Investors in technology stocks should buckle up for a wild ride as the group turns toxic in an environment of rising inflation, CNBC’s Jim Cramer said Wednesday.
“If you own the turbo-charged growth stocks … you will either have to fight the pain or cut your losses on the next strong uptrend because we are in a new market that is very different from last year.”Bad money“said the host.” What worked in 2020 didn’t work in 2021 and that won’t change, so get used to it. “
That explains the shellacking in stocks like Tesla, Teladoc health, square, Roku, Shopify, Zillow, Twilio, Spotify, Coinbase and Accurate Sciences, Noted Cramer. Most of their stocks were down double digits in May.
Cramer referred to them as “WoodStocks”, named after Cathie Wood, portfolio manager at the popular Ark Invest company. The stocks are the largest holdings for Ark, whose exchange-traded funds include the ARK branded funds of innovation, Genomic Revolution and Fintech innovation, among other.
“Cathie Wood is fantastic at identifying [long-term growth] Stocks like Twilio, but they’re not stocks for all seasons, “Cramer said.” They don’t work in this environment and … they really don’t work in an inflationary environment where bond yields are rising. “
Wood commented on the tech stocks retreat told CNBC on Friday that she “loves.”[s] this setup “for the company’s long-term prospects.
After significantly outperforming major stock averages last year, the Nasdaq Composite was the most volatile index since the start of the new year. The tech-heavy index fell 2.7% on a market-wide sell-off on Wednesday on the inflation number.
Cramer expects the tech cohort to move down more until inflation fears subside.
“It ends when inflation goes away or is somehow tamed,” he said. “With the exception of sawn timber and some semi-finished products, there is no sign that the raw materials will cool down anytime soon.”