We recently compiled a list of the Jim Cramer Discusses 17 Stocks And Blasts Zero Day Options. In this article, we are going to take a look at where Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) stands against the other stocks.
In his second appearance on Squawk on the Street after the Fed’s interest rate cut, Jim Cramer had a lot to say about the Fed’s decision and the Personal Consumption Expenditure (PCE) data release. The PCE data was a boon for investors as it signaled that inflation was dropping. Cramer started by pointing out that the PCE data release was “somewhat reassuring. Because if we do get lower inflation, I think it’s certainly a possibility because we’re starting to get our arms around what’s really causing inflation. Then it doesn’t seem so devastating, what happened on Wednesday.” He added that the release doesn’t reverse the market fall since he thinks that the market fell after “rampant Bitcoin speculation, after speculation in nuclear power, after speculation in quantum computing, after speculation in what I regard as being these, really kind of, I’ll put them in commercial aerospace, because of Musk.” Cramer believes that the central bank officials ” don’t wanna see that. They don’t point blank say it. I wish they had. But that’s what’s going on here, it’s the air going out of that balloon.”
However, while he believes that the market might have fallen because of the balloon ‘deflating’, this has created an interesting opportunity. According to Cramer, the speculation in the market has been replaced by “some really interesting fundamental news. And I think that we are the most oversold that we’ve been in, you’re up there in terms of the ten-year low, if you bought, and I’ve got some numbers that are saying if you bought today, three months later, you made money. In every single case, it’s really rather extraordinary.”
While the threat of a US government shutdown over the holidays has been averted, Cramer also had some interesting takes on the conflict in Congress. He shared that “I studied shutdowns for my last book. And every shutdown was a buying opportunity. They’re always as frightening as the way we’ve been covering this morning. Uh, and they always end up being a buying opportunity. Because they are considered to be so frightening.”
Cramer backed his claims by sharing data that took all night to calculate. He added “What I’m saying, I know this is against the grain of what I’m hearing, but you’re supposed to buy today not sell it. All the data I have, all the data I have, I mean I’ve got data going back ten years. And. . . [THE] oscillator, the S&P oscillator that I follow. It’s minus eight, uh, thank you to the S&P people.”
The negative oscillator reading means that buying stocks at the dip and then holding them for certain time periods has historically yielded returns. Cramer pointed out “You have a median gain three months later of 4.55, sixty days, 11.0. I mean, this is unassailable stuff. I couldn’t believe it. I asked them to calculate it. Took them all night to calculate. But oh my! You buy today, you make money! I don’t know what to say, the data is the data! The forecast is the forecast! The guidance is the guidance!” He continued and added that while watching the markets early morning on Friday, he wondered “Who are these numbskulls who’re doing this. They are people who are sleep-deprived, they don’t know what they’re doing. And frankly, we now know we have become the crack house. We are the crack house!”
Cramer didn’t hold back when criticizing investors who are obsessed with zero-day options. These options expire after the trading day ends, and therefore, they are for those investors who seek to profit from the market’s daily moves. According to Cramer, people who trade these options “are debilitated. They are, they believe the long term means you gotta hold it to the afternoon. Uh, these people I feel bad for them because they’re losing fortunes, they don’t know what they’re doing.”
He believes that day trading is more “addictive” than online gambling. “Depression, anxiety, all the things that are tell-tale of how to wreck your life are now part of our market,” believes Cramer. In fact, according to him, options trading needs to be talked about more. Cramer pointed out that “$538 million is options! Out of $1.9 billion. $538 million! Crypto is $268 million! Their next big line is margin interest! $220 mil! Why aren’t people talking about this?”
According to Cramer, “These people are losing a lot of money. And maybe they ought to take a little more long-term approach. We have to say, look, if you think that you can trade up against professionals, and the professionals have software, the professionals have algorithms, the professionals know more than the people who are day trading. That’s what I’m saying.” However, he does believe that “you can balance it. You can do some of this stuff for fun if you want to. But my father was wiped out by trading the National Video. Now go Google National Video. He did day trading for it all the way down.”
Our Methodology
To make our list of the stocks that Jim Cramer talked about, we listed down all the stocks he mentioned during CNBC’s Squawk on the Street aired on Friday.
For these stocks, we also mentioned the number of hedge fund investors. Why are we interested in the stocks that hedge funds invest in? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here).
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Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX)
Number of Hedge Fund Holders In Q3 2024: 75
Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) is a pharmaceutical firm that created substantial headlines in January after its gene therapy Casgevy secured FDA approval to treat Sickle Cell disease. This is the first treatment of its kind, and Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX)’s approval also generated tailwinds for the broader gene editing industry. The firm also relies on cystic fibrosis to generate 92% of its revenue. Sickle Cell and cystic fibrosis play key roles in Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX)’s hypothesis, and the sizable contribution of the former means that the firm has to maintain focus on developing new treatments. One such drug is a non-addictive painkiller, and here’s what Cramer said about the drug’s trial:
“Okay I want to put this in the context. Many companies, many people, everyone was hoping that Vertex had the holy grail. That they had some painkiller that was not addictive. Now Vertex will argue that the trial that came out which showed no difference with the placebo did not, it was not set up right. And frankly, you shouldn’t use it. However Barclays comes out this morning, $509 down to $418, says it was the worst case scenario. I know that Vertex management is incredibly responsible, but when you see management at odds with the street, I tend to want to believe the street.
“But what’s a shame about this is if this is true David we cannot get to the root of this opiate addiction in this country.
“And this was the hope, and the hope now seems to be. . . .
“It [THE STOCK] probably could go lower. They have a great cystic fibrosis franchise. They’re a great company. And I want to go with them to some degree that maybe things are okay. But this is hardly down for the year. I think it can go still lower.”
Overall VRTX ranks 4th on our list of the stocks Jim Cramer recently talked about. While we acknowledge the potential of VRTX as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than VRTX but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.