Jim Cramer: How to profit from the next market sell-off

With the stock market trading in record territory, CNBC’s Jim Cramer on Tuesday delivered advice on how investors can capitalize and turn profits if stocks take a tumble in the future.

“The market is often wrong, especially during earnings season. You need memory to take advantage of these temporary multi-day declines,” the “Mad Money” host said.

The comments come after a mixed day on Wall Street where the Dow Jones and S&P 500 averages dipped from their highs the day prior, snapping a six-day winning streak in both indexes. The Dow declined about 10 points to 31,375.83 and the benchmark S&P 500 declined a modest 0.11% to 3,911.23.

The Nasdaq Composite was the exception, rising 0.14% for a record close of 14,007.70, extending its streak of gains to four days.

“There’s always another sell-off … so on a tepid day where nothing much really happened,” Cramer said, “let me tell you how to profit from the next sell-off. You need to remember what got plastered the last time and then bounced right back, so that you’re ready for the next opportunity.”

Cramer used recent trading action in Chipotle and Constellation Brands for examples.

Chipotle shares pulled back nearly 3% over two trading days after the restaurant chain posted a mixed quarterly report a week ago. While some investors disapproved of the company’s results from the holiday quarter, Cramer labeled it a mistake, given that Chipotle saw same-store sales grow 11% in January, the first month of the current quarter.

Shares have since rebounded 4.8%, reaching a new closing high of $1,550.49 Tuesday.

“This stock got crushed by people who didn’t like the quarter. I told you they were wrong. Why? Because those people knew nothing,” Cramer said. “Sure enough, today Chipotle hit a new all-time high. Don’t sell it. Right now the company’s just banging it out with delivery and all sorts of new ways to handle takeout.”

Constellation Brands, the spirits and wine company whose brands include Modelo and Corona beers, lost 8% of market value after about a month ago reporting a top- and bottom-line beat in its fiscal third quarter. After falling below $211 in late January, Constellation stock has since rebounded almost 11% to $233.8 Tuesday.

The alcohol company also has a large stake in Canadian-cannabis producer Canopy Growth, which reported mixed results in its fourth-quarter report Monday. Canopy shares are up almost 63% in the past month.

“The market was just dumb. It was dumb-as-a-bag-of-hammers wrong. Today, Constellation hit $233,” Cramer said. “This is going to take out its all-time high of $240. Canopy’s surged from $29 to $49. [CEO] Bill Newlands came on [this show] and he gave you a two-fer, but you had to listen. You had to know that he was right and the market was wrong.”

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[adamgarrett]

Another interesting presentation.... Tesla's technological development is mind-blowing... Really a great man indeed.

[lukecarran]

I've heard drunk homeless people speak more clearly than Jim Cramer .

[VoltageLP]

The recipe is clear, listen to what cramer recommends and do the opposite

[bumble]

Dude out of his mind telling people to buy mall stock 😂

[monsterbeast]

almost like he planned the selloff this morning

[pweddy]

People can afford more beer when they are drinking at home. $1-2 a bottle at home vs $5-6 at the bar. This is rationally better for beer sales because the bars sell less beer than a distributor selling to individuals.

[taylorlee]

*Things are getting worse, it's so bad that having a job doesn't mean financial security*

[DividendBull]

REITs as a whole got pummeled from COVID and most are slowly rebounding now. I'm a fan of Realty Income (O) and W.P. Carey (WPC) both of which have had great rent collection percentages and both have increased their dividends during the pandemic.

[MrTheguywiththemoney]

I've heard this like 10 times so far this year

[driftgod]

I've been an investor and I can tell it changed my life for better 😊😊 Investing in Forex and crypto will be one of the widest things to do.

[kin]

The dude at our local liquor store told me he was reviewing year over year sales, 2020 saw their highest sale volume and revenue as far back as those records go.

[iKeanuHD]

lol what selloff? there aint gonna be a sell-of it will be a buying oppertunity for most people. in 20 years when people realise that there is no more growth the stock market will crash but unitil then it will keeps rising.

[lifekobe]

No respect for this market manipulator

[htowntexwreck]

Do the opposite of a Jim Cramer says you're going to end up losing money listening to him.
🤦‍♂️🤦‍♂️🤦‍♂️💎👐

[AG-diuj]

I do the opposite Cranmer say and I always make money !!!

[danialhussain]

Cramer still mad that we made bank off GME?

[vickirobert]

This morning, I woke up and stretched my bones and said to myself 'What are you dallying for? Invest again!'
Thank you bitcoinsamurai
I cashed out yesterday and I am going again 💪

[iana]

Cramer seems more like a Comedy Central comedian type than a financial advisor to be taken seriously, except he’s not intentionally funny.

[alspooner]

What happens when chipotle has another ecoli outbreak you will get a 30 percent sell off, who will want to pay upwards of 1300 for a company with no drive thru and has multiple health crisis.

[raghuveerchebrolu]

Ever since game stonks this guy is a joke 😂