The true enemy of the stock market isn’t inflation, it’s froth, Jim Cramer warned his Mad Money viewers Monday.
The true enemy of the stock market isn’t inflation, it’s froth, Jim Cramer warned his Mad Money viewers Monday. That’s because froth only appears at the end of a rally, Cramer explained, and it always involves a lot of pain for shareholders.
The markets are already down big from their November highs, and many speculative investors from last year’s wave of IPOs and SPACs have either taken huge losses or have exited the market altogether. That’s why it’s cringeworthy to see stocks like Tesla (TSLA) – Get Tesla Inc Report rocket up 8% on just the rumor of a possible stock split. Gains made on rumors, Cramer explained, will easily evaporate during the next downturn unless there is something solid to back it up.
Heading into the last week of the first quarter, the Action Alerts PLUS team is not only helping their investment club members protect their investments, the AAP portfolio has seen strong outperformance relative to its benchmark. Wins include shares of Nucor (NUE) – Get Nucor Corporation Report, up 15.77%, as well as big gains for Apple (AAPL) – Get Apple Inc. Report, AMD (AMD) – Get Advanced Micro Devices, Inc. Report and Alphabet (GOOGL) – Get Alphabet Inc. Class A Report. Get in on the conversation over on Action Alerts PLUS.
Cramer was equally cautious about the 45% move in AMC Entertainment (AMC) – Get AMC Entertainment Holdings, Inc. Class A Report on the company’s speculative investment in a gold mining company.
What investors should be investing in are boring companies with low price-earnings ratios and actual profits. In times of rising interest rates, pharma companies like Eli Lilly (LLY) – Get Eli Lilly and Company Report should be bought. Retailers like Costco (COST) – Get Costco Wholesale Corporation Report should be bought, and oil and energy names like Chevron (CVX) – Get Chevron Corporation Report and Devon Energy (DVN) – Get Devon Energy Corporation Report won’t do you wrong.
Cramer recommended agriculture stocks like AGCO (AGCO) – Get AGCO Corporation Report, which was featured on the show last week. If investors must invest in tech, stick with the big boys like Alphabet (GOOGL) – Get Alphabet Inc. Class A Report, which we know can weather any economic downturn.
To sign up for TheStreet’s free Daily Booyah! newsletter with all of the latest articles and videos please click here.
