Sometimes I wish that stocks were just liked or retweeted positively rather than be bought because some of these moves are so breathtakingly stupid and based on nothing that they might as well be social media playthings.
Seriously, on a day like today with the Nasdaq plummeting but the old blue chips hanging in you see lots of stocks moving for no reason whatsoever other than other slim-reed theses that last as long as a tweet or maybe even shorter.
Maybe that makes sense. After all our president embarked on a major economic strategy with a few tweets Tuesday, notably criticizing the Fed because it has "incessantly lifted interest rates even though inflation is very low." Trump says if the Fed started cutting rates aggressively "we have the potential to go up like a rocket." Given the rigorous analysis about the Fed the president's offering, perhaps it makes sense that stocks should go up or down on happenstance.
But Tuesday just bugged the heck out of me and let me tell you why.
First, let's talk guilt by association. Alphabet's (GOOGL) stock plunged 8% Tuesday on a quarter that the company stubbornly insists was a good one. Put aside that Alice in Wonderland critical analysis of 90 days' worth of Google, the fact is that Alphabet's issues were, if anything indicative of the strength of other companies that are nipping at its heels or actually chomping at its knees. Nonsense.
Alphabet's stock got eviscerated because it is losing share in its core index ad business, presumably to Amazon (AMZN) and Facebook (FB) , both of which present seamless alternatives, with the former being a lot more friendly to the enterprise and the latter working really well for small and medium-sized business.
So, what happens? Instead of going higher the stocks of both Amazon and Facebook go down. If ball clubs were represented by stocks, Tuesday's moves were like sending the winning teams down even though they beat the losers. That's so counterintuitive it makes me sick.
What should have happened?
The collective mentality of the sellers must be compared to those of nematodes and coelenterate, or jellyfish. That's right. Jellyfish.
That's why I wish that instead of selling the stocks of Amazon and Facebook you could simply say, write a bad Yelp (YELP) review of them or tweet out a scathing review, not unlike the president's thoughtful riposte to Fed Chair Jay Powell's rash rate-raising behavior.
You buy Amazon and Facebook on Alphabet's weakness. But the merchants of ETFs have bundled so many baskets woven together with these three stocks that they have to trade together.
You know those t-shirts your partner might wear, the ones that say, "I'm with stupid?" That's how I feel about the entire consumer packaged-goods sector. If you bought them Tuesday, probably on some ridiculous view that we are about to go into a recession, you are now with stupid.
Look, I like the stocks of PepsiCo (PEP) , Clorox (CLX) , Colgate-Palmolive (CL) , Procter & Gamble (PG) , Kimberly-Clark (KMB) , but they all had gigantic moves Tuesday, every one of them. But nothing happened. I mean nothing at all. They didn't report. They didn't gain from anything. There was no survey indicating that apotheosized millennials are suddenly brushing their teeth more with Colgate or blowing their noses with Kleenex twice as much as they used to while they swill Diet Mountain Dew while firing up the Kingsford. It just didn't happen. Nothing. Yet these stocks led the market.
Hmm, maybe it is not because people feel a recession could be coming. Maybe portfolio managers have swapped their heads for bags of hammers and decided that they are tired of a growth animal like Alphabet and if they want real growth they might as well hide in the aisles of the supermarket. I do not mean to insult hammers, especially the claw kind, but these are moves that should not be had. It would have been much better had portfolio managers decided to block these stocks and report their abuse to @Jack at Twitter.
Not that long ago both United Parcel Service (UPS) and FedEx (FDX) reported earnings that, if you owned the stocks, felt like the equivalent an ice ax buried more than two inches into the skull of Cramer-fave Leon Trotsky.
What's happening now?
First, FedEx has been rallying non-stop, I mean just a straight line, ever since it reported a real disappointing quarter. Then United Parcel did the same. Now, after it got hammered, the stock's doing the same kind of pirouette.
Why?
One thing it can't be? An accelerating economy. If buyers are sending up Clorox, PepsiCo and Procter you don't send up FedEx and its doppelganger UPS.
No, I have a better reason why: portfolio managers based in the United States are exercising their First Amendment right to do incredibly stupid things. Wouldn't it be better if they just liked these stocks under a whole lot of different names on Facebook? Maybe set up an Instagram account where you can dress up like a FedEx or UPS worker and do shows to demonstrate affection of the stock. Anything but mindlessly buying it. Yet that's what happened Tuesday.
Oh and you want crazy? Occidental Petroleum (OXY) , which is trying to buy Anadarko Petroleum (APC) decided to accept $10 billion of Warren Buffett's money to make the bid work. That's all well and good. But Oxy, which pays a 5.3% yield will be paying Warren Buffett 8% on the money he lent. I absolutely love being affiliated with Warren Buffett. And my charitable trust, Action Alerts PLUS, which owns Anadarko, is most grateful. But 8%? That's positively usurious.
I would have just borrowed money from a bond market that probably would have lent it at about 5%. No need to create what's basically a second class of shareholder with first-class rates. I think that it's time to ring the register in both Anadarko AND Oxy and the latter should have been down much more if it weren't for Buffett's imprimatur.
Why did this happen? I think it's because Buffett has an almost Kylie Jenner-like following. Maybe it would have just been better to like this Buffett initiative like an Instagram and have it be liked 18.1 million times, which would be the most likes of one Instagram ever.
Look, stupid is as stupid does. The difference is stocks aren't boxes of chocolate. And on days like Tuesday, chocolate's a lot smarter.
(Alphabet, Facebook, Amazon and Anadarko are holdings in Jim Cramer's Action Alerts PLUS Charitable Trust Portfolio. Want to be alerted before Cramer buys or sells these stocks? Learn more now.)
