CNBC’s Jim Cramer on Wednesday said that profit-taking is important, even if it’s hard to let go of winning shares.
Cramer recently trimmed some Big Tech holdings in the CNBC Investing Club’s Charitable Trust, but admitted that it was not an easy decision. To Cramer, companies in the “Magnificent Seven” are continual innovators and strong long-term performers that tempt investors not to take profits.
“When you sell or even just trim any of the seven, something always seems to come up that makes you regret doing so,” Cramer said. “The good news? Right now, it looks like you’ll get a chance to buy these stocks lower because the stock market’s getting nasty. No one ever got hurt taking a profit.”
To Cramer, Amazon has huge potential with its Prime Video service, both in subscription and advertising revenue. The company is rolling out new advertisements on its streaming platform along with an ad-free subscription tier. An analyst from Bank of America estimated that this new program could generate billions in incremental revenue.
Tesla has a promising future beyond electric vehicle manufacturing, Cramer said. He described the company’s “optionality,” listing off potential revenue streams such as financial services, network services, and ride-sharing as well as a possible deal with a Chinese electric vehicle maker.
“These darned companies are so good, they always seem to come up with something that makes them more compelling than we thought,” Cramer said. “That’s the definition of a good investment, as long as you do some trimming after a big gain.”
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Disclaimer The CNBC Investing Club Charitable Trust holds shares of Amazon.