in seven years following the release of positive economic data.

US hiring data published Wednesday was stronger than expected, and momentum could continue Thursday if initial claims numbers add to the optimism. A strong US economy and the expectation of rate hikes by the Federal Reserve are fueling the trend.

“The underlying message is that the US economy isn’t just in fine fettle, it’s on fire,” said Kit Juckes, strategist at Societe Generale.

4. CNN means business: On Thursday, CNNMoney becomes the all-new CNN Business, covering the companies, personalities, and innovations driving business forward.

This new initiative will focus on the single biggest financial story of our generation: how technology is upending every corner of the global economy, forcing businesses, workers, and society itself to adapt rapidly, or be left behind.

5. Global market overview: US stock futures were lower.

European markets dropped in early trade following a negative trading session in Asia. The Shanghai Composite was closed for a holiday.

The Dow Jones industrial average closed 0.2% higher on Wednesday, while the S&P 500 added 0.1% and the Nasdaq gained 0.3%.

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6. Earnings and economics: Constellation Brands (STZ) will release earnings before the open. Costco (COST) is set to follow after the close.

Shares in Danske Bank (DNKEY) opened 3% lower after the Danish lender said it had received requests for information from the US Department of Justice in connection to its money laundering scandal.

Markets Now newsletter: Get a global markets snapshot in your inbox every afternoon. Sign up now!

7. Coming this week:
ThursdayCostco (COST) earnings; CNN Business launches
Friday — US jobs report

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