Investors who have cash might want to consider putting some to work after a recent pullback in the stock market, CNBC’s Jim Cramer advised Wednesday.
“If you haven’t bought anything, maybe you dip your toe in,” Cramer said on “Squawk on the Street,” while noting he has for weeks been advising people to sell and lock in profits on certain soaring technology stocks.
Cramer’s comments came as U.S. stock futures rose higher Wednesday, following a three-day decline in tech that helped pushed the Nasdaq down 10% into correction territory as of Tuesday’s close. Some of the market’s strongest performers this year, such as Apple, Tesla and Zoom, were all ensnared in Tuesday’s sell-off but rebounded with the broader market Wednesday. The Dow Jones Industrial Average was up nearly 2% in late morning trading. The Nasdaq was up about 2.75%.
Some on Wall Street viewed the declines in recent days as a sign that stocks were starting to crack after getting overheated during a robust rally from coronavirus-driven lows in late March.
Cramer said he has been telling people for a while to take some profits on certain high-flying names, even as far back as June 24, when he said, “I’m not advocating that this is a ‘get-out-now’ moment. I just think we’ve had such a good run.” He repeated similar calls on Sept. 3 and again Tuesday, reminding first-time investors that gains on paper are unrealized until a stock is actually sold.
On Wednesday, Cramer said investors need to be disciplined as they look to put money to work. “It’s not just you come in and you say, ‘It’s all clear,'” he said. “There are levels that just don’t make sense for some stocks.”
“I think there is a bubble in a lot of tech stocks that are very hard to try to value,” Cramer added. “How do you value Crowdstrike? They have the highest annual recurring revenue of any company I follow. How do you follow Zoom, which has changed the world over a period of six months? And I think the answer is it’s incredibly hard to value. Does that mean you default to owning FedEx? Does that mean you end up buying Tiffany after the deal broke down? Perhaps. I’m just saying, if you took something off … I don’t know if you still want to take stuff off.”
The “Mad Money” host emphasized there can be attractive entry points in some stocks, such as pharmaceutical company Bristol Myers Squibb. “Stop it with the across the board, ‘You’re a fool if you buy stocks.’ That’s something you say when you’re rich and you don’t want other people in,” Cramer said, referring to Wall Street skeptics, stressing that the market is the “greatest wealth generator of all time.”