CNBC's Jim Cramer reviewed Wednesday's market action, telling investors to look beyond hot stocks and pay attention to "sleepers."
"The game is self-correcting: The too-hot eventually cool down, the sleepers wake up and get too expensive themselves," he said. "It's a process, people, and if you approach it clinically, you'll know the expensive stocks come at a price that can and will diminish as the underlying companies can't keep up with Wall Street's overhyped expectations."
The major averages declined Wednesday after the Federal Reserve indicated it wouldn't be ready to cut interest rates in the spring. To Cramer, this piece of Fed action and resulting sell-off means investors can be more decisive about their portfolios.
Cramer looked at several high-profile stocks that reported solid numbers Tuesday night but fell Wednesday, saying investors had raised expectations too much before earnings. Even after reporting revenue and earnings that exceeded Wall Street's expectations, Alphabet and Microsoft saw their shares decline, and by close, the former was down 7% and the latter over 2%.
Although Starbucks reported disappointing earnings on Tuesday, its stock managed to climb on Wednesday. Some analysts suggested Wall Street had been prepared for worse results. To Cramer, the company's stock had "nowhere to go but up."
"With this background of the Fed doing nothing, you got to err on the side of picking players that haven't run too much," Cramer said. "Because anything that's run too much can slip down even on good numbers."
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Disclaimer The CNBC Investing Club Charitable Trust holds shares of Microsoft, Alphabet and Starbucks.
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