Here's one thing we can be certain of: If the president tweets something and the market goes down -- especially when the tweet puts the kybosh on handouts to Americans whose livelihoods are being destroyed by Covid -- don't take the bait and sell stocks. That's because the president appears to disdain when the market goes down, especially when he sends it down. That is especially true if he can take it back with a stroke of a second tweet. We saw him do just that on Tuesday night, after the market took a header from his stunning pull of the plug of ongoing stimulus talks that many market participants actually thought were going well.
But you know what else can be certain? That the Democrats in the House will be angry at big tech and want to break up the best of the best like the House Judiciary's investigation into alleged monopoly power that came out Tuesday.
Let me just say I am no fan of monopoly power.
It cuts to the heart -- or I should say, cuts the heart out -- of my favorite part of American business, the small- and medium-sized corporations that, if not put down by these monopolies might thrive and become big companies themselves. That would end up in more hiring and more food on the table, something that I have fought for ever since I lived in my car in 1978. An experience like that crystallizes the need to help the less fortunate.
But that's not really what this antitrust kangaroo court is about. It's really a witch hunt against Facebook (FB) , Apple (AAPL) Amazon (AMZN) and Alphabet (GOOGL) . Yet, it is presented as re-writing laws to fit the digital age and to deal with how powerful some companies have become. But it overlooks almost entirely what these companies have created and, instead, focuses on the grousers who claim they can't succeed because of these powerful tech companies. These companies know that the more smaller competitors they wipe out, the more dominant they become.
Put aside that there's nothing like government deeming some companies being essential as has happened with the pandemic. When this thing is through, the government-anointing of Costco (COST) , Walmart (WMT) , Target (TGT) , Home Deport (HD) and Lowe's (LOW) as companies that remain open during this big Covid wave, has done more to wreck small business than anything Facebook, Amazon, Alphabet and Apple will ever do with their so-called monopoly power.
Before I make the case for these four fabulous companies, the fab four -- sorry Netflix (NFLX) -- let me tell you what this is really about. It's pretty easy right in the preamble of the report: "Nearly a century ago, Supreme Court Justice Louis Brandeis wrote, 'We must make our choice. We may have democracy, or we may have wealth concentrated in the hands of the few, but we cannot have both.'"
Ah hah, this is really about rich-bashing. Well, good to see that's the genesis. So, why not go with the philosophy of Sen. Elizabeth Warren, who wants to put a tax on the rich? I know it's a bit like Robin Hood, the fictional character not the day trader's best friend. But at least it's naked in its goals, an acceptance that at least lets us extract some of that wealth to help others. I like Sen. Warren's wealth tax to the extent that you should be able to avoid it by giving money away. That offset will be sure that the tax addresses not the rich, but the filthy greedy rich who do not care about the commonweal.
With that explainer in mind, let's address these four companies and make the case that they are phenomenally positive for our country.
First, the overweening issue: There was a time when we had lost all our dominance in pretty much anything. At Japan's height in 1989, I could not think of a single industry we dominated other packaged food -- think Heinz (KHC) ketchup -- and medicine. We were a pathetic parody of the human mind, a business disaster of epic proportions.
And then along came the genius of Steve Jobs, the ascension of the smart phone, the amazing social media juggernaut, the company that has done more to lower prices to consumers and the business that allows us to search everything you need to know for free.
Now these companies have created riches beyond belief including for themselves, because they are big shareholders. But they never said you couldn't make money with them. Warren Buffett holds a giant shindig for the masses who own the stocks. I think all four should do the same as the shareholders do not do enough to protect and defend their benefactors. I wish I were called in front of this committee and I would explain the real deal to these folks, the fact that we isolated these companies a lot lower and they made fortunes for those who listened.
How about the companies themselves? Do they have competition? Have they tried to destroy them unfairly, lowering prices in a predatory way, well below their own cost, boxing or buying our competitors to squelch competition?
First, Facebook. On its face this is a ridiculous proposition. How do you explain the success of competitors TikTok, Twitter (TWTR) , Snap (SNAP) and Pinterest (PINS) ? If Facebook were this all-powerful Svengali, how did it miss squashing these companies? Not that long ago, I orchestrated a panel to help small businesses with my guest, noted entrepreneur Gary Vaynerchuk, and when he was asked the cheapest way that a small business person could have her business takeoff, he said that advertising on Facebook and its subsidiary Instagram are the real bargains out there and that they are much cheaper and more targeted than every other kind of ad.
I, too, have seen Facebook help millions of businesses, many of whom would say that the company was the reason why they are successful. These small and medium size ambassadors would be bereft of their best opportunity to success.
Apple? Oh come on. Millions of jobs have been created by the writing of software for new businesses because of Apple. Millions of companies have been able to catch on because of the App Store. Take is from me, I used to help run TheStreet.com and when we made our app, we ignored Apple. We didn't want to have to pay 30% for new readers. It was a total failure. You can't get to be known unless you are in the App Store. Apple's a starting point for a job, and believe me, that's exactly what CEO Tim Cook wants to do. That's why the service revenue is so robust; it makes too much money for its clients.
If Amazon is such a monopolist, why do so many retailers choose a competitor, in the form of Amazon Web Services, instead of the clouds of Google or Microsoft (MSFT) ? It's kind of nuts when you think about it. I know that people may think that you have to be in Amazon to get your small business going. But that's wrong. You can go to Etsy (ETSY) or Shopify (SHOP) , two recent competitors that have upended the Amazon ecosystem and do better than if you went to Amazon. The Amazon Web Services has cut its prices endlessly. If it were a monopolist, it would be raising prices. And no it's not predatory or the unlimited power of Microsoft's Azure or Alphabet's Google Cloud Services would fold.
Finally, there's Alphabet, which, again, can let you advertise at the top of the queue. Are they a monopolist? OK, let's say they are. All I can tell you is the sum of the parts is worth more than the stock as a whole. Bring on the scalpel. Give me some Google search, self-driving auto, Google Cloud Services, Google health and the incredibly under-used health care business. That company would be worth much more than the current entity for certain. I don't really understand what to make of the monopoly case, other than bring it on.
Finally, if the stocks keep getting hit on this, buy them. The House committee is toothless, wrong and behind the times. It's great news fodder but not more than that.
(Amazon, Apple, Alphabet, Facebook, Microsoft, and Costco are holdings in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells these stocks? Learn more now.)