It's time to play a new game. It's called kill your own stocks.
We just heard Carol Tome, CEO of United Parcel Service (UPS) trying to resurrect a stock that was killed during her own conference call. It was a stunning performance where almost everything that happened in the past, all the great changes, mean little and the stock's ahead of itself. That's a new posture for a CEO. I have heard cautious CEOs, but it is rare to hear that the future might not be as good as the past.
To me, that says take the money and run.
Then we have the Chinese government, which is mowing down stocks of companies that make a lot of money that perhaps shouldn't? At the same time, the government also wants to stop the billionaire creation in its tracks both here and there. The remarkable annihilation of the China Education stocks is a warning to all companies in China: If you make a lot of money off rich people doing something that accentuates the difference in economic classes, we are going to crush your profitability. I mean that literally. How else so you get a price target cut from $93 to $3 the way Deutsche Bank slashed the blue-chip stock of Gaotu Techedu Inc (GOTU) .
The Communist Party is killing three birds with one stone here. It is confiscating the wealth of the billionaire founder. It is making the education system more equal -- rich kids have been getting better education than poor kids. And it is smashing the wealth of Americans who may own this one or TAL Education Group (TAL) or New Oriental Education & Tech Group (EDU) . You can't say the party didn't give you a head's up when it crushed shareholders of Didi (DIDI) , the Uber (UBER) of China, right after it came public. I think the party is also after companies that dumb down Chinese, like Tencent (TME) . Would could be next? Online gossip on Baidu (BIDU) ? How about excessive consumption at Alibaba (BABA) or maybe JD.com (JD) ? Maybe the Communist Party makes them have giveaway days? Hey, after it attacked popular American favorite, e-commerce platform Pinduoduo (PDD) , for pushing some fake goods, so anything is possible. The party obviously doesn't care for profitability. It ostensibly cares about equality that doesn't jibe with better-than-expected quarters.
How about it is time to flee all Chinese stocks, even the non-tech stocks, even as the media is calling this a tech crackdown?
Even the legendary Cathie Wood, the fund manager who for all intents and purposes doesn't seem to ever like to sell her growth stocks because once she buys them they will go up, is bailing. Who can blame her? You think Xi likes Americans making money off the Chinese without creating any jobs for them? I don't think so.
Don't be the last to leave. And as President Xi might say, Don't let the door hit you on the way out.
The most bizarre example of the kill-your-stock game came from none other than the Technoking himself -- his name -- Elon Musk from Tesla (TSLA) . Musk spent most of his time talking about how hard it is to manufacture cars and how the semiconductor supply chain issues are real and hurting his company. This was a remarkable quarter both top and bottom and should have been cause for the usual Musk magic and showmanship. Instead I felt like I was on an old Ford Motor (F) call. Check that, he actually praised Ford for not going bankrupt and also for mass producing the Model T against all odds. It was more like a call you would expect from a good tool and die man.
Now, unlike the other assassinations, though, at least Musk might have had a reason for playing it this way. If you were thinking about investing in one or all of the new electric vehicle competitors, whether it be the $41 billion Lucid (LCID) , or Fisker (FSR) or Rivian or any number of new competitors, ponder how difficult it might be for them to mass produce as well as Musk has done.
No matter, on a down day, the last thing you want is a company with stewards -- whether they be Carol Tome, the Communist Party or Elon Musk -- making you feel like a chump for owning their shares after uniformly good quarters. Look, I am not asking for hype. I don't want endless self-promotion. But how about helping, not hurting, your own cause.
(F and UPS 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.)
