Cramer: Sell Tech Stocks Into Strength
Cramer on Monday recommended selling technology stocks, which he had recommended for years.
The "Mad Money" host said names like Skyworks Solutions and NVIDIA are "trading vehicles," meaning they can fly and crash. Stocks like PepsiCo and Altria Group , however, are staples. Trading vehicles can make investors a lot of money in a short amount of time, but need to be sold every so often. Staples, on the other hand, can be held for the long-term.
"The problem with so much of tech right here is that stocks which are winners when a cycle is strong are also losers when the cycle is weak," Cramer said, adding that staples don't experience cycles. "You have to change your view when the facts change. I don't want you to end up like the victims of the dot-com bomb, the people who refused to sell when the story fell apart and got wiped out."
Communications equipment maker Ciena was trading at around $28 a share a few weeks ago. At the time, things were going great and nobody thought that would change, Cramer said. When the company gave a weak forecast, however, investors should have gotten out of the stock. The facts had changed.
To Cramer, it remains unclear when the down part of the cycle will be over. He doesn't think tech will get better any time soon, though. If there comes another opportunity to sell, he recommends doing so as to avoid further losses.
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