Transcript
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Jim Cramer (1:24)
Hey, I'm Kramer. Welcome to Mad Money. Welcome to Cray America. I'll be with my friends. I'm just trying to make a little money. My job is necessary to you, but to educate, to teach you. So call me @170CBC. Tweet me. Jim Kramer Park Exhaust me. I'm talking about my handy acronym for Palantir, Applovin, Robinhood and Coinbase. These are for the many stocks that seem to have no quit in them. Even if they all pull back hard into the close today, giving us a rare moment to evaluate them on relative weakness, it's better for me to talk about these stocks on a down day so you can get a discount if you're so inclined. These park names are emblematic of how stocks have devolved into a two track market. There's the S&P 500, and then there's this handful of stocks that retail investors have anointed and relentlessly take up without any real bounce. Today, with The Dow dipping 19 points, SB inching up 0.14% and the Nasdaq advancing point 3%, most of the park stocks ultimately took a breather. Not a beating, but a breather. But a fisher's in the guy. They'll bounce right back, probably tomorrow. Now, even though I say park, these four stocks are just representatives of what's been going on in this market. They're actually the best lot. They have earnings, they have analysts following them who come up with estimates. Although judging by the way people have been buying these names, neither of those things like estimates and analysts Seems to matter at all. Now you've got, oh hey, you've also got the nuclear power stories like Oklo, which sold off hard today, or the stocks that make for electric make better, like electric vehicles, like the back from the dead Quantumscape, which makes a new kind of battery. This captured the fancy of retail investors, although that wasn't enough to prevent the stock from plummeting over 14% today. Although even that decline, the stocks almost tripled over the past month, as have many of these stocks. These same people will buy anything quantum, anything rocket related, anything crypto, including spacs that buy crypto. Why these? Well, maybe the better question is, well, why not? If you're an individual investor, you don't have much information about how stocks work longer term. It's pretty easy to play this game, and it is a game. We know there are parlays in gambling where you have to pick two or more events and all have to be correct for you to win. The payouts can be big if your parlay hits, but if any bet loses, you lose the whole thing. These are pretty similar, except you tend to win all three. In many ways, gambling on park is a much fairer, better game, but it is a game nonetheless. This morning, Carl Quintanilla, of course, now we're talking about Squawk on the street, Asked if I believe in this kind of investing. Did I think it had a rigor? My answer was simple. It isn't investing. It's believing in something that may or may not come true. These stocks are taking place in what I call the year of magical thinking, which is a nod to one of my favorite writers, Joan Didion, Although she was trying to cope with the death of her fabulous husband. Rather than using this investment strategy. The buyers are irrational believers in these companies, not from grief, but from glee. I then talked about someone I met this weekend. Get this. Who bought Oklo, who truly did not know what the company did, other than like something to do with nuclear. And it went up a lot. True alcohol is involved with fission power. It can recycle waste as fuel. It might have a future. When the stock hit 30, I was adamant to people I'd be careful with it. But then when it went up another 10%, I threw in the towel. I said, hey, listen, it's a speculative stock. If you want to own it, go ahead. And it can be Oklahoma. It can be any part of the parks. It could be with strategy, the old microstrategy, or any of the spacs that are being created purely to buy crypto or it could be Rocket Lab to supplement the rocket fleet for satellites. Hey, how about Redetti Computing? It's a quantum copy quantum escape for faster electric cars, Joby Aviation, Flying cars, Circle Internet Group the red hot recent IPO that I'm not particularly fond of because it's a stablecoin play. And pretty soon because of that genius act, I think we'll be flooded with stablecoins. Now I don't care which one you pick as long as you don't flood the zone with him. But I no longer try to stop people because there's just too much money being made and I don't want to stand in the way of you making money. However, when you've got a big game, you do have to take something off the table. That's the only time the discipline really does pay. What are the signs that the year of magical thinking might be over? Maybe. Do you think today might end of it? I don't know. How do we return to rationale? Let me tell you what you need to see before this kind of thing goes away. I want you to know that we had a period like this in 1999 leading up to the dotcom crash. Things just kept going up and up and up. But the comparisons to the dot com crash do not hold up under close scrutiny. While flying cars and experimental batteries don't yet make money, park does lots of it. Oodles, Palantir, Applovin, Robin and Coinbase. They are all pretty darn profitable by comparison. During the dot com year, most of these red hot companies had little to no revenues and were actually running out of money, constantly tapping the public markets at the same time that insiders were furiously sell, sell sell sell sell their own stock because they knew there was no justification for these sky high valuations, they got out. Most of the dot coms were not ready for the prime time. This move, on the other hand, is unlike any I've ever seen, except for maybe 2014, which was filled with tech success fueled by the rise of the cloud. But it ended when insiders sold a huge amount of stock into a host of underwritings. The cloud stocks then fell under their own weight. That could happen if you were to contrast that with now. While we've seen some insider selling, we haven't been confronted with the avalanche of new offerings that usually stymie red hot stocks. Normally there'd be tons of new nuclear and quantum crypto IPOs to the point where the supply would only overwhelm demand. That has not happened yet, at least not yet now I'm reading a lot of stories about how these companies are way overvalued and have no business being this high. To which I say that means nothing to the buyers. Remember, we have two markets. There's the market that plays by the rules. And here I'm thinking about companies that report and go down because they are they don't meet expectations and think about like a Netflix or Market Express. More on them later. And then there's the second market, the red hots, which tend to get a pass either because there are no expectations or because the buyers don't want to be confined by something so pedestrian as the four walls of the spreadsheet. They think these estimates are for small thinkers. They think big. They don't want to be at Okta where the expectations are hard to beat. They want to be an OCLO where there are no expectations. Will they ever be tempted to go into a traditional stock? Only maybe a few tech stocks called the Magnificent Seven. But those are no longer so reasonable because they don't have to beat the expectations. I'm saying they have to be despicable. Give me some Alphabet's going to report this week right Itself was a big they have to meet the expectations, not beat them. I wonder if people will care who are part of this meme trade. There I called it, which is parc. With the exception of Nvidia, the Magnificent Seven are not exactly a part of the year of magical thinking. But when you see a digital galaxy or a quantum computing, just remember to play it as it lays. Here's the bottom line. Aside from the occasional pit stops like today, the park stocks just keep running. And until we see a wave of new IPOs creating a supply glut and a ton of insider selling, I wouldn't be surprised if they continue to rally. Let's go to Larry in New Jersey. Larry.