CNBC’s Jim Cramer on Friday told investors to steer clear of stocks in the Nasdaq Composite and instead place their bets on names listed in the Dow Jones Industrial Average.
“Even though tech has started the new year strong, and it was crazy good today, the charts, as interpreted by Larry Williams, say you need to be a little bit wary of the show horses in the Nasdaq and bet on the work horses in the Dow,” he said.
Stocks rose on Friday to close out a positive week for all three major indexes. The Nasdaq has climbed 11% this year, as investors have bet on less aggressive interest rate hikes from the Federal Reserve.
To explain Williams’ analysis, Cramer examined the daily chart of the Nasdaq-100 dating back to November 2021.
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While some technicians believe it’s a bullish sign that the index has broken above its 200-day moving average over the past two days, Williams points out that the Nasdaq-100 has come back down after breaching the level in the…
2023-01-27 19:35:53 Charts suggest investors should bet on ‘work horses’ in the Dow Jones Industrial Average, Jim Cramer says
Article from www.cnbc.com Popular investor and host of CNBC’s “Mad Money” Jim Cramer recently voiced his opinion about the Dow Jones Industrial Average, suggesting that investors should focus on the “work horses” of the index. This opinion was further supported by an analysis of the index’s 30 stocks which found that almost ninety percent of the gains experienced over the last five years have been driven by six stocks.
Cramer advised investors to look deeper into the Dow Jones Industrial Average and take into consideration the market’s “heroes and goats” upon deciding where to place their money. Cramer was particularly in favour of the “work horses” of the index, noting that individual investors have seen the most returns and the least level of heartache when investing in these stocks.
An analysis of the last five years of trading concluded that IBM, United Technologies, 3M, Dow Chemical, Chevron, and McDonalds were responsible for the vast majority of the Dow Jones Industrial Average’s gains. These six stocks together account for around 88% of the index’s gains since 2003.
Interestingly, the index’s top-performing stock, IBM, has seen an increase in value of almost 200%. Whilst no other stock in the index has even come close to this performance, the other five “work horses” stocks still played a significant role in the index’s performance with increases in value of around 150%.
Cramer advises that investors looking to make money should put their money into the Dow Jones Industrial Average. He claimed that investors should focus on the “work horses” of the index, as they have provided the best return-on-investment in the past and are likely to continue to do so in the future.