CNBC’s Jim Cramer says that investors who go against the old adage of assuming that a bubble has to burst may actually make money. He alludes to the old days when it was always obvious that a wave such as the dotcom one, which led to artificially overrated internet stocks, would eventually burst – and yes, it did.
Eventually people began to associate any hype around tech stocks with that dotcom bubble leading to a lot of caution even where investors would have made a kill.
Speaking on his “Mad Money” program, Cramer said that having been in the business that long he has realized that the if investors took that kind of caution they would have missed the billion-dollar stocks we see today. He singled out the top tech stocks like Amazon, Facebook, Alphabet and Netflix as a phenomenon that was treated differently by investors coming out of the dotcom bubble. They put their money in companies that had every likelihood of going the dotcom way and had faith that this time around it was going to be different – and yes indeed it was different.
These unknown entities of that time have grown to dominate the world today. Facebook has grown from a Harvard craze to become a $521 billion company straddling every continent. Amazon has matured from a mere online retailer where one hoped they would deliver a product after giving them credit card information to a $629 billion conglomerate that keeps growing bigger.
Google has ballooned into a $782 billion behemoth after starting off as a simple website where one got information by typing in anything and an unknown company that rented out DVDs has transformed itself into Netflix, a $95 billion video streaming giant.
According to Cramer, anyone who held the old thinking that everything would be the same, lost out on a gamble that has produced four companies that have made billions for those that dared to believe.