CNBC’s Jim Cramer on Tuesday warned investors to avoid buying losing stocks in a bet with short sellers.
The market favored short sellers on Tuesday after the major indexes fell. Markets recovered earlier in the day considering disappointing financial reports from companies and bracing for key inflation numbers later this week.
“In a market that gives you lots of opportunities to lose money, I can’t confirm buying these losing stocks in hopes of a technical cut. Sooner or later you’ll have a day like today, where that tactic just blows you in the face, “the”Crazy money” said the presenter.
Here are the stocks Cramer mentioned:
Many investors seem to be trying their luck with short selling. The GS Shortest Index, which measures stocks that investors are short selling or betting on, more than 18% increase in the past five days. It is currently at its highest level since January of last year, when the meme stock craze peaked.
Cramer warned investors that the move was making losing stocks look as attractive as long-term plays.
“When good things happen to bad stocks, I get worried. We’ve seen a lot of low-quality stocks go up purely because too many hedge funds are shorting them all at once and the pants are tight. that short is eventually squeezed,” he said.
