'The playbook says you have to go with more tangible companies that make real things and generate real profits,' the 'Mad Money' host said.
"Okta versus Deere is the best way to understand this market," Cramer said. '"At this point in the business cycle, the playbook says you have to go with more tangible companies that make real things and generate real profits. ... Conceptual is out, tangible is in," he added.
A year ago, Cramer said investors were willing to pay up for Okta's strong revenue growth even as the company remained unprofitable. However, now money managers are reacting to high inflation readings and preparing for likely interest rate hikes from the Federal Reserve, Cramer said. Cramer said that shift helps explain why Okta shares are down 4% over the past five days, while Deere is up 6.2% in that same stretch.
"I don't mean to pick on Okta. We all know anything can bounce. There are literally dozens upon dozens of these nosebleed valuation stocks; Okta's just among the best of them," Cramer said. "At the moment, though, that makes it the best house in an awful neighborhood."
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