Stocks are just pieces of paper, Jim Cramer reminded his Mad Money viewers Wednesday, and Wall Street will keep printing more until the buyers run out of firepower. Cramer said his froth-o-meter is heading toward the danger zone and investors need to take note and take profits.
There are three areas of froth in the market that have Cramer especially worried.
Special purpose acquisition companies, or SPACs, are following the typical IPO cycle, where the best deals come first, followed by a growing wave of lesser and lesser deals until eventually, the market implodes.
Cannabis is another area where investors are getting especially greedy. Cramer said he's still a believer in Canopy Growth (CGC) - Get Report, as that company has the backing of Constellation Brands (STZ) - Get Report. All others are incredibly overvalued. Cannabis stocks got crushed once before, he cautioned, and it will happen again soon.
Finally, there are the short-squeeze stocks, which are all over the news, but totally unhinged from their fundamentals. These trades are no longer new and clever, Cramer said, and people will eventually lose interest.
All frothy markets follow the same patterns, Cramer explained. They're impossible to resist, they last a lot longer than anyone expects, but eventually, they burst.
There are still parts of the market that are working, so it's not time to sell everything, Cramer concluded. It is, however, time to get cautious and start raising cash for when the end finally comes. In the dot-com era of 1999 through 2000, over 330 companies came public, he reminded viewers. Only a handful survived.
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Executive Decision: Mattel
In his first "Executive Decision" segment, Cramer spoke with Ynon Kreiz, CEO of toymaker Mattel (MAT) - Get Report, which just reported a top- and bottom-line beat with strong guidance. Shares closed the day down 2%.
Mattel saw its best fourth-quarter growth in 15 years, Kreiz said, and the company overall saw strong demand to cap off an exceptional year for the toymaker. Kreiz said this year's results are part of a multi-year strategy that is tracking well.
In addition to toys, Mattel is doubling down on toy-related entertainment, with 11 films and 17 TV shows currently in production, and another 25 in development, Kreiz added.
Mattel has improved its cash flow for three years in a row, using its excess cash to pay down debt and improve its balance sheet.
Executive Decision: Juniper Networks
For his second "Executive Decision" segment, Cramer also spoke with Rami Rahim, CEO of Juniper Networks (JNPR) - Get Report, the network equipment provider that trades at 15 times earnings with a 3.5% dividend yield. Juniper is holding its annual analyst event this Friday.
Rahim said that Juniper managed to have a great year, despite the pandemic, by focusing on the segments of the enterprise market that were growing and pivoting to meet the new challenges. He said companies like Zoom Video (ZM) - Get Report, for instance, are taking advantage of Juniper's data center products, while those like ServiceNow (NOW) - Get Report are leveraging their AI-driven networking solutions.
Rahim explained that Juniper was able to reduce network trouble tickets by 90% but using AI to diagnose and fix problems before and as they occurred. The result, he said, is that end users that always have access to the services they need.
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Off the Charts: Silver
In the "Off The Charts" segment, Cramer checked in with colleague Carley Garner over the chart of silver, the commodity that became a target of the Reddit crowd, but failed to see the same result as equities like GameStop (GME) - Get Report.
Cramer explained that unlike equities, silver is a global asset. When prices increase, producers simply increase production to compensate. There aren't many short sellers in silver, he added, something that was confirmed by Garner by looking at the Commitment of Traders, or COT, report.
Garner noted that before silver's recent move, both large and small speculators were net long on silver. That's why the commodity barely revisited its summer peak of $31. Garner felt it was unlikely silver would revisit $36 an ounce, although she noted that the relative strength indicator, or RSI, is still positive, meaning more upside is likely in the short term.
Chips: Made in America?
In his No-Huddle Offense segment, Cramer said once the pandemic is over, America will be left with two other crises -- high unemployment and a growing shortage of semiconductors. Fortunately, there is a solution to both of these problems, following the Operation Warp Speed playbook.
Cramer said despite being the global leader in semiconductors, America outsources nearly all of its chip manufacturing to Taiwan and South Korea. But if we made semiconductors a national priority and took advantage of low interest rates, we could sell bonds to build state-of-the-art foundries and companies could repay the loans with the chips they produce.
Semiconductors aren't a luxury, they are a national security and competitiveness issue that affect autos, IoT, defense and practically everything that has a chip inside. We made vaccines a national priority, semiconductors should be next on the list.
Here's what Cramer had to say about some of the stocks that callers offered up during the Mad Money Lightning Round Wednesday evening:
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At the time of publication, Cramer's Action Alerts PLUS had no position in the stocks mentioned.