Don't try to be a hero. Take your time before buying on this weakness, Jim Cramer told his Mad Money viewers Monday.
If fact, there are five questions you should ask yourself before placing your next buy order.
Cramer said investors need to ask themselves if they have enough cash on hand to buy. Borrowing money to buy stocks is never a good idea. Second, investors need to ask if they need the money in the near-term and do they understand that the markets can still go lower. Finally, Cramer said investors need to ask if they're aware of the alternatives, like dividend ETFs, and are they OK buying individual stocks. If the answer is yes to all of these questions, only then should you be a buyer in a volatile market.
Even then, Cramer said investors need to be careful, as even great companies like Apple (AAPL) - Get Report and its suppliers will be affected by the coronavirus. You simply can't touch anything related to travel or leisure or cruises or airlines, he said. The oil stocks are also off limits, as are the bank stocks with interest rates plunging.
Cramer said he's only be a buyer of consumer staples like Coca-Cola (KO) - Get Report and Mondelez (MDLZ) - Get Report. He also recommended the drug stocks like Gilead Sciences (GILD) - Get Report and Johnson & Johnson (JNJ) - Get Report, as well as utilities like Dominion Energy (D) - Get Report, American Electric Power (AEP) - Get Report and ConEd (ED) - Get Report.
Cramer and the AAP team are thinking through Monday's decline with the majority of their positions -- including Citigroup (C) - Get Report. Find out what they're telling their investment club members and get in on the conversation with a free trial subscription to Action Alerts Plus.
Raise Cash Now to Buy Later
It's hard to call this a buying opportunity when we still don't know how bad the problem is, Cramer admitted to viewers. We're already into the second month of the coronavirus outbreak and we still know very little about the disease. We're still not entirely sure how many people have it, how quickly it spreads, or what the death rate actually is among healthy people that don't have weakened immune systems.
With so little actual information to go on, it's easy to see why so many people are critical of the Chinese government, and are buying into the many wild rumors and stories about the origins of the virus.
Wall Street has been in denial of how bad things could become, Cramer explained. That's why he's been predicting the decline we saw today. With the disease only now starting to spread around the globe, we simply don't know how bad the problem will become, which is why investors should use any strength tomorrow to raise cash so they can buy later on.
Executive Decision: Five9
For his "Executive Decision" segment, Cramer sat back down with Rowan Trollope, CEO of Five9 (FIVN) - Get Report, the virtual call center software provider whose shares fell 8% Monday after reporting a solid quarter.
Trollope said that Five9 is a critical component for companies like Teladoc Health (TDOC) - Get Report, which uses his company to manage call routing for over 500 physicians. He said in today's world, your employees can be anywhere, which makes Five9 even more valuable.
Five9's cloud infrastructure helps companies manage their most stressful times, like the dinner rush at food delivery services. They can also help with other annoyances, like transferring between call centers and agents losing the context of why you called.
On Real Money, Cramer keys in on the companies and CEOs he knows best. Get more of his insights with a free trial subscription to Real Money.
Executive Decision: Deluxe
McCarthy said Deluxe is transforming itself into a business technology company. The company now operates four business units including payments, cloud services, promotional products and its legacy check printing products. He said less than 40% of Deluxe's business currently comes from checks, and one of his company's biggest challenges is letting people know about everything they do.
McCarthy added that Deluxe had previously stemmed the decline in their check printing business by growing through acquisition. The company has made over 50 acquisitions in just the past seven years alone. But now, he explained, it's time to integrate those businesses and create a comprehensive story for customers.
When investors are worried that everything is falling apart, they buy gold. In fact, the price of gold is up 25% in just the past 12 months. That's long before the coronavirus outbreak, so what's powering the move? Interest rates.
When interest rates plunge, gold becomes more attractive. That's why, when the yield curve inverted last year, investors began piling into gold. But Cramer said the move in gold isn't done yet, as the commodity's MACD momentum indicator just recently flashed a bullish crossover.
There are many ways to invest in gold, Cramer said. He recommended the SPDR Gold Shares ETF (GLD) - Get Report, but his favorite gold stock remains Barrick Gold (GOLD) - Get Report, the lowest-cost producer of gold with the scale to deliver for years to come. Cramer also suggested Kirkland Lake Gold (KL) - Get Report, a stock that's off 20% from its highs.
Here's what Jim Cramer had to say about some of the stocks that callers offered up during the Mad Money Lightning Round Monday evening:
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At the time of publication, Cramer's Action Alerts PLUS had a position in C, AAPL, MSFT.