Jim Cramer and Katherine Ross are discussing FAANG, Peloton's treadmill recall, Gary Gensler's testimony in front of the House Financial Services Committee, Kellogg (K) - Get Report and Uber (UBER) - Get Report and Tapestry's (TPR) - Get Report earnings in the video below:
When In Doubt, Hold on to FAANG
"When our booming economy begins to cool, the tech stocks will come roaring back, Jim Cramer told his Mad Money viewers Wednesday. That's why it's always prudent to keep a diversified portfolio and never give up on FAANG," TheStreet's Scott Rutt wrote in his Mad Money recap. "FAANG is Cramer's acronym for Facebook (FB) - Get Report, Amazon (AMZN) - Get Report, Apple (AAPL) - Get Report, Netflix (NFLX) - Get Report, and Alphabet (GOOGL) - Get Report."
"Yes, it's true, things aren't looking good for the FAANG stocks so far this year. Shares of Amazon are up just 1%, while Apple remains down 3% for the year. Those results can't hold a candle to the industrials like Cleveland-Cliffs (CLF) - Get Report, up 39%, or steelmaker Nucor (NUE) - Get Report, up 75%," Rutt continued. "But Cramer said he's not giving up on FAANG and offered up five reasons why it would be a mistake to sell."
"First, there is no real FAANG, these are just five separate entities, all with winning pedigrees. Second, while FAANG may be lower in 2021, over the long term, it's no contest. Over the past 10 years, Apple has delivered 934% gains and Amazon is up 1,559%," he wrote. "Third, boom times like now are great, but they never last. The economy will eventually cool and the industrials will fall. Meanwhile, FAANG is built to last. All of these companies have the scale and resources to reinvent themselves time and again."
U.S. regulators and Peloton jointly said they were recalling the company's Tread+ and Tread treadmill machines after injuries and a death.
The U.S. Consumer Product Safety Commission said in a statement that consumers who bought either treadmill should immediately stop using it and contact Peloton for a full refund.
This comes after the commission issued an "urgent warning" linked to the devices last month.
CEO John Foley said in a statement that the decision to recall both products "was the right thing to do for Peloton’s members and their families."
"I want to be clear, Peloton made a mistake in our initial response to the Consumer Product Safety Commission’s request that we recall the Tread+," he said. "We should have engaged more productively with them from the outset. For that, I apologize."