NEW YORK ( TheStreet) -- "Let it ride," Jim Cramer said on his "Mad Money" TV show Tuesday, as he told home gamers that they don't need to be like a hedge fund and try to game the market every day. Instead, he said, sometimes doing nothing works just fine. Cramer said that hedge fund managers are like sharks in that they need to be in constant motion in order to stay alive. There is daily pressure to turn a profit with every trading session. And that leads to the endless buying and selling of the S&P 500 futures on every headline, every tidbit of news out of Europe, out of the U.S., out of China and out of pretty much anywhere. Cramer explained that the hedge fund managers have been playing it safe as of late, shorting the markets, betting that worries out of Europe and debt concerns here at home would flush out the retail investor and send the markets lower. But he said no one expected to hear about a possible U.S. debt deal today, nor were they prepared for Apple ( AAPL), a stock which Cramer owns for his charitable trust,
Bearish on TechIn the "Off The Charts" segment, Cramer showed viewers just why he's so bearish on the tech sector, despite Apple's superb results. He used a monthly chart of the Morgan Stanley Tech Index and the Philadelphia Semiconductor Index, relative to the S&P 500 overall, to illustrate his point. The chart included the combined monthly performance between 2000 and 2010. According to the chart, both the tech and semiconductor indices underperformed the S&P by about 1% in the months of July through September, while they outperformed the markets from September through January by almost 3%. What's behind this move? Cramer said a few things, including the need for retailers to replenish inventories after the back to school season, all of Europe returning from summer vacations, governments around the globe rushing to complete year-end buying and the curious case of summer pre-announcements not being quite as bad as predicted. For all of thee reasons, Cramer said history tells us that now is not the time to be buying tech stocks. He urged investors to use any strength in this rally to sell their tech before the next leg lower can begin. Cramer said there will always be outliers, like Apple and IBM ( IBM), another Action Alerts PLUS name, but these two companies are only making it harder for others that compete with them, which is why Apple and IBM are the only two tech names Cramer said he'd comfortable recommending for the time being.
Online EdgeSometimes its not all about the numbers, Cramer told viewers, as he pitted the high-end retailer Williams-Sonoma ( WSM) against its lower-end rival Pier 1 Imports ( PIR) to see which makes the better investment. Williams-Sonoma operates 589 high-end stores under four different concepts, while Pier 1 has 1044 stores in the U.S. and Canada and mainly caters to a less expensive crowd. Cramer said based on the metrics alone, Pier 1 seems to have the lead, while both companies are doing quite well. In both cases, the companies are seeing stronger margins, lower inventories and increased same store sales, said Cramer. Both companies also have great balance sheet, with Sonoma having $4.50 a share in cash on its books and Pier 1 having $2.60 a share. But Cramer said sometimes picking stocks is also about the subjective, not just the numbers. Here, he said, Sonoma has the edge, thanks to its online operations which account for 34% of total sales. Online is growing at a 20% clip for Sonoma and the company's platform will allow it to expand internationally with ease. Pier 1, on the other hand, is only getting started with its ecommerce operations, the bulk of which will roll out next summer. Cramer said Sonoma also gets the edge thanks to its multiple concepts, which include West Elm and Pottery Barn. He said each of these concepts has room to grow, while Pier 1 only has a single concept. So while the companies may look identical, Sonoma trading at 17 times earnings with a 13% growth rate and Pier 1 trading at 15 times earnings with a 12.5% growth rate, in reality the time is now to pull the trigger on Williams-Sonoma, said Cramer. The stock is also 15% off its high and has less analyst coverage, he said, leaving more room for upgrades.