Cramer says investors who hold stocks of companies that are losing money should sell them

CNBC’s Jim Cramer said Thursday that the early strength of broader market indices following the Federal Reserve’s faster but still gradual tightening plans doesn’t reflect the reality many companies are starting to struggle with.

“If you are in companies that are losing money, sell them,” Cramer said on Squawk Box, repeating a topic he made last week during the special online live event “CNBC Investing Club: Jim Cramer’s Game Plan.” for 2022 ”revealed.

“I think next year is the year you want to own companies that make things that do tangible things that are innovative,” said Cramer exactly a week ago. “We don’t want companies that only increase their sales, but shiploads of money to lose and get rich with cash and especially with stocks while we have the bag in hand.”

In an environment where the Fed is accelerating its bond purchases and forecasting three rate hikes over the next year to combat rising inflation, Cramer said Thursday’s futures did not reflect what actual stocks are doing.

“There’s something negative about actual stocks today,” Cramer said before Wall Street opened. He pointed to post-earnings calls from software maker Adobe and home builder Lennar that were “not that good” and that these companies “really missed” quarterly earnings estimates.

Adobe and Lennar opened significantly lower as the S&P 500 traded above last week’s record high on Thursday. While the Dow Jones Industrial Average and the Nasdaq also got stronger into the session, the initial soaring faded. The Dow and Nasdaq rose 1% and more than 2% respectively on Wednesday, ending the day nearly 1.4% and 3% respectively from last month’s record highs.

In his “CNBC Investing Club” newsletter on Thursday morning, Cramer emphasized “tangible over intangible” stocks. He also reiterated a Wednesday night theme from Mad Money that this year’s Santa Claus rally may be earlier than planned this year. The Christmas rally has historically materialized during the last five trading days of a calendar year and the first two in January.

“We have a Santa Claus and that’s great,” Cramer said later on CNBC’s “Squawk on the Street” after the opening bell. But he cautioned investors to be cautious as Wall Street analysts downgrade money-losing companies. “You are fighting the analysts” by holding these types of stocks, he added. “I find it exhausting after a while fighting the analysts.”

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