Jim Cramer is saw a massive rotation of stocks happen on Thursday, as investors flocked into groups deemed as safe. In Cramer's view, this was a case of panic mixed with over-ownership, so, it may just be best to buy the best of what is being thrown away.
The groups being dumped started with the financials and apparel and then even Apple had a chunk taken out of it as investors viewed it as being all about the iPhone. A week ago everyone gave up on all things oil, too. Crude hit $26 and everyone thought the world was ending for these companies.
The most recent group to be obliterated is health care. Many investors had been hiding in these stocks, but political issues and a few missed quarters from companies sent them running.
"Just throwing all of them away and instead deciding to hide in the consumer packaged goods stocks like Campbell Soup, Kellogg, Procter and even the left-for-dead Kimberly-Clark," the "Mad Money" host said.
The fear is that they might remain weak until the election, so don't even bother owning them.Jim Cramer
Cramer drilled down several reasons why the health care stocks have become taboo, starting with the Presidential election. The leading Presidential candidates from each party have bashed the entire health care industry.
And while Republicans have avoided the conversation of pharmaceutical pricing topic, Cramer added that Donald Trump did go on record as stating that he would allow Medicare to negotiate with them in order to save the Treasury $300 billion.
Even though Trump will not be attending the Republican debate on Thursday, many on Wall Street still fear that he will stake out this ground again when he gives a talk on policies.
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This topic of pharmaceutical pricing also happens to be an issue that Trump, Hillary Clinton and Bernie Sanders agree on, as they are in favor of the government negotiating with drug companies.
Cramer doubts that any president will be able to actually pull this off because big pharma has so many friends in Congress. But the rhetoric is still very bad for the industry.
It is also true that every other developed country uses its weight to bargain with drug companies, so taxpayers would be saved a fortune if this happened.
"So, you can understand why these stocks are in such weak hands. The fear is that they might remain weak until the election, so don't even bother owning them," Cramer said.
While Cramer understands this fear, he does think it could be a good idea to think long term and do a small amount of buying.
"I'm not trying to call a bottom in health care, but I think it makes a ton of sense to take a longer-term view, like you might have done in other areas where the fundamentals are fabulous but the sentiment is terrible," Cramer said.
So, when Cramer took a sum of everything that is happening right now, he could see the panic and rotation happening clearly. That is why he thinks the best bet is to think long term and buy the best of what is being thrown away in stages, because one never knows when a new rotation will end.
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