Jim Cramer says the S&P 500 is like a patch of grass. It looks great from afar, but when you get closer, it's covered in weeds
- CNBC Mad Money host Jim Cramer compared the S&P 500 to a patch of grass, saying it looks great at a glance, but when you get closer, it is covered in weeds.
- Big tech stocks like Apple and Tesla have seen huge gains in 2020, masking the generally weak performance of most of the index, he noted.
- He said: "When you get down into the weeds of this market, what you see is that there are a lot more losers than there are winners.
- The index is up 5% in 2020, but has risen more than 50% from lows seen in March.
- Visit Business Insider's homepage for more stories.
The S&P 500 has soared since touching March lows, but for Jim Cramer the index still has more losers than winners.
The CNBC "Mad Money" host on Thursday compared the S&P 500 to a patch of grass.
"When you get down into the weeds of this market, what you see is that there are a lot more losers than there are winners," Cramer said.
Cramer's comments come after stocks rose on Thursday despite new US weekly jobless claims hitting 1.1 million in the week that ended on Saturday.
That was well above the consensus economist estimate of 920,000 compiled by Bloomberg and snapped a two-week streak of declines, signaling a slowdown in the economic recovery.
Cramer's basic contention is that the massive overperformance of big-name stocks like Apple and Tesla is masking the generally weak performance of most of the index.
Apple this week became the first US-listed company to reach a $2 trillion market capitalization, while Tesla closed above $2,000 for the first time on Thursday.
The stock has ballooned more than 800% in the past year, gaining around 400% in 2020 alone.
He added: "That's the nature of the COVID economy, and now that there's no one in Washington willing to play gardener, maybe it's only a matter of time before the weeds overrun the entire patch."
The S&P 500 has exploded more than 50% since touching a coronavirus low of 2237.40 in March, with tech stocks contributing to a massive chunk of the growth.
Cramer said: "We have a bizarre situation where some companies are doing very well but a lot of other companies are getting crushed."
He said other stocks in the hospitality and travel sectors, like Carnival and Norwegian Cruise Line have lost significant ground. Both stocks are down more than 60% since the start of the year.
Cramer said: "Once you go through all the decliners, you realize this is a tale of two cities market. It was the best of times, the worst of times. It was the string of hope."
He said that markets are overly caught up on predicting different types of recoveries.
"We always get caught up and argue whether this is a V-shaped economic recovery or a U-shaped recovery, a W-shaped recovery or an L-shaped recovery in the stock market but not the economy."
"I think we need to rethink the whole terminology of some of those letters," he added.