To start Thursday’s “Mad Mail,” David in California asked what he should do with his NVIDIA holdings—take profits on half or buy more? Given that the stock has more than doubled since David bought it at $11, Cramer urged him to take profits. After all, bulls make money, and bears make money, but hogs get slaughtered.
“You do not buy up here,” Cramer said.
Jorge in Texas wanted to know if he should trade in his Cisco Systems for F5 Networks now that the latter has pulled back. Cramer’s response?
“Absolutely,” he said. “Do it tomorrow. I think you’re dead right.”
Bonnie, meanwhile, said she had problems knowing just when to dump a stock. Cramer told her to take some profits after a 25-percent run, and then continue selling in increments as the stock goes higher. But as for getting out of stock completely, Cramer said that depended on the company itself. If the fundamentals change, then investors should sell. But sometimes a stock fails to move even though the company’s fundamentals are good. In those situations, investors should hold on.
“We have to have patience, Bonnie,” Cramer said. “Patience.”
Jeff in Kentucky told Cramer he’d been looking at sectors that haven’t participated in the market’s recent run. Like the shippers, which are near their 52-week lows. Was this a good idea, he wondered? “Absolutely not,” Cramer said. There’s a glut of ships that’s forcing down day rates, and that’s cutting into the shippers’ profits.
“You do not want to touch any of those stocks,” Cramer said.
Investors watch closely a company’s price-to-earnings ratio, but what about the debt-to-earnings ratio? If the former is low, but the latter’s high, should the stock be bought? That’s what Alan wanted to know. “It depends,” Cramer said. Some businesses, like Verizon, have a huge amount of cash flow, and that tells you “absolutely nothing” about the debt picture. “And I think Verizon is a terrific stock.”
And lastly, Bill said he followed Cramer’s advice, selling his bonds during this period of low interest rates and buying dividend-paying stocks instead. But he was worried that, with talk of those rates starting to rise again, he’d gotten in at the bottom of the rate schedule, as that talk was putting pressure on his portfolio. But Cramer told him no.
“Interest rates are really low, so that triggers a lot of borrowing,” Cramer said. “You don’t want to give them money. You don’t want to own bonds. You want to own higher-yielding stocks.”
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