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A wise man once said, “Change is the only constant in life.” While it may sound counterintuitive, almost anyone who has reached old age will tell you it’s true. CNBC’s investing guru Jim Cramer believes this paradox also applies to investing. During a recent appearance on his show “Mad Money,” Cramer discussed the importance of a flexible investment strategy that adapts to current market conditions.
Cramer, who has built a reputation for being an incredibly smart trader, devoted a segment of Mad Money to explaining his advice for staying away from alcohol stocks in 2024. He started by saying, “I’ve been telling you pretty much all year to stay away from the alcohol supplies because they’re horrible. The young people seem to have an aversion to drinking, in part because recreational cannabis is in almost half of the country has been legalized.”
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He offered another explanation for the declining alcohol supplies when he noted, “At the same time, those GLP-1 weight loss drugs reduce cravings for everything, including booze.” Cramer described other headwinds, such as consumer resistance to high prices, that have not only hindered the growth of alcohol stocks but also pushed them down.
He noted that shares of alcohol giant Diageo have fallen 24% and that legacy brand Johnnie Walker has also experienced a 15% drop in share prices. Neither are good numbers, and Cramer admitted they look even worse compared to the S&P 500, which he said was “up 28% over the same period.” At that point, Cramer had made a solid argument for why he avoided alcohol stocks.
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Based on the data he cited, it appeared Cramer would extend his “no alcohol stocks” recommendation through 2025. He then threw everyone for a loop by saying, “No investment statement stays true forever.” You can’t take your ideas for granted, even if it seems like you’ve tapped into a long-term story. That’s why I always tell you to do your homework if you’re going to own individual stocks.”
Cramer expanded on these thoughts by saying, “There have been some surprisingly positive developments in the alcohol industry that may indicate a ‘drink bottom.'” If so, now might be the right time to jump into an alcohol stock like Diageo or Diageo. Johnny Walker. Whether that is the case remains to be seen. However, the overarching theme in Cramer’s advice is 100% rock solid.
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Nothing stays the same forever in investing, and a frigid sector can become red-hot just as easily as a previously hot sector can lose all its momentum. A recent example is nuclear energy stocks, which have been booming for most of 2024 due to their viability as a fuel source for AI. This is why following stocks and sectors very carefully, or “doing your homework,” as Cramer calls it, is so important.
An investment strategy that paid off like gangbusters in 2024 could keep you looking at your stock selection all year long in 2025. It is up to you as an investor to realize this and be prepared to adjust your investment tactics accordingly. If all that homework is too time-consuming, you might be better off with an exchange-traded fund (ETF) or index fund, where a professional fund management team has already done the heavy lifting.
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This article Nothing Works the Same Way Forever – Why Jim Cramer Says You Should Always Be Ready and Willing to Adjust Your Trading Strategy originally appeared on Benzinga.com
