Jim Cramer said Monday that the stock market is divided between houses of pleasure and pain, one made up of traditional stocks and the other made up of stocks favored by younger investors, CNBC reported.
What Happened: The “Mad Money” host said that the “house of pleasure has walls made of traditional stocks that hold up under scrutiny, but the house of pain has been falling apart.”
The former hedge fund manager said that the stocks in the house of pain, the same that drew investors to the markets last year, are now leaving them out in the cold, according to CNBC.
The TV host said that the second market — one that represents the house of pain — is dominated by “the younger cohort that’s been drawn in by no-commission trading, an easy-to-use Robinhood app, and some very exciting stocks” that made people fortunes last year.
“The old school players own stocks that the [newcomers have] never heard of” like Emmerson Electric Co EMR.
“They wouldn’t know a Honeywell if it hit them over the head,” said Cramer — adding, “ They would rather slit their own throats than own JPMorgan or Wells Fargo.”
Why It Matters: Stocks that spiked higher last year have failed to keep pace this year with Tesla Inc TSLA up just 1.3% this year and Zoom Video Communications Inc ZM down 3.9%.
On the other hand, Emmerson is up 14.2% so far this year and Honeywell International Inc HON is up 8.6%.
JPMorgan Chase & Co JPM and Wells Fargo & Co WFC are up 20.1% and 45.4% respectively.
Also included in Cramer’s “house of pain” are special purpose acquisition company plays such as QuantumScape Corp QS, Nikola Corporation NKLA, and Lordstown Motors Corp RIDE.
Shares of these companies have declined between 62.6% to 32.6% since 2021 began.
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