We ran this clip of Jim Cramer talking about Apple last night, but we want to run it again to highlight something else.
Amazon’s stock has been on a tear while Apple’s stock has been tanking. This is frustrating to Apple bulls because Amazon makes no money. Apple, on the other hand, makes lots of money.
Cramer gives a good explanation of why people love Amazon right now and hate Apple:
- Amazon is a momentum stock right now, so people are piling in. (This isn’t necessarily good for the long rn.)
- Amazon has proven that it knows what it’s doing.
- Apple is in a new position of being the world’s most valuable company and it’s run by Tim Cook, who does not have the same track record as Bezos.
- Apple has $137 billion cash just sitting there, Amazon is spending its cash like crazy. Cramer notes that typically we revere savers. In Apple’s case, investors are wondering, “What’s the point?” Do something bold with the cash. Amazon is showing the world it’s investing for big ideas for the future.
And, we’d add our own thought: Amazon has been tried and tested year after year by Walmart and others. Either Amazon beats its competition or it buys it (See: Zappos, Diapers.com, LivingSocial).
Apple is being tested by Samsung and it’s unclear how it deals with the test. Thus people are dumping it.
Cramer starts talking Apple at the 2:00 mark. It’s a good summation of the differences between the two companies as far as the market is concerned.