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A wise man once said, “Change is the only constant in life.” Although it may sound counterintuitive, almost anyone who has made it to old age will tell you it’s true. CNBC’s investment guru Jim Cramer believes this paradox also applies to investing. During a recent appearance on his show, “Mad Money,” Cramer discussed the importance of having a flexible investment strategy that adapts to current market conditions.
Cramer, who has earned a reputation for being an incredibly savvy trader, dedicated a segment of Mad Money to explaining his advice to stay away from alcohol stocks in 2024. He began by saying, “Pretty much all year, I’ve told you to stay away from the alcohol stocks because they’ve been awful. The younger people seem to have an aversion to drinking, in part because recreational cannabis has been legalized in nearly half the country.”
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He offered another explanation for slumping alcohol stocks when he noted, “At the same time, those GLP-1 weight loss drugs reduce craving for everything, including booze.” Cramer described other headwinds, such as consumer resistance to high prices, that have not just stunted the growth of alcohol stocks but pushed them downward.
He noted that alcohol giant Diageo’s stock is down 24% and legacy brand Johnnie Walker has also experienced a 15% decline in share prices. Neither of those are good numbers and Cramer conceded they look even worse when compared to the S&P 500, which he said was “up 28% over the same time frame.” By this point, Cramer had made a solid case for why he avoided alcohol stocks.
Based on the data he cited, it appeared Cramer would extend his “no alcohol stock” advice for 2025. Then he threw everyone a curveball by saying, “No investment thesis stays true forever. You can’t take your ideas for granted, even if it seems like you’ve tapped into a long-term story. That’s why I always tell you (that) you need to do the homework if you’re going to own individual stocks.”
Cramer elaborated on those thoughts by saying, “There have been some surprisingly positive developments in the alcohol industry that may indicate a ‘booze bottom.'” If that’s the case, now might be the exact time to jump on an alcohol stock like Diageo or Johnnie Walker. Whether or not that’s the case remains to be seen. However, the overarching theme in Cramer’s advice is 100% rock solid.
Nothing stays the same forever in investing and an ice-cold sector can turn red-hot as easily as a previously hot sector can lose all its momentum. One recent example is nuclear energy stocks, which have been booming for much of 2024 because of their viability as a fuel source for AI. This is why tracking stocks and following sectors very carefully or “doing your homework,” as Cramer calls it, is so important.
An investment strategy that paid off like gangbusters in 2024 may have you rolling snake eyes on your stock picks all year in 2025. It’s up to you as an investor to realize this and be ready to adapt your investment tactics accordingly. If doing all that homework is too time-consuming, you may be better off with an exchange-traded fund (ETF) or index fund, where a professional fund management team has already done the heavy lifting.
