Looking for a bubble? Just look at last year!

Bubble or bust? Cramer says market not bubblicious
Bubble or bust? Cramer says market not bubblicious   

As Nasdaq flirts with a 15-year high and mounting speculation that tech stocks are now in a bubble, Jim Cramer is putting his foot down once and for all. Enough with the bubble talk already!

"Because the truth is, I'm not at all worried about where we are right now. This is not a bubblicious market, and that includes the high-flying technology stocks," said the "Mad Money" host.

If investors what to know what a bubble looks like, there's no reason to remember all the way back to 2000. Just look at last year!

During the first quarter of 2014, the market was flooded with initial public offerings from cloud-based software companies. A new one was hitting the marketplace every day, and it was dotcom mania.

And as the market continued to roar higher, more IPOs came into the picture. But Cramer reminded investors of a key point—stock are all about supply and demand. A glut of IPOs is not a good thing.

"In a real bubble, the kind that can devastate on a decent portion of the market, you'll often get a slew of initial public offerings as companyies try to cash in on the euphoria in the public markets," Cramer said.





A GrubHub banner on the exterior of the New York Stock Exchange on Friday, April 4, 2014.
Jin Lee | Bloomberg | Getty Images
A GrubHub banner on the exterior of the New York Stock Exchange on Friday, April 4, 2014.

And here's the problem with a significant amount of IPOs: with each new company that jumps on board to make money, the quality goes down. Eventually, you are scraping the bottom of the barrel.

One of the main reasons why Cramer avoided the IPOs last year was because he knew eventually the bubble would burst. He advised to be very selective about investing in IPOs, as many companies had stretched balance sheets. But there were just so many subpar IPOs that the good ones were few and far between.

Though many of the companies that went public last year flopped, Cramer is still avoiding some of those that survived. He recommended ducking companies like Paylocity, simply because the market for payroll and human capital management software is just too competitive. He also recommended selling A10 Networks on any strength.

So what does Cramer like currently? He has his eye on the consolidations happening with semiconductors like Avago's acquisition of Emulex, and Cypress Semi with Spansion. He also likes Skyworks Solutions, too.

He also considers Salesforce.com the "king of cloud" and thinks the stock has room for more growth. He wouldn't be surprised to see rallies from Facebook and Google, either.

So do you need to worry about IPOs this year? No.

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Last year at this time, the market had already seen 37 IPOs. This year there have only been 24—a significant drop—and fewer of the businesses are technical in nature.

"In other words, at the moment, things are not at all bubblicious. Sure the Nasdaq has run, but that's because so many parts of tech are working, even as many of the old-school, PC-centric players like Hewlett-Packard have been hammered," Cramer said.

So, stop worrying about all this bubble talk. The high-quality stocks that have been fueling the market this year are nothing like the dotcom techs that burst the bubble last year.

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