원문 보기
My mission is simple: to help you make irazy America. Others want to make friends, and I'm you, but to teach and enlighten you. So call me at 1800 743 CBC or tweet at Jim Cramer. Okay, listen, because we have two markets here. That's right. We have a house of pain and a house of pleasure. House of pleasure.
The House of Pleasure has walls made of traditional stocks that withstand any test. But the house of pain collapsed completely. And today the walls have collapsed. The Dow fell 1,623 points, the S&P lost 0.53%. The NASDAQ is down 0.98%—right where the house of pain is. So how did we get two markets?
Everything is simple. You see, we have a market made up of old-timers who know how the business cycle works. When the economy picks up, they have a whole bunch of stocks to buy. Good old cyclical stocks that can make you a fortune while the economy recovers. These are the stocks that took the market to new heights.
These are the stocks of the "roaring 20s ", the boom stocks, the ones you should own while the world returns to normal. Well, there is also a second market. Oh, that second market, dominated by a younger generation attracted by commission-free trading, the simple Robinhood app, and a few very exciting stocks that made people say, "We'll find the next Tesla." OK.
Old-school players own stocks that the second group has never heard of. I mean, the "old guys" own Emerson Electric, Ingersoll Rand. These names mean nothing to the young crowd. They wouldn't recognize Honeywell even if she hit them over the head. They are not interested in PPG, or even Home Depot or Lowe’s.
They would rather cut their own throats than own JP Morgan or Wells Fargo. Too boring. But that's exactly what's been working lately. Unfortunately, for this new generation of investors, what works seems to be worthless. They don't need what works. They need drive. Drive — it's great when your favorite stocks are growing.
Oh, but it's a nightmare when things go wrong. And things are going very badly for this group. Look, overall, it's a strong market with a lot of great winners, right? Averages continue to reach new highs. I mean, the happy days are back again. I talk about it every night. But there are also stunningly unsuccessful outsiders.
And who do they usually belong to? For beginners. I want to take time for the details, the "furniture" we find when we enter this house of incredible pain. So, who do we see, sir? We see Tesla. Yes. Here's a stock that was going straight up until January. Hey, did you know about this? Did you know that Tesla has virtually not changed in 2021?
Tesla has been falling steadily since its peak when it entered the S &P 500. Experienced investors know not to chase stocks that have already risen significantly. When you get a big win, you lock in a profit. But novice traders can't hold back. They don't understand that the news is about selling, not buying.
Then again , just a few months ago, Tesla was the best success story in the stock market. Still about 1200% growth over the last couple of years. This is the stuff dreams are made of. Tesla's incredible rise has brought in legions of young investors. They bought shares. But no, they were never satisfied with just stocks, were they?
They also needed to buy call options to get more leverage. They needed to borrow money, do whatever worked. Now they can't . Some of these firms do not allow lending, but they do allow call options. Call options work great when stocks are soaring, but when stocks are stagnant or falling, there's nothing worse, especially out of the money, or let's say, you know, barely in the money, or at the money...
Oh my God, they've all lost value because Tesla stopped growing. This is partly due to sector rotation, where investment managers replace fast-growing technology stocks with cyclical ones that are prone to ups and downs. However, it certainly doesn't help that the news flow about Tesla has been, let's say, suboptimal.
We just had that terrible accident that killed two people. Probably because there was no one behind the wheel . I don't think it's fair to blame Tesla for this. It seems like the driver's fault, or in this case, the non- driver's. But a bad headline is a bad headline. So Tesla is in a tough spot right now.
Of course, there are many other residents in this " house of pain ." You have lockdown stocks that benefited from the pandemic. Many new investors fell in love with Zoom last year , but now Zoom has fallen from 588 to 324. Third, you know what they fell in love with? They loved the cruise promotions and it was great.
They too were crushed, or they went into decline. Their balance sheets were bad. This worked perfectly because the stock was oversold. Now, however, cruise lines have ground to a halt due to the CDC, which seems determined to put them out of business. This may not sound like a bad thing, but when the stock stops, call option holders lose everything.
You own options on cruise lines. You were caught on a hook. The fourth, most destructive wing of the House of Pain is SPAC companies. So many people are chasing these SPAC electric cars in the desire to find the next Tesla. Perhaps some of them will turn out to be gems , but for now the whole building has collapsed.
We had QuantumScape on Friday's broadcast. I think they performed well. This battery project was one of the best SPACs, but the forecasts are very aggressive and do not take into account the possibility of failure. With stocks down 76% from their peaks, it's a veritable battery of broken dreams. Well, hey , it could have been worse.
Their competitor Romeo Power fell 80% from its peaks after the “ mother of all cuts” in performance. Where are you, Romeo? No, we are fine. The same can be said about Lucid Motors or Fisker. Fantastic concepts, terrible promotions. Lucid is a great car company, but its merger with Churchill Capital 4 was a complete mess.
Now listen to this. This SPAC is up 95% in a year, to over 19, looks good, right? Yes. You think that's good, but the stock was trading at 64 a couple of months ago. Yes. From 64 to 19. Buyers got too carried away with speculation about the terms of the deal with Lucid. Even the best experience difficulties.
MP Materials, which mines rare earth minerals, was doing well, but then they did a secondary offering, and—bingo—the stock fell from 51 to 29. All the charging station stocks took a serious hit. Everything related to electric cars, vans, or trucks has sunk into the sand: Lordstown Motors, XL Fleet, Nikola—these are nightmare stocks.
Fifth, let's not forget about alternative energy stocks, such as FuelCell or Plug Power. These companies are trying to make hydrogen fuel cells a reality. But you had to believe they would get big orders thanks to the huge transition to "green " hydrogen. But there is no transition to "green" hydrogen.
Instead, oh, shockingly for me, there were accounting irregularities at Plug Power. Accounting violations equal sales. Six houses of pain. Peloton. Hey, these guys were doing a brisk business with high-tech exercise equipment. But now they're dealing with the fallout from a horrific video from the U.S.
Consumer Product Safety Commission that will make me never want to go near a treadmill again. This is a real video of a toddler being dragged under a treadmill along with his rubber ball . This is one of the scariest things I have ever seen. Hollywood couldn't make anything as scary as that video. Meanwhile, Bitcoin fell sharply this weekend on concerns about possible regulation.
Brutal margin call on the weekend. By the way, as I always say, when you have a big game, you need to take profits. I could talk at length about the " house of pain" versus the " house of pleasure ," but here's the important thing. If you are in simple old-fashioned actions, let's call them "poses", you are going with the flow and wasting time.
However, if you are just starting out and have never experienced a loss, like many of us seasoned veterans, are you gathering your tears? Are mine enough for you ? However, last year's biggest winners weren't just left behind. They have turned into epic losers, losing money. Meanwhile, cyclical stocks, which experience ups and downs, have weathered today's sell-off without any problems.
The bottom line is that if you contain your losses, the profits will take care of themselves. But if you try to stay in the “house of pain,” your portfolio will be completely destroye? Tweet to . Missed .
Comments 0