Stocks are likely to head lower before they come back, Jim Cramer admitted to his Mad Money viewers Tuesday. That's because this market is quick to latch onto the negatives but slow to identify the positives, he said -- especially when it comes to trade.
Not everything hinges on trade, however, and much of our economy will thrive, even if tariffs stick around forever.
Tuesday's tweet from President Trump suggesting that a trade deal might not be reached until after next year's presidential election may have sent the markets reeling, but Cramer said that's only because they shouldn't have been this high in the first place. Many traders were betting on a quick trade resolution, but close watchers of the negotiations know that the U.S. and China are still worlds apart on just about all of the major issues.
Cramer reminded investors that we live in a service economy, and with full employment and no inflation, the vast majority of the economy will continue to thrive even with tariffs. That's because many retailers have the scale and supply chains to beat those tariffs, while China is losing more business every week the trade war drags on.
The main reason the markets fret over trade at all is tech, Cramer concluded. While many fear the end of the world if Apple (AAPL) - Get Report becomes embroiled in the trade feud, Cramer said even Apple would be able to recover if it became the victim of tariffs.
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Stick to Your Game Plan
You might be tempted to sell everything going into this horrible selloff, but that line of thinking is almost always a mistake, Cramer cautioned viewers.
Cramer recalled the market crash of 1987, when the Dow Jones Industrial Average suffered its biggest one-day loss ever. Cramer, through a stroke of luck, had sold everything just ahead of the crash, a move that made him look like a genius in the days and weeks that followed the historic event.
But what most investors don't realize is that buying stocks is always a lot harder than selling them. Cramer said while he was aggressively buying back his positions after the crash, he couldn't get back in fast enough, losing a sizable piece of those initial gains. In less than a year, the markets were right back where they started, making Cramer's "genius" selling look a lot less exceptional.
That's why Cramer said he never tells investors to sell in the middle of a selloff. There's simply no time to get back in.
Executive Decision: Salesforce.com
For his "Executive Decision" segment, Cramer spoke with Keith Block, co-CEO of Salesforce.com (CRM) - Get Report, the cloud computing giant that dipped 1.8% on a strong quarter that included some weaker-than-expected guidance.
Block reiterated Salesforce's plan to double the size of the company to $34 billion in revenues over the next four years. He said this exceptional growth continues to be powered by the digital transformation and shows no signs of slowing.
Digital transformation is not just about new technology, Block explained, it's about putting the customer first in everything you do, and about breaking down information silos to get a holistic picture of what your business needs. He said it's not just technology that's changing, businesses are changing their models and their entire organizational structures to better meet the needs of their customers.
Block continued by assuring investors that there's still plenty of innovation happening at Salesforce, both organically, with products like Einstein Voice, and inorganically, with acquisitions like Mulesoft and most recently Tableau Software.
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Executive Decision: Coupa Software
In his second "Executive Decision" segment, Cramer also sat down with Rob Bernshteyn, CEO of Coupa Software (COUP) - Get Report, the cloud-based expense management platform that just delivered a massive 14-cents-a-share earnings beat.
Bernshteyn said whether it's good times or bad times, companies always want to control their expenses, which is why Coupa has become so popular and continues to grow. He explained that the name stands for "comprehensive, open, user-centric, prescriptive and accelerated" procurement and expense management, but what they really deliver is value as a service.
Expanding on the notion of value, Bernshteyn said that not only can companies track expenses with Coupa, they can even get preferential treatment and pricing from select suppliers. The company's platform also alerts companies to suppliers that have had less-than-stellar reputations in the past.
Despite all Coupa's successes over the past 10 years, Bernshteyn said it's still early in the digital transformation. Shares of Coupa are up 139% for the year.
Executive Decision: PPG Industries
For his final "Executive Decision" segment, Cramer spoke with Michael McGarry, chairman and CEO of PPG Industries (PPG) - Get Report, the industrial coatings manufacturer that's going strong despite trade fears.
McGarry started off by saying that auto manufacturing is picking up in China, which is always great news for PPG. The company is also hot on the acquisition trail, completing five deals over the past 12 months.
McGarry said that PPG believes that growing the business is better than buying back the stock, but if they can't find anything to buy, they will certainly do both. He said PPG also remains committed to returning capital to shareholders in the form of dividends.
When asked about about organic growth, McGarry said they're very excited about the shifts in packaging away from plastics and toward materials like aluminum. They're also looking forward to more electric vehicles, because EVs require two to four times as many coatings and adhesives as traditional vehicles. McGarry noted that PPG is actively developing new materials for EVs, such as binders, gap fillers, and thermal coatings.
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At the time of publication, Cramer's Action Alerts PLUS had a position in AAPL, CRM.