Jim Cramer told his Mad Money audience Thursday that investors looking to take advantage of the market sale have much more time to wait. Cramer reminded viewers that there are five stages of pain, even in the financial markets, but most investors remain trapped in denial.
We all know the five stages of mourning. It starts with denial, then anger, then moves on to negotiation, depression, and finally ends with acceptance. The recent market fright over inflation and rising bond prices is one we’ve seen before, which is why Cramer warned that we’re not even close.
“We need to see a lot more anger, more negotiation to come to acceptance,” Cramer said. This process takes days and weeks and is painful. That’s why Cramer said the only prudent measure right now is to raise cash and sell with any force and not give in to “bounce buying”.
Cramer added that there is only one shortcut to the bottom, which is what we saw in February 2016, when investors gave up en masse and the shares suffered a massive sale of “crescendo” over a two-day period. .
It remains to be seen if this time we will see a similar pattern.
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Executive decision: Splunk
In his first segment of “Executive Decision,” Cramer spoke with Doug Merritt, president and CEO of Splunk. (SPLK) – Get the report, the data analytics firm that saw its shares fall 2.6% on Thursday after reporting a strong quarter on Wednesday.
Merritt explained that as Splunk transitions from local cloud software to subscription, they really are a two-company story. As for the cloud, revenue grew 83% in the quarter and shows no signs of slowing down. However, on the premise they saw some delayed purchases, as companies were contemplating whether now was the right time to move to the cloud. Splunk has taken steps to help customers who find themselves in these situations.
Merritt added that for customers like Shopify (SHOP) – Get the report, Splunk is proving to be an invaluable tool. Shopify is continuously updating its platform and adding thousands of new customers, he said. And with all these changes, terabytes of data appear that need to be analyzed for metrics and statistics to keep your e-commerce platform running at peak performance.
Cramer said Splunk is the perfect stock to include on the shopping list when the market sale ends.
Executive decision: FireEye
For his second segment of “Executive Decision,” Cramer also spoke with Kevin Mandia, CEO of cybersecurity firm FireEye (SHEET) – Get the report.
Mandia said he has been in the industry for 20 years and the attacks keep coming. Right now, FireEye continues to work on cleaning up the remnants of the massive Solar Winds cyberattack and just this week we learned of four new zero-day vulnerabilities at Microsoft (MSFT) – Get the report Exchange email servers. Zero-day farms are those that currently have no patches or corrections available.
Mandia hurried not to blame. however, claiming that software development is much more complex than most people realize and that companies have good intentions and are doing the best they can.
When asked how FireEye is capable of detecting intrusions and attacks, Mandia explained that his entire organization is designed for large and small investigations. As soon as an anomaly is detected, they go into action and deconstruct entire systems until they find out exactly what happened and why.
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Super offer of shares
The market is already in a bad state and is about to get much worse, Cramer warned viewers. As we saw in late 2016 and early 2016, an oversupply of new stocks is about to overwhelm demand.
There are three things that keep Cramer up at night. First, the deluge of new IPOs continues. Today we saw Oscar Health shares (OSCR) – Get the report fall 7.8%, adding up to more than 11% losses due to its IPO. Clearly, investors are losing interest in these transactions, Cramer said, and there are more on the way, including South Korean e-commerce and more cryptocurrency players.
The second worrying trend is the ongoing SPAC attacks. There are simply too many of these offers, Cramer noted, and they just become more silly and desperate. Investors have already begun to flee after burning.
Finally, the worst offender will be the expiration of the blockade for IPOs we have already seen. Actions like the snowflake (NEW) – Get the report and GoodRx (GDRX) – Get the report it will soon flood the market with additional stocks and there is simply no room in an already weakened market.
The stock market is, after all, a market, Cramer concluded. Excess supply can easily overwhelm the little demand left.
Relative investment
In his No-Huddle Offense segment, Cramer reminded investors that anything that shoots as if it had no roof can also fall as if it had no floor. And the fall happens much faster.
It’s a dangerous game when actions are detached from reality, Cramer explained. Just look at the actions on social media. When Pinterest (PINS) – Get the report last year experienced better-than-expected growth, stocks jumped, valuing the company at 100 times profits. But if Pinterest is worth $ 50 billion, what is Snap (SNAP) – Get the report is it worth it with twice the growth rate? And if Snap is worth twice as much as Pinterest, clearly Twitter (TWTR) – Get the report it is even more so.
All of this thinking is fantastic, Cramer said, until we have fears of inflation and the value of that future income is suddenly worth less. Therefore, we see how the actions of social networks are collapsing, as their assessments were never tied to anything concrete.
Round Lightning
Here’s what Jim Cramer said about some of the actions callers offered during the “Mad Money Lightning Round” Thursday night:
Equinix (EQIX) – Get the report: “People don’t want to have REIT when interest rates go up. I can’t recommend it.”
Walgreens Boots Alliance (WBA) – Get the report: “The model has changed and Amazon (AMZN) – Get the report it’s the way most people want to buy. “
CEL-SCI (CVM) – Get the report: “I think this is good.”
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At the time of publication, Cramer’s Action Alerts PLUS had a position on AMZN.