Cramer's 'Mad Money' Recap: Green Light on Big Data (Final)
NEW YORK ( TheStreet) -- Winning money managers know how to quit when they are ahead, Jim Cramer told his "Mad Money" TV show Thursday. He said the weakness in many of the market's top stocks was nothing more than hedge funds and money managers locking in their gains after the best quarter we've seen in 14 years.
Cramer recalled how he first learned about locking in gains: It was back in early 1991, as the first Iraq war was about to get started. He said that his hedge fund had already picked out the stocks that would rocket higher if the war would end quickly. So as the bombers were readied, Cramer went all in on those stocks, using all of the money and leverage he could muster.
Five days later, when the war ended in spectacular fashion and stocks soared, Cramer said his hedge fund was up 28%, a year's worth of gains. Taking the advice of his wife, Cramer said he sold everything and only dabbled in the markets thereafter, taking the entire summer off.
Cramer explained that the same thing is happening now, after 2012's terrific first quarter. He said the only real movers were stocks betting on interest rate cuts in China. Those stocks, like Joy Global (JOY) , Caterpillar (CAT) and Cummins (CMI) , all opened lower only to turn higher by the end of the day.
Everything else, however, and especially the market leaders like Apple (AAPL) , a stock which Cramer owns for his charitable trust Action Alerts PLUS, finished sharply lower by the end of today's trading.
Cramer said fortunately the markets are strong enough to absorb all of this big-money selling. But investors can expect to see even more market gyrations tomorrow as the first quarter draws to a close.
If "big data" is the future of technology, then investors better sit up and pay attention, Cramer told viewers. What exactly is big data? Think of it as the huge piles of digital records being amassed daily by companies, organizations, search engines and social networks. As more and more information is being stored online, its possible uses -- for everything from marketing to crime prevention -- grows exponentially.
Cramer said that Red Hat (RHT) proved just how large big data is becoming after the company blew away the numbers, sending shares up $10 each, or 19.5%, in a single session. But while Red Hat may be hot, Cramer said that EMC (EMC) , an Action Alerts PLUS holding, remains his favorite.
EMC has been on a big data shopping spree, making several acquisitions in recent months to help solidify its position as a leader in the same. Yet shares still trade at just 14.7 times earnings despite the company's 15% growth rate.