This sell-off is creating buying opportunities
CNBC’s Jim Cramer warned investors Monday against selling high-quality stocks in a market he said is driven by fear rather than fundamentals.
“Stocks are falling for a lot of reasons, some good, some bad. We’ve had a lot of bad things lately, and I want to fix some things tonight,” Cramer said on “Mad Money.” “Because a bad tape often causes individuals to dump large stocks when they should be buying more.”
Stocks finished mostly lower on Monday, reversing initial gains and falling slightly short of session lows. The S&P 500 and Nasdaq finished down 0.39% and 0.73%, while the Dow Jones Industrial Average gained 0.11%.
While the broader market is giving up early gains despite rising oil prices, Cramer said the bigger story is the disconnect between stock movements and underlying business realities (especially technology).
He pointed to cybersecurity as an important example. Concerns that private artificial intelligence company Anthropic’s artificial intelligence could replace traditional cybersecurity firms, Palo Alto Networks And CrowdStrike.
“This is absolutely wrong,” Cramer said. “In reality, the rise of AI should be a headwind for Palo Alto and CrowdStrike, because the same AI agents can be programmed by hackers to take over your network very easily. These are vulnerabilities. Without the help of traditional cybersecurity, you are more vulnerable than ever before,” he added.
Palo Alto CEO Nikesh Arora recently purchased $10 million worth of shares, he explained, adding that insider confidence strengthens this view. “I don’t think a CEO who thinks AI is an existential threat to his business model is going to buy $10 million worth of stock,” Cramer said.
Cramer also touched on the sharp decline in the social media giant Meta Platforms They argue that investors are overreacting after recent legal rulings.
“I thought these lawsuit-based sales were strange,” he said, adding that such cases are often overturned on appeal.
Bottom line: “Sometimes stocks sell for bad reasons or completely bogus reasons, and in those moments I would rather be a buyer than a CrowdStrike or Meta seller.”
