Transcript
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Homes.com knows that when it comes to home shopping, it's never just about the house or condo. It's about the home. And what makes a home is more than just the house or property. It's the location and neighborhood. If you have kids, it's also schools, nearby, parks and transportation options. That's why homes.com goes above and beyond to bring home shoppers the in depth information they need to find the right home. And when I say in depth, I'm talking deep. Each listing features comprehensive information about the neighborhood, complete with a video guide. They also have details about local schools with test scores, state rankings and student to teacher ratio. They even have an agent directory with the sales history of each agent. So when it comes to finding a home, not just a house, this is everything you need to know, all in one place. Homes.com, we've done your homework.
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Building a portfolio with Fidelity Basket Portfolios is kind of like making a sandwich. It's as simple as picking your stocks and ETFs, sort of like your meat and other topics and managing it as one big juicy investment.
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Mmm.
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Now that's pretty good.
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Learn more@fidelity.com baskets Investing involves risks, including risk of loss.
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Fidelity Brokerage Services LLC Member NYSE SIPC. Hey, I'm Kramer. Welcome to Mad Money. Welcome to Kramer America. Other than friends, I'm just trying to save a little bit of money. My job is not just to educate, but to explain how something like this could be happening. So call me at 1-800-743- CNBC. Tweet me at Jim Cramer. Talk about a jarring session. We're captive to a president who's decided he can wage economic warfare against any country in order to get his way. In this case, it's against Denmark for refusing to hand over Greenland. Of course, Greenland has nothing to do with our stock market, right? But our president uses tariffs to coerce our trading partners, even though Wall street absolutely hates it. And that's what caused today's pain. The house of pain. With The Dow tumbling 871points, S&P plunging 2.06%, Nasdaq plummeting 2.39%. Get this. It could have been worse. But everyone remembers when we sold off hard on tariff worries last spring on for stocks to rebound once the president rolled back most of all day as the market adjusted to the possibility that someone blinks on Greenland next 72 hours. Something we might find signals, by the way, when we watch our own Joe Kernan speak to the president tomorrow in the exchange. I Had something else on my mind. I want to talk about something that's beginning to really bother me in this market and it does not have all that much to do with Greenland. Tonight we are going to talk about something I despise. We're going to talk about froth, the process by which we overpay for things that might not be worth as much as we think, maybe much less than we think. We're going to talk about how to preserve gains that might not otherwise be available and how to reposition to high grade, as we call it, the investing club, where I should add, we have a noon meeting for members on Thursday. It's an hour long. I think you should join and find out what we're talking about. Let's start with a simple supposition. While many long term winners have struggled since the beginning of the new year, the speculative stocks and momentum stocks have really caught fire. They're different, very different. The speculative names are at the heart of the froth. More on that later. But there's been a huge amount of money made in these stocks over the past few weeks. And that's one part of the problem. For the most part, they're companies with no earnings and little in the way of sales. Now, as I teach in how to make money in any market, speculation is a reasonable way to make a lot of money. But the operative word is make. You haven't made a profit unless you bring the register on some of your gains. Otherwise you don't have gains. Paper gains, that doesn't count. And that's what I suggest you do. Tomorrow morning. I have a big gain. Let's say you have big, let's say big gain in stock. Okay, that soared this year. Tomorrow you can take something off the table. If you're up, say 50% since the year began, you're crossing over to one of our most important disciplines on mad money. You cannot turn a gain into a loss. We know four months ago that we had a very similar situation to the one we've seen lately. Back then I excoriated those who failed to take profits and was loud and noisy about it. And I'm doing the same right now tonight. I was right back then and I think it would be right again. Many of you have made more money this year already than you might have made last year or maybe multiple years altogether. I'm not advocating you sell everything. I'm advocating that you try to take a big percentage of your stock and put it in cash. That way you're playing with what I call the House's money you'll still be in. In the old days, I used to advocate wholesale selling of speculative stocks. But I spent years studying the process of what a speculative stock morphs. When it morphs into a long term investment, I've gotten much less strict. I now think that you're perfectly justified to pick one speculative name if you own five stocks, or even two if you own 10 and let them ride if they put a big gains. You can gradually ring the register on the way up. But you've also got my blessing to leave part of your position on the table. A large part of it. Because when you catch a terrific speculative winner, the long term gains can be immense. But you got to take something off now. How about a different course of. How about the momentum stocks? Now those are the ones that have earnings and have sales. And those stocks have caught fire too. Very tough call. These are two. There are two kinds of momentum stocks in this market right now. First, we got the memory plays. Okay, that's the memory and storage. Sandisk, Micron, Seagate, Mushroom Digital. Those stocks are up huge both last year and this year. It seems like every day one or another broker recommends them with a new price target. The whole group rallies accordingly again and again. Even today, the memory plays seem unassailable. But I got news for they're not. And that's because there's another set of companies with momentum stocks that are going higher. Ever higher, ever higher. That's the semiconductor capital equipment makers which are busy trying to create more memory supply. We don't know when supply will catch up with demand because we know there are companies in Japan and Korea that are also trying to pump out as many storage devices as possible to make as much money as possible. And they're using these very same capital equipment. Place Applied Materials, Land Research and kla. There will come a day when we will. This is going to happen, people. When there'll be a marginal increase in disk drives and flash memory chips and then the prices for those products will plummet. You cannot afford to get caught holding a lot of these stocks. When that occurs, it won't be tomorrow. I know. And you'll say, why didn't tell me to get out? No, I don't know when. So what do you do after these monster parabolic moves? You need to cut these positions pretty sizably. Take profits. Let the restaurant. That's fine. They're great companies. But the unseen competition might be right around the corner. And then you'll say, why didn't he tell me? Why didn't he? Tell me. Final group, gold and silver tough. For some these are hedges, basically insurers. But for others are just speculation. In either case, the moves have been parabolic. Now you know what I say about parabolic moves. I can justify the gains because these companies like the Memory Place have actual earnings. But a parabolic move? No, no. If you own them because you want precious metals as insurance, I'm not. I'll bless it. If you're speculating, you got a remarkable moment to take out your cost basis and let the rest run. One other consideration. We're seeing a change in the gardens market. Depending on what you include it's message 40 or 50% of this s and P is is tech right now. And we're noticing the tech, especially large cap tech, is underperforming to start the year. If you want to take a longer term view that everything's fine and tech will come back all right, I get that. But I don't agree, which is not. And that's why we're not doing that for the investing club only. One of our recent buyers is tech. As we spread out into many other tremendous secular themes. Which themes? Non data center tech, consumer goods, retail, aerospace, banking, health care. You saw how those act much better than tech. Is tech done? Of course not. But could you have too much tech exposure in your portfolio? Absolutely. If you have 40% tech or more, may I suggest you take some profits, put that money in cash, then wait and see. Guys, I'm really asking you to do this. All right? I asked you to do it in September, October and I was right. And I really do think I'm going to be right this time. Again, the bottom line, there are better non tech stocks to own in this frothy market. It's time to diversify. Remember, you want to make the most amount of money with the least amount of risk. That's what this business is about. And right now that's simply not tech. Make these changes and I think you'll be glad you did. Did no panic. Just be smarter. Gil in Virginia. Gil.