CNBC’s Jim Cramer said that for investors struggling to make sense of volatile markets, focusing on scarcity as a key determinant of stock performance provides clarity.
“When in doubt, ask whether the company in question is selling a shortage or an excess,” Kramer said Wednesday night on “Mad Money.” “If it’s the former, you can buy it, but if it’s the latter, you should stop avoiding it.”
Kramer called the framework “the best cheat sheet I can offer at this point in earnings season,” adding, “Scarcity is the true north, oversupply is the kiss of death.”
But that may not be obvious just by looking at the performance of major U.S. stock averages, Cramer said. On Wednesday, Dow Jones Industrial Average It increased by just 12 points, or 0.02%. of S&P500 was almost flat, but Nasdaq It increased by 0.17%.
Cramer said the market message is becoming clearer as investors focus on which stocks are actually performing. “If you look at the scoreboard this time of year, it’s all about undersupply and oversupply, who are the winners and who are the losers,” he said.
One of the most obvious examples is gold. “We don’t have enough gold,” Kramer said of precious metals, noting that miners’ supply of gold is only increasing by 1% a year. He reiterated his long-held position: “I will hold onto the gold. I’ve always been a gold bug.”
Kramer said scarcity characterizes the technology, especially in data storage. “There’s a huge lack of technology, and this is something I’ve never seen before,” he said, referring to data center and cloud infrastructure. That’s because even as we work to build out our AI infrastructure, we can’t quickly continue supply. As a result, Kramer said he believes the shortage will continue “for some time.”
