• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Bruce Kamich
    • Doug Kass
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • Trifecta Stocks
  1. Home
  2. / Investing
  3. / Industrials

Jim Cramer: We Are Seeing the Power of Negative Thinking

With all the selling, the market is afraid of even the good buys, like Amazon and Northrop Grumman.
By JIM CRAMER Oct 30, 2018 | 06:37 AM EDT
Stocks quotes in this article: AMZN, RHT, IBM, TGT, WMT, NOC, RTN

The power of negative thinking. That's the phrase I keep repeating over and over -- because the negativity is overwhelming the facts. But no one is interested in the facts right now, for fear that the facts may change -- and change for the worse. We know from John Maynard Keynes, one of the greatest economists and thinkers of all time, that when the facts change, you have to change your view, too. So that means everything you might want to buy could turn into a sale, or even a short, or the tariffs and rate hikes could keep going higher.

Right now, for example, we are all transfixed by the FAANG. They are all, we know, over-owned, meaning that there are plenty of funds that have huge gains in them and, theoretically and ironically, at least, the prevailing thinking is that unless these funds sell these stocks now, they will give up all their gains. They are going to have to give up all of their gains. That's why the stocks can't bottom.

I totally get that. I regularly check my Twitter feed and it is filled with people who think I just recommended Amazon (AMZN) for the first time at $1750. Like I fought it all the way up or something. I did recommend it at $1750. Guilty, your honor. But, how about if I recommended it at $75 or $175, does that count against my transgressions?

Apparently not, because the facts have supposedly changed and all who liked it at $1750 are now dead wrong.

That's the current storyline -- and I wish it were true. That would make me feel a little more certain. But it isn't. The company's crushing it and even the sellers would agree with that. They are just more fearful of their other shareholders than they are of their own work. The miss was minuscule. The reaction gigantic.

Some may have been sanguine about the story after Thursday's earnings blow out --oops, after Thursday's revenue miss -- but because Red Hat (RHT) has now teamed up with IBM (IBM) to "get" Amazon, I guess Amazon is no longer investable. Forget that Red Hat was disliked because it had missed the last quarter. Forget that IBM did the same. You put them together and they are supposed to beat Amazon? I like the deal, but let's not go too crazy. AWS is the undisputed king of the cloud.

I believe that if you loved Amazon at $2050 you have to worship it at $1500. But that's not how this new, very bearish, game works. We find a chink -- a minute revenue miss -- and we decide that Amazon is no longer any good and that Target (TGT) and Walmart (WMT) are great and not only that but now that Red Hat and IBM have teamed up to defrock Amazon it is double game over for the colossus that ruled the world a few weeks ago.

That's what I call the power of negative thinking.

I am seeing it everywhere. I got a call last night about Northrop Grumman (NOC) . The caller couldn't believe that after its amazing quarter, the stock should be shelled. The lightning round is fast. You don't have time to hem and haw. But I had been on the amazing NOC call and I have followed this company and loved it since BEFORE Ron Sugar was CEO -- and he left a decade ago. He's now chairman of Uber, so it is top of mind.

So, what could I do? Should I have joined the throng who are hurtling out of it -- as they are Raytheon (RTN) , a company with shares that my charitable trust, which you can follow along by joining the Action Alerts Plus club, owns?

I stood there for a moment, music blaring in the background, the clock ticking and I realized that, at this point, with the stock down more than 100 points from its high and off 16% for the year, it was too late to bail. But did I say buy? No. Too much selling. You'd be down a great deal before you even got your report.

The power of negative thinking.

In truth, Amazon is most likely a buy down here if you ask those selling it, but who has that kind of chutzpah? Even if the Democrats take the house, is Northrop still a good sale? I don't think so. I think it is a buy. But I am loath to just come out and say it. Too much blowback if it doesn't bottom today and rally big.

So, while I don't join the selling exodus, I, too, won't swim against the tide. That's because I, too, have been infected by the power of negative thinking, even when I believe that the facts haven't changed and the negativists at this juncture, with these lower prices, may actually be wrong.

So I wait until the selling stops. Like everyone else. Which is why they can fall so fast. Which is how bargains are created. Or at least will be, one day. Right now, though, I'm thinking negatively. And it's powerful as all get out.

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

Action Alerts PLUS, which Cramer co-manages as a charitable trust, was long AMZN and RTN.

TAGS: Investing | U.S. Equity | Transportation | Industrials | Consumer Discretionary | Technology | Markets | E-Commerce | Stocks

More from Industrials

Bearish Bets: 3 Sluggish Stocks You Should Consider Shorting This Week

Bob Lang
May 15, 2022 10:30 AM EDT

These recently downgraded names are displaying both quantitative and technical deterioration.

Bearish Bets: 3 Slumping Stocks You Should Consider Shorting This Week

Bob Lang
May 8, 2022 10:30 AM EDT

These recently downgraded names are displaying both quantitative and technical deterioration.

Bears Remain in Control of Rockwell Automation

Bruce Kamich
May 4, 2022 9:12 AM EDT

ROK continued to weaken Tuesday. Here's our latest outlook.

Plug Power Is a Strictly Speculative Name: Here's My Trade Idea

Stephen Guilfoyle
Apr 19, 2022 10:35 AM EDT

PLUG has a number of high volume clients and that could be huge going forward.

Are Linde's Charts Foreshadowing Economic Weakness?

Bruce Kamich
Apr 18, 2022 2:58 PM EDT

Here's what to avoid with LIN.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 11:33 AM EDT PETER TCHIR

    Thoughts Ahead of the Fed Minutes

    Recent economic and earnings issues are convincing...
  • 02:24 PM EDT PAUL PRICE

    An Interesting Chart

    I'm betting heavily that stocks will be way up aga...
  • 10:10 AM EDT JAMES "REV SHARK" DEPORRE

    This Weekend on Real Money

    "Market Timing for Dummies"
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2022 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login