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Cramer floats idea for 'gloomy' ETF with Wall Street's most downtrodden stocks

Key Points
  • CNBC's Jim Cramer proposes starting a new exchange-traded fund with the stocks that scare investors most when trade tensions run high.
  • The "Mad Money" host includes stocks like Caterpillar, Boeing and General Electric in his fictional fund, entitled GLUM.
Cramer floats idea for 'gloomy' ETF

CNBC's Jim Cramer is growing tired of rampant negativity in the stock market, especially when it weighs on the major averages despite the fact that the economy is still strengthening.

So, on Monday, the "Mad Money" host pitched an idea to Wall Street's doomsayers.

"I would create a gloom index. It's a group of stocks that exemplifies this overwhelming pessimism," he said. "Yep, we need an ETF — obviously, it should trade under the symbol GLUM."

"The bears can sell it whenever they're feeling down and out," he continued. "Those of us with a little more composure might actually consider buying it or shorting the GLUM index."

Here are the central figures in Cramer's fictional fund:


The stock of construction equipment giant Caterpillar has the power to drag the market down, and every time concerns about President Donald Trump's steel and aluminum tariffs bubble up, people tend to sell it, the "Mad Money" host said.

"I like this company ... a lot. It's literally doing better than ever," he said. "But as long as we keep hearing about peaking earnings and trade wars, you can't go wrong making CAT the biggest position in the GLUM ETF. "


When investors are feeling gloomy about the broader global economy, they tend to sell shares of Boeing, the sprawling aircraft manufacturer with a sizable business in China.

"The stock simply cannot advance on days marred by tariff talk," Cramer said. "Doesn't matter how many times management traces out the sky-high demand or how many times I point out that China needs Boeing more than Boeing needs China. It's strictly sell, sell, sell. The stock is a cornerstone of my new ETF. "


"Many investors are repulsed, I mean, downright repulsed, by 3M here because they think it's totally adrift ... in a time of turbulent, Trump-spurred tsunami selling that's knocking down 3M's earnings every day, " Cramer said.

The Scotch tape maker posted its worst trading day in nine years after management cut the full-year earnings guidance in its April earnings report.

"3M has become a total pariah here, even as their products tend to be pretty beloved overseas, " Cramer noted. "The sellers don't care, which is why 3M personifies the doom-and-gloom ETF."

General Electric

Calling General Electric "a charter member of GLUM," Cramer rattled off the ailing industrial's many pain points: "The debt. The long-term care tail risk, oh boy. The pension issues. The lack of capital coming from GE Capital. The health care unit that so stupidly spurned a $20 billion bid from Danaher. "

"These are all nightmares that make it a perfect fit for our Gloom index," he continued. "Just wait until it cuts the dividend, which is inevitable ... if you believe Steve Tusa from J.P. Morgan, the leading GE gloomster. "

Johnson & Johnson

Sellers also tend to ignore the benefits of owning shares of Johnson & Johnson, which benefits from a weaker dollar and has eight major drugs in its pipeline, which makes it a shoe-in for GLUM, Cramer said.


The fact that Citigroup's domestic and international prospects remain strong isn't reflected in its stock, either, the "Mad Money" host said.

"Nothing it does seems to work, even when it should. This stock wants to go down because it's viewed as the bank with all the worst exposure everywhere," he lamented. "You can't make this stuff up."

Goldman Sachs

The stock of Goldman Sachs is "simply the kiss of death. It's a virtual basket of sadness. I mean, everything it does is regarded as wrong," Cramer said, noting that business at the colossal investment bank is actually strong.


Cramer admitted that Lennar's gloomy theory makes more sense than the others did. The homebuilder's prospects are dimming because of tariffs on imported lumber, slumping home sales and higher mortgage rates.


Rounding out GLUM's top 10 stocks was Walmart, the global retailer that recently took a stake in Indian e-commerce play Flipkart just in time for the president to "supposedly" wreck world trade, Cramer quipped.


With Trump considering placing tariffs on automobiles, Cramer thought Ford — rather than Tesla, which is plagued by too many short-sellers, or General Motors, which is being revalued thanks to its self-driving car initiative — also warranted a spot in GLUM.

Final thoughts

"There we go, 10 stocks that get hit whenever we start worrying about trade," the "Mad Money" host said. "Here's the bottom line: GLUM's the word. It is all-pervasive as investors freak out about President Trump's tough trade policies. That's why we've got to have this ETF. You're feeling glum? Go sell some GLUM. Trump got you down? You know what I'm saying: GLUM. As for me, though, I think these stocks are buys into weakness as the negativity, at last, ... [has] gotten completely out of hand."

WATCH: Cramer's new "gloom" index... and what's working
Cramer floats idea for 'gloomy' ETF with Wall Street's most downtrodden stocks

Disclosure: Cramer's charitable trust owns shares of 3M, J.P. Morgan, Citigroup and Goldman Sachs.

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