• 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
    • Doug Kass
    • Bruce Kamich
    • Jim Cramer
    • 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. / Stocks

Jim Cramer: What's Winning Is the Technology of Replacement

If you look at the economy as between service and tech you find the old-guard being overrun.
By JIM CRAMER
Feb 09, 2021 | 06:29 AM EST
Stocks quotes in this article: TDOC, ZM, DOCU, PYPL, FB, PINS, ETSY, SQ, WIX, SHOP, AMZN, WMT

Did we go from being a service economy to being an industrial and medical-based technology country overnight?

Sometimes when I look at where the unemployment has been concentrated, it's distinctly in service. That's what's not moving. That and experience. Service people are capable of making things great or less cumbersome or at least offer a touch that gives you a chance to do something you couldn't do on your own.

But the hiring? It's totally in technology, meaning the technology that the Labor statistics can't pick up because those are old-fashioned and not by vertical.

More importantly, they are zero sum.

Now we are involved in re-opening and we are seeing some traditional service jobs coming back to life. The mall is actually a little bit abuzz with mall kingpin David Simon talking about green shoots in Florida and Texas malls and giving you stats that show leasing is much better than it has been, not back to 2019 but still positive per contract. We have seen second-tier retail make it back and the first, well, they are some of the best in the market.

But what's really going on, and unfortunately, where the valuations are being stretched, is in the technology of replacement. The biggest winners these last few days are the highest of growth, the companies that replace people who couldn't show up and are alas superfluous when technology can think more quickly and accurately than people and help you know your customer better than you ever could.

This is no longer a "press one to speak with" menu economy. This is the ascendance of customer relations management to the point where Teladoc (TDOC) and Zoom (ZM) and DocuSign (DOCU) are simply better than the hundreds of thousands people who we now view as "friction."

Sure there are instances where there are actually new finserve customers: look at Robinhood and PayPal (PYPL) . There are a spectacular number of companies that empower the small and medium-sized companies to be direct-to-consumer businesses found on Facebook (FB) , Instagram, Pinterest (PINS) , Etsy (ETSY) , powered by Square (SQ) and Wix (WIX) and Shopify (SHOP) . I am talking about millions of jobs created BECAUSE of tech but also because tech wiped out the day job.

Finally we have this whole, gigantic growth phalanx of new businesses devoted to alternative fuels that are thriving BECAUSE of imperatives involving climate change that, with the help of the government or of Amazon (AMZN) and Walmart (WMT) and the like, are recreating the engine. And let's not forget the virus industry. Jobs wanted galore.

It's a peculiar pastiche. One day it will be filled with hope about auto sales and all the millions of people needed to get you a car, until we see that the industry is being disrupted so quickly by vending machine car sales. Another day it will be housing and we see that it's become techno-hungry with the friction being everyone but the buyer and seller. Any tech-related company found itself on the new high list.

Most important, because of Zoom we know that we have to be hybrid home-office and that turned out to be the biggest spur of so much that we are out of semiconductors to meet the demand.

It's in this environment, not the value versus growth faux dichotomy, that we currently play. Oil is value until it's commodity. Vaccines are technology until they are up and running, destroying the stocks of all non-Covid related health care for now.

And finally, there's the SPACs that provide so much money to so many companies that need all of the cloud technology to run smoothly, which is why you can see endless numbers of payments companies and back-office helpers and customer-centric tech and onboarding tech because the new companies are about hiring as many machines and high-value software as possible and cutting out rent, the biggest friction of all save people.

It's an economy that if you look at it as between service and tech you find the trenches, the offensive and defensive lines, with the defense, the old-guard, being overrun. The money that's left is made by the skill player who hangs behind the O-line and the new tech players overrunning the old service dogs all of whom are on the run simply because they are humans and not machines loaded with artificial intelligence, machine learning and a soul directing them to victory.

(Facebook, Amazon and Walmart are holdings in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells these stocks? Learn more now.)

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 manages as a charitable trust, is long FB, AMZN and WMT.

TAGS: Economy | Investing | Jobs | Markets | Stocks | Trading | Retail | Science | Software & Services | Technology | Technology Hardware & Equipment |

More from Stocks

This Market Might Make Your Head Spin

James "Rev Shark" DePorre
Mar 8, 2021 4:40 PM EST

The rotation out of technology and into 'reopening' plays is driving the deceptive action.

'F' Is for $14

Mark Sebastian
Mar 8, 2021 2:53 PM EST

Ford as some serious FOMO behind it.

I Wouldn't Be Surprised if Palantir Technologies Worked Lower in the Weeks Ahead

Bruce Kamich
Mar 8, 2021 2:40 PM EST

Making recommendations about stocks that are thinly traded or are new issues is always a little 'dicey'.

How Does Dick's Sporting Goods Look Before the 'Big Game'?

Bruce Kamich
Mar 8, 2021 2:05 PM EST

Let take a look at the charts ahead of Tuesday's earnings release.

I'm Not Blowing Smoke With This 'Boring' Trade

Timothy Collins
Mar 8, 2021 1:46 PM EST

Given the rotation away from tech and growth, look for the market to at least make an effort at a breakout push here, taking PM with it.

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

  • 11:38 AM EST GARY BERMAN

    The INDU and DIA

    FIBOCALL: The INDU index and the DIA The INDU ...
  • 10:44 AM EST JAMES "REV SHARK" DEPORRE

    This Weekend on Real Money

    "The Challenge of Short-Selling"
  • 08:40 AM EST PAUL PRICE

    Recent Pick SpartanNash (SPTN) Raised Its Quarterly Payout by 3.9%

  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2021 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