Jim Cramer Explains Why He Is Selling Stocks

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We are selling stock because our discipline says we have to. We are always willing to sell when we think that enough is enough, we are vulnerable to something we can't see right now because people are so bullish, but we have to be ready. Unlike a majority of owners, both in the mutual funds and hedge funds and maybe with you [a] majority, we like taking profits. It means in a world of greed with little fear we aren't greedy and we are fearful. 

By the way, when I sold some bitcoin, when I sold some stocks that everybody liked on, Reddit, that WallStreetBets, they were furious at me. But I said again, my discipline says after a big run you do some selling. It is not: After a big run you get worried about price-earnings and in a big run you get price-to-sales. After a big run, you take some profits because you don't know what's going to happen.

Now, no manager who comes on TV ever does what I outlined or even admits to it. No one says, “I am worried about something, but I can't pin it down, so I'm going to do some selling.” It's almost as if you’re afraid of your shadow, so I get why they wouldn't want to do it. But see, I'm not afraid of my shadow. I'm afraid of history, where I think that those reasons I gave at the top could dawn on people. The president, the expensive market, how inflation may not be ephemeral, and that will bring out sellers. And I don't want to look back and say, “what was I thinking?”

Things are very, very expensive. [S&P] oscillator way up. Lots of things that I'm worried about in terms of inflation, in terms of quarters that may not go well. And I didn't do any selling? Why not sell aggressively? Again, I'll tell you, because it is pretty darn clear that even on negative news, sellers are hard to come by. I would imagine that 60% of stocks are now owned by indexers who don't sell even as they turn all sorts of unfathomable baby-boomer ages because they can't get a return elsewise because they've been pretty much brainwashed, brainwashed that you shouldn't sell. And they don't want to go into a 2% risk-free treasury because they can't make any money.

We know that there's always going to be some money coming into the market naturally to sate the sellers. I do not want to wake up one day, though, and find that there are a plethora of IPOs that fail and secondaries that blow up for whatever reason and there's no new money coming in. Because my experience is that stocks go down far faster than they go up. And you won't be able to take action if you're not taking action when things are up. Remember, we like to sell strength and buy weakness, and not to buy strength.

None of these stocks is a key holding in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer adds or removes stocks from his portfolio? Learn more now.

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