Jim Cramer warns about speculation in the stock market, urges action
A wave of speculative buying occurred in the stock market as we started the new year, prompting CNBC’s Jim Cramer to encourage investors to profit from stocks that have gone parabolic.
“You’re not making a profit unless you record some of your earnings,” Cramer said on “Mad Money” Tuesday night. These are just “paper winnings. That doesn’t count,” he said.
“Let’s say you have a big gain tomorrow on a stock that has risen this year. [you should] “Take something off the table,” Cramer said.
Cramer identified more than 30 U.S.-listed stocks with market capitalizations above $1 billion that were up at least 50% year-to-date as of Friday’s close. Stocks that check all of these boxes are where investors should look for a correction, he said.
“Mostly, they are companies with no earnings and very little sales,” Cramer said, explaining that trading in this group mirrors speculation seen late last summer in areas such as quantum computing, cryptocurrencies and alternative energy.
In late September, Cramer began sounding the alarm over what he thought was an overly frothy market, imploring investors to sell hot names that had too little earnings to justify their valuations. In the end, many high-flying stocks, such as nuclear play Oklo, were hit hard during the decline and fell well short of their peaks.
“At the time, I was berating those who weren’t making a profit. I was talking loud and loud about it, and I’m doing the same right now tonight,” Cramer said. He continued, “I’m not advocating selling everything, I’m advocating taking a large percentage of your shares and converting them into cash. So you’re playing with what I call the house money.”
Cramer’s comments Tuesday came on the heels of a broader market pullback as President Donald Trump stepped up his rhetoric on Greenland with tariff threats.
