Jim Cramer Says Some 5G Stocks Are Making the Market Frothy

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Markets were getting too frothy at the beginning of the May 11 trading week, according to Action Alerts PLUS charitable trust portfolio manager Jim Cramer, and the main culprits for that frothiness were internet of things, 5G and oil stocks. 

Market froth refers to the market conditions that have stocks priced independent of their fundamentals and is often seen as a precursor to an actual market bubble. 

"There were many stocks that were single digits a month ago that have roared to the twenties because they have some magic formulation against COVID-19. These stocks have to be shut down," Cramer said. 

Cramer's biggest issue with 5G and IoT trades is that there are a ton of pretenders out there who are only tangentially connected to those industries and who will not benefit short-term from current economic and market conditions. 

He did name Marvell  (MRVL) - Get Report as an almost entirely 5G play that he trusts, but other than that, there are slim pickings when it comes to good stocks to own in that space. 

Cramer, however, identified oil as the frothiest market. 

"The frothiest market has been since the end of the quarter in oils. Many new oils have doubled, quite an opportunity to get out of them. Sell them," Cramer said.  

Last month, Apple announced that it could delay their launch of its 5G iPhone until December of this year. This was an important note because it's being viewed as perhaps Apple's  (AAPL) - Get Report most important product release in years.

This week, Microsoft  (MSFT) - Get Report agreed to buy networking-software firm Metaswitch as part of a plan to make 5G more efficient for operators.

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