Nothing lasts forever, Jim Cramer reminded his Mad Money viewers Wednesday. After a big market rally, things have gotten too good, Cramer said, and that's causing big institutional investors to begin to head for the exits. Cramer said the markets have begun to shift from FOMO, or "fear of missing out" to FOBS, or "fear of big sellers," as hedge funds begin selling to lock in their gains.
Cramer recalled how he was in this very position at the beginning of the Gulf war in August 1990. His hedge fund had been long oil, and after the conflict began, oil prices spiked and he was able to lock in big gains. But as fears of a longer, protracted war with Iraq set in, the market began drifting lower.
Cramer said he wanted to hold onto his favorite stocks, like Home Depot (HD - Get Report) , but his partner, Karen Cramer, sold all of their positions while he left the office to grab a pretzel. Why? Because now that the easy money had been made, Karen wanted to get ahead of the rest of the sellers, which did indeed flood the market shortly thereafter.
Cramer saw similar patterns today in the semiconductors, cloud kings and General Electric (GE - Get Report) , where big money managers have begun unloading their positions to lock in gains before everyone else decides to do the same. Your only escape, he said, is with the FAANG stocks, which are immune to the trade war.
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Executive Decision: Dollar Tree
For an "Executive Decision" segment, Cramer sat down with Gary Philbin, president and CEO of Dollar Tree (DLTR - Get Report) , which just reported in-line revenue and earnings. Shares of Dollar Tree are up 11% for the year.
Philbin explained that the renovations at their Family Dollar locations continue, and they plan on renovating 1,000 locations this year. He said the keys to their success have been focusing on the basics, while also injecting some Family Dollar "wow" and some Dollar Tree surprises to keep customers coming back. It's all about the thrill of the hunt, he added, something that had been lacking at Family Dollar locations.
When asked about China and tariffs, Philbin said they continue to manage whatever the situation is at the time. He said some of the costs many affect the bottom line, but overall, they remain committed to growth. They are investing in their existing stores, building new ones and strengthening their balance sheet by paying down debt.
Cramer remained a fan of Dollar Tree.
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Executive Decision: Bristol-Myers Squibb
In his second "Executive Decision" segment, Cramer sat down with Giovanni Caforio, chairman and CEO at Bristol-Myers Squibb (BMY - Get Report) , to discuss his company's planned acquisition of Celgene (CELG - Get Report) and the recent shareholder challenges against the deal.
Caforio said the deal, announced on Jan. 3, would create the No. 1 company in both oncology and cardiovascular medicines and would create value for Bristol shareholders right from day one. The combined company would be introducing six new drugs within the first 24 months.
Caforio added that 60% of Bristol's current sales stem from products that have been introduced in the past five years, and as older drugs lose patent protections, it's crucial to have a strong product pipeline. As a combined entity, they will have 20 drugs in phase one and two clinical trials, and they'll be able to develop even more as they begin to work together.
Caforio concluded that this was not a defensive deal. They are only looking towards the future.
Rebounding From Amazon Reports
Every time it's rumored that Amazon is looking to take market share in an industry, the stocks in that industry plummet, Cramer told viewers. But every time that happens, it's been a buying opportunity.
Last week reports surfaced that Amazon is again looking to expand into the grocery and beauty business. Stocks like Kroger (KR - Get Report) and Ulta Beauty (ULTA - Get Report) immediately sank on the news, only to rebound shortly thereafter. Cramer reminded viewers we've seen this before when Amazon acquired Whole Foods and again when it was rumored to be taking on the auto parts business.
Shares of AutoZone (AZO) had fallen over 35% on those reports, Cramer recalled, which is why he recommended the stock back in October. But since those lows, shares have rallied 24%. Cramer said he's still recommending the stock, which trades at just 15 times earnings.
Likewise with Cisco Systems (CSCO - Get Report) , which also fell victim to Amazon rumors that proclaimed the web services giant was developing its own networking equipment. In the end, those reports were false and Cisco was also a buy at those depressed levels.
In his "No-Huddle Offense" segment, Cramer said this market still has one huge positive going in its favor: stock buybacks.
All throughout the big fourth-quarter decline, companies like Home Depot, an Action Alerts PLUS holding, were buying back huge amounts of shares. Home Depot purchased $4.5 billion worth in the fourth quarter alone. Overall, the company has reduced its share count from 1.38 billion to 1.12 billion, an 18% reduction.
Other retailers have been doing the same, Cramer noted, including Target (TGT - Get Report) , which reduced its share count 17% over the past five years, and Kohl's (KSS - Get Report) , Ross Stores (ROST - Get Report) and Best Buy (BBY - Get Report) .
Buybacks matter, Cramer concluded, and you never want to bet against a company that's buying what you're selling.
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