Jim Cramer says growth investors need to adjust their strategy or risk getting blown out of the market altogether.
The era of “beat and raise” and “buy no matter what” is over for the growth stocks, Jim Cramer proclaimed during his Mad Money show on Thursday. Growth investors must adjust their strategy or risk getting blown out of the market altogether.
Cramer called it back in November, when the Federal Reserve first announced they were preparing to raise interest rates. When the Fed is no longer your friend, growth stocks with no earnings get pummeled, he cautioned, and since then, that’s exactly what happened.
Wednesday, we saw it again with Snowflake (SNOW) – Get Snowflake, Inc. Class A Report and Okta (OKTA) – Get Okta, Inc. Class A Report, both of which appeared on last night’s show and suffered huge losses after reporting strong earnings. The fundamentals at both companies remains basically the same. What’s changed is what investors are willing to pay for those future earnings.
When the momentum is gone, the thrill is gone, and that’s when investors start fleeing these high growth names.
There are still plenty of strong sectors in the stock market, Cramer concluded. You can invest in oil, energy or healthcare, he said, but you can no longer invest in companies that trade on a price-to-sales ratio, no matter how much you like those companies.
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