CNBC's Jim Cramer on Monday revisited his barbell strategy for investing amid the coronavirus pandemic.
Retail investors managing their own holdings, the strategy stipulates, should expose their portfolios to both lockdown and recovery plays.
"You need to maintain a diversified portfolio with high-quality companies that may be out of favor right now so that you won't be forced to pay up for winners on days like today," the "Mad Money" host said. "I want you to stick with the barbell, otherwise you'll want to throw up your hands … and give up on the entire asset class every time we get a rotation."
The Nasdaq Composite, which recently made it a habit to set new records, slid for the second day in a row as the tech-heavy index retreated 0.39% to 10,968.36.
The energy, industrials and materials segments of the market were the strong parts of the trading day, while some of the biggest names in technology lagged.
"Everybody hates the barbell, until days like today when it keeps your portfolio from getting obliterated and driving you bonkers," said Cramer, who admitted that he did not expect recovery stocks to rise without an update on Covid-19 vaccine research or progress on a new coronavirus response package in Washington.
"Stick with the barbell, otherwise you'll want to throw up your hands and give up on the entire asset class every time we get a rotation."
Cramer was most curious about the moves in the hotel chain Marriott, cruise operator Royal Caribbean and shoe retailer Foot Locker, three companies dealing in sectors of the economy ravished by the economic shutdown. All of their stocks are down double digits year to date, but they rallied Monday with Royal Caribbean trading up10% to a $57.31 close.
Marriott and Royal Caribbean, two travel companies, are both up on the market more than 15% in the month of August.
"You'd expect the high-growth portion of the barbell, the FAANG stocks ... would be the leaders, along with fellow travelers Nvidia and Microsoft," Cramer said. "Not today. Instead, we had a couple positives that boosted the other end of the barbell, positives that had nothing to do with the headlines or politics and everything to do with the companies themselves."
Marriott on Monday morning posted a bigger-than-expected loss in the second quarter, but management on the conference call revealed that interest in traveling is picking up, Cramer noted. It's a sign that the hotel industry may be beyond the throes of lost business.
"If travel's coming back, Marriott's a buy, so the stock jumped 3.5%," he said. "Sure, it's down 36% for the year, but that makes it even more enticing."
Royal Caribbean also reported losing more money than estimated in the June quarter, but executives talked about seeing "remarkable" demand for cruise bookings in 2021.
"Put the two of them together, it seems clear: consumers are eager to travel, to take a vacation. The only thing stopping them is the pandemic," the host said.
As for Foot Locker, shares popped almost 8%, closing at $29.63, after the apparel retailer revealed that same-store sales increased 18% last quarter.
The company is preparing to report quarterly results in full on Aug. 21.
The rally in Foot Locker ignited a "monster rally in all things apparel, naturally including Nike," Cramer said, "but also pretty much everything else imaginable. Think about it: if Foot Locker's good, what can Target and Walmart put up?"
Disclosure: Cramer's charitable trust owns shares of Facebook, Apple, Amazon, Alphabet, Nvidia and Microsoft.