Search Jim Cramer's "Mad Money" trading recommendations using our exclusive "Mad Money" Stock Screener.
Cramer said the fears that the markets are replaying Y2K all over again are starting to take hold, especially with Twitter (TWTR - Get Report) barely beating the estimates, Panera Bread (PNRA) lowering guidance and Ebay (EBAY) just flat out missing their numbers. But that doesn't mean its time to panic, he continued.
Cramer explained that the tech bubble collapse in 2001 was fueled by many things, including hedge funds piling into momentum names, only to pile out when the growth stopped, the market leaders playing fast and loose with their newfound capital to make stupid acquisitions and a flood of "me too" IPOs that overwhelmed demand. That was compounded by insiders selling at any cost, truly proving to everyone that their "red hot" companies were indeed overvalued.Are those same things happening today? Well, yes, to some degree, Cramer admitted. But as you'll recall, only the tech-heavy NASDAQ plummeted in 2001. The broader S&P 500 stayed alive for a full year after the dot com bubble burst, which is why he continues to recommend scaling out of the momentum names and into safer stocks like old tech, food and retail names, those that pay good dividends and should be immune to the shift away from momentum.
Check Out Our Best Services for Investors
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Model portfolio
- Stocks trading below $10
- Intraday trade alerts