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Jim Cramer: Sell Index Funds and Stay Long These 4 Stocks
Posted on 5/4/20 at 11:51 pm
Posted on 5/4/20 at 11:51 pm
quote:
If you are older, as I am, and you are still walking around with something like 80% or 70% S&P Index fund, I would say that's just too much risk. We know most people are in index funds now. On Saturday, Warren Buffet was questioned about whether indexing has reached a peak and has overstayed its welcome.
Buffett defaulted to how much better an index fund is to one that charges fees. I get that. But he didn't address what I thought the core of the question was: do index funds own too many of the wrong stocks for a recession/pandemic? Buffett did not truly address the latter and my judgment is you now must scrutinize the index because it was built without a pandemic in mind.
The problem is, if you own index funds, you own the other $13 trillion. Many of these stocks were index worthy during even a garden variety recession, but not one of pandemic proportions. In a pandemic that's coupled with a worldwide collapse of trade and a trade war, you have to have a lot of cash and you have to overweight secular winners wherever they may be, even if it means being very long Facebook (FB) , Alphabet (GOOGL) , Amazon (AMZN) and Microsoft (MSFT) as I have long advised club members. These are and have been core holdings for ages because they have great management, can pivot and have fabulous balance sheets. How many S&P 500 names can meet that tri-part test?
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Posted on 5/4/20 at 11:53 pm to rickgrimes
Oh Cramer hasn't heard of MVIS????????
Posted on 5/5/20 at 7:02 am to rickgrimes
I wonder how the folks who were long on Shell feel about this strategy
Posted on 5/5/20 at 7:21 am to rickgrimes
quote:
you have to overweight secular winners wherever they may be, even if it means being very long Facebook (FB) , Alphabet (GOOGL) , Amazon (AMZN) and Microsoft (MSFT)
those stocks plus AAPL are like 25% of the S&P. If you hold an index fund you hold those stocks, but what that also means is that in the current market you’d be better off ditching the index fund and just buying those equities. A middle way is to get out of the whole market index funds and invest in growth, dividend and industry specific funds, which are SOP for most investors
this isn’t groundbreaking investment strategy
Posted on 5/5/20 at 7:40 am to cgrand
quote:
If you hold an index fund you hold those stocks,
yep all of them are in VIGAX and other funds including apple, visa, etc.
Posted on 5/5/20 at 8:14 am to rickgrimes
This idea works if you’re ignorant.
Posted on 5/5/20 at 8:30 am to jimbeam
quote:
This idea works if you’re ignorant.
Go on.... I think it's pretty sound general advice for the masses in this market...
Posted on 5/5/20 at 8:35 am to Zilla
You think it is sound advice to sell a diversified fund to put all of your money into the hottest names of one sector? Pretty sure I would get sued if I did that.
Posted on 5/5/20 at 9:47 am to jimbeam
I beat Jim Cramer in a stock picking contest... just so ya know.
P.S. And if you haven't noticed, I'm a monkey (literally).
Yours Truly,
Mr. Adam Monk
P.S. And if you haven't noticed, I'm a monkey (literally).
Yours Truly,
Mr. Adam Monk
Posted on 5/5/20 at 10:20 am to Janky
I think being indexed during this type of recession isn't necessarily the best position to be in...and I like picking individual stocks so for me I'd do that...esp when those stocks themselves are diversified businesses....
This post was edited on 5/5/20 at 10:23 am
Posted on 5/5/20 at 10:26 am to Zilla
All people need to do is look at your Pick'Em equity choices in our contest. High revenue growth, reasonable market cap, and tech focused.
Posted on 5/5/20 at 10:53 am to LSUtoOmaha
Thats where I like to be, maybe coupled with some of the big boys mentioned herePosted on 5/5/20 at 12:05 pm to rickgrimes
I saw something that showed the top 3 companies (by market cap) outperformed the entire market quite substantially, going back to like 1980 or something. It was a Reddit post so don't @ me. Seems to jive with Cramer's advice.
ETA: Here's a quote from Buffett at the shareholder's meeting
ETA: Here's a quote from Buffett at the shareholder's meeting
quote:
“In my view, for most people, the best thing to do is owning the S&P 500 index fund,” Buffett said at Berkshire’s annual meeting. “If you bet on America and sustain that position for decades, you’d do far better than buying Treasury securities, or far better than following people ... Perhaps with a bias, I don’t believe anyone knows what the market is going to do tomorrow, next week, next month, next year,” Buffett said.
This post was edited on 5/5/20 at 12:10 pm
Posted on 5/5/20 at 12:32 pm to Boring
quote:Was it the same 3 companies over that time period? Would you just buy/sell as market share changed?
saw something that showed the top 3 companies (by market cap)
Posted on 5/5/20 at 12:43 pm to jimbeam
quote:
Was it the same 3 companies over that time period? Would you just buy/sell as market share changed?
Sorry yeah, I didn't make that clear. It's the top 3 companies by marketcap each year, so it would look something like this just as a quick example:
1980: Ford, GE, JCPenny
1990: Ford, GE, Visa
2000: Microsoft, Walmart, Visa
2010: Microsoft, Amazon, Facebook
2020: Microsoft, Amazon, Apple
Posted on 5/5/20 at 12:57 pm to Boring
Was Visa public in 1990 or 2000?
Posted on 5/5/20 at 12:58 pm to hottub
I don't know man, I was just using random companies for the example 
Posted on 5/5/20 at 1:26 pm to rickgrimes
quote:I'm not a fan.
Jim Cramer: Sell Index Funds and Stay Long These 4 Stocks
Ms NC likes Cramer. I think he's hot garbage. This "4 Stock" bullshite advice is a perfect example. Cramer runs a daily segment called "Am I diversified?" Guess what Jimbo . . . a Facebook (FB) , Alphabet (GOOGL) , Amazon (AMZN) and Microsoft (MSFT) portfolio ain't diversified.
Cramer simply is not trustworthy.
Half of his show has turned into CEO interviews which are actually infomercials. I don't know how much the CEO's pay to be "interviewed", but the interactions stick of greased palms. Hell to this day, Cramer would still be willing to bring Aubrey McClendon on to sell the audience on what a great company Chesapeake Energy is, if only Aubrey hadn't offed himself in a car.
quote:Do index funds own too many of the wrong stocks for a recession/pandemic? Like, for example, do they own the four major airlines as Buffett did?
Buffett defaulted to how much better an index fund is to one that charges fees. I get that. But he didn't address what I thought the core of the question was: do index funds own too many of the wrong stocks for a recession/pandemic?
Here's an idea Jimbo . . . if you think the S&P is headed south Jimbo, buy an inverse fund
Posted on 5/5/20 at 2:54 pm to rickgrimes
Jim Cramer is head of sheep herding (and then shearing) for Goldman Sachs. Do the complete opposite of this charlatan.
NC nailed it above!
Btw, your money was NOT fine with Bear Stearns! He murdered sheep with that infamous call!
NC nailed it above!
Btw, your money was NOT fine with Bear Stearns! He murdered sheep with that infamous call!
This post was edited on 5/5/20 at 3:01 pm
Posted on 5/5/20 at 3:24 pm to Hussss
quote:
Jim Cramer is head of sheep herding
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