Cramer says investors holding stocks in companies losing money should sell them

CNBC’s Jim Cramer said Thursday that early strength in the broader market indexes after the Federal Reserve‘s faster, but still gradual tightening plans does not reflect the reality that many companies are starting to struggle.

“If you’re in companies losing money, you should sell them,” Cramer said on “Squawk Box,” reiterating a theme that he revealed during last week’s special online live event “CNBC Investing Club: Jim Cramer’s Game Plan for 2022.”

“I believe next year is the year that you want to own companies that make stuff, that do tangible things, that innovate,” Cramer said exactly one week ago. “We do not want companies that only grow sales but lose boatloads of money and pay themselves richly in cash and, more importantly stock, while we’re left holding the bag.”

In an environment in which the Fed is accelerating its bond-buying taper and forecasting three interest rate hikes next year to fight rising inflation, Cramer said the futures Thursday were not reflecting what the actual stocks are doing.

“The actual stocks, there’s a negative stuff today,” Cramer said before Wall Street’s open. He pointed to post-earnings calls from software maker Adobe and homebuilder Lennar that were “not that good” and those companies “really missed” estimates on quarterly results.

Adobe and Lennar opened sharply lower as the S&P 500 on Thursday traded above last week’s record close. While the Dow Jones Industrial Average and the Nasdaq also began the session stronger, the initial burst higher faded. The Dow and Nasdaq on Wednesday rose 1% and more than 2%, respectively, ending the day nearly 1.4% and 3% away from last month’s record closes.

In his Thursday morning “CNBC Investing Club” newsletter, Cramer stressed “tangible over intangible” stocks. He also echoed a theme from Wednesday evening’s “Mad Money” that this year’s Santa Claus rally may be coming ahead of schedule this year. The Santa rally has historically materialized during the final five trading days of a calendar year and the first two in January.

“We have a Santa Claus and that’s terrific,” Cramer said later on CNBC’s “Squawk on the Street,” after the opening bell. But he warned investors to be careful because Wall Street analysts are downgrading money-losing companies. “You’re fighting the analysts” by holding these kinds of stocks, he added. “I find after a while it’s exhausting to fight the analysts.”

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