Selling software service stocks on trade worries is a 'big mistake,' Jim Cramer says

CNBC 3 weeks ago

Don't give up on the entire technology sector of the market, according to CNBC's Jim Cramer.

The "Mad Money" host advised that selling off would be a poor miscalculation, urging investors to "ask yourself what you're selling."

"If you're dumping an ETF, be my guest — those are just moronic amalgamations of stocks slapped together by people who make a living by convincing you that the tech sector is still a real, cohesive thing," he said. "But if you're dumping the kind of tech stocks that are working here — especially the better run software-as-a-service names — I think you're making a big mistake."

Cramer sought to dispel thoughts that it's time to get cautious about the tech stocks that have powered the market to new highs or because of potential escalations in the U.S.-China trade war.

Software stocks like ServiceNow, and Adobe may still face pressure from the trade front, as President Donald Trump continues to pressure Chinese trade negotiators with more tariffs to agree to a trade deal, but Cramer continues to put his faith in the group.

"In fact, these stocks will probably be the first to go down again because the algorithms ... sell them on any trade worries," he said. "But after that, their stocks tend to come bouncing back with alacrity because these companies are forces of nature."

Pointing to Kohl's, whose shares deflated nearly 20% to almost $42 per share in Tuesday's session on a disappointing earnings report and forecast cuts, Cramer noted that retailers have to equip themselves with the right software to stay competitive.

Management blamed its quarterly earnings and sales declines, along with its reduced profit outlook, in part on an "increasingly competitive promotional environment."

"The lesson here is simple: If you want to stay competitive in retail, you need to pay these software-as-a-service companies a fortune," Cramer said. "That's why I rebel against this idea that you need to lighten up on tech [stocks]."

Disclosure: Cramer's charitable trust owns shares of and Kohl's.

Source link
Read also:
CNBC › 1 month ago
CNBC's Jim Cramer helps investors understand what to add to their portfolios, explains what software stocks are safe to buy here and sits down with Centene CEO Michael Neidorff to talk health care, among other topics.
CNBC › 3 weeks ago
CNBC's Jim Cramer advises investors not to give up software-as-a-service plays, despite boiling trade tensions. The "Mad Money" host sits down for interviews with executives of Salesforce, Square and RH.
CNBC › 2 days ago
"Mad Money" host Jim Cramer reveals a list of stocks worth buying on a trade deal and makes a case against free trade with China. He sits down with a Robinhood co-CEO to learn about the company's plans for fractional stock trading.
CNBC › 1 month ago
CNBC's Jim Cramer reveals stocks worth buying after Thursday's market decline, breaks down emerging Fed and China trade worries, and sits down with top brass of Columbia Sportswear, Smarties and Eurazeo.
CNBC › 2 months ago
Jim Cramer says Trump's trade strategy is working, but he's not yet sold on trade talks. The "Mad Money" host previews the week ahead on Wall Street, chats with Wendy's CEO and offers tips in golf stocks.
CNBC › 1 month ago
Resolutions to the trade disputes are "a real possibility and ... you need to start factoring it in before you start doing a lot of selling right into this market," Jim Cramer says.
CNBC › 1 month ago
"At this pace, value will soon be regarded as expensive, and the growth stocks" that were shown no mercy will look cheap, "Mad Money" host Jim Cramer says.
CNBC › 3 weeks ago
"Mad Money" host Jim Cramer says it's "crazy" to sell semiconductor stocks such as AMD and Nvidia "when they report good quarters with a tiny bit of irrelevant hair on them."
CNBC › 1 month ago
CNBC's Jim Cramer explains why some stocks rallied on "not-as-bad-as-feared" quarterly reports, makes a case to speculate on positive trade deal news and says to "ring the register" on Netflix.
CNBC › 1 month ago
"Normally these stocks get hammered in the wake of a shortfall, yet this quarter they're more likely to rally," Jim Cramer says.
Sign In

Sign in to follow sources and tags you love, and get personalized stories.

Continue with Google