Mad Money 01/20/26 | Audio Only

Hey, I'm Cramer. Welcome to Mad Money. Welcome to Cramer. Other friends, I'm just trying to save a little bit of money. My job is not just to educate, but to explain how something like this could be happening. So call me at 1-800-743-CBC. Tweet me at Jim Cramer.

Talk about a jarring session. We're captive to a president who's decided he can wage economic warfare against any country in order to get his way. In this case, it's against Denmark for refusing to hand over Greenland. Of course, Greenland has nothing to do with our stock market, right? But our president uses tariffs to coerce our trading partners, even though Wall Street absolutely hates it.

And that's what caused today's pain. The house of pain, with the Dow tumbling 871 points, S&P plunging 2.06%, NASDAQ plummeting 2.39%.

Okay, get this. It could have been worse. But everyone remembers when we sold off hard on tariff worries last spring, only for stocks to rebound once the president rolled back most of it, all day as the market adjusted to the possibility that someone blinks on Greenland in the next 72 hours. Something we might find signals, by the way, when we watch our own Joe Kernen speak to the president tomorrow on the exchange. I had something else in my mind. I want to talk about something that's beginning to really bother me in this market, and it does not have all that much to do with Greenland. Tonight we're going to talk about something I despise. We're going to talk about froth.

The process by which we overpay for things that might not be worth as much as we think, maybe much less than we think. We're going to talk about how to preserve gains that might not otherwise be available and how to reposition to high, as we call it in the investing club, where I should add we have a noon meeting for members on Thursday. It's an hour long. I think you should join and find out what we're talking about. Let's start with a simple supposition. While many long-term winners have struggled since the beginning of the new year, the speculative stocks and momentum stocks have really caught fire. They're different, very different. The speculative names are at the heart of the froth. More on that later, but there's been a huge amount of money made in these stocks over the past few weeks, and that's one part of the problem. For the most part, they're companies with no earnings and little in the way of sales.

Now, as I teach in "How to Make Money in Any Market," speculation is a reasonable way to make a lot of money. But the operative word is make. You haven't made a profit unless you ring the register on some of your gains. Otherwise, you don't have gains, paper gains. That doesn't count. And that's what I suggest you do tomorrow morning. I have a big gain. Let's say you have a big gain in a stock, okay, that's soared this year. Tomorrow, you're going to take something off the table. If you're up, say, 50% since the year began, you're crossing over to one of our most important disciplines on Mad Money. You cannot turn a gain into a loss. We know four months ago that we had a very similar situation to the one we've seen lately. And back then, I excoriated those who failed to take profits and was loud and noisy about it. And I'm doing the same right now tonight. I was right back then. And I think I'm going to be right again. Many of you have made more money this year already than you might have made last year or maybe multiple years altogether. I'm not advocating you sell everything. I'm advocating that you try to take a big percentage of your stock and put it in cash. That way, you're playing with what I call the house's money. You'll still be in.

In the old days, I used to advocate wholesale selling of speculative stocks, but I've spent years studying the process of what a speculative stock morphs into when it morphs into a long-term investment. I've gotten much less strict. I now think that you're perfectly justified to pick one speculative name if you own five stocks, or even two if you own 10, and let them ride. If they put up big gains, you could gradually ring the register on the way up. But you've also got my blessing to leave part of your position on the table, a large part of it, because when you catch a terrific speculative winner, the long-term gains can be immense, but you got to take something off. Now, how about a different course of how about the momentum stocks? Now those are the ones that have earnings and have sales, and those stocks have caught fire too. Very tough call. There are two kinds of momentum stocks in this market right now. First we got the memory plays. Okay, that's the memory and storage, SanDisk, Micron, KLA, Digital. Those stocks are up huge both last year and this year. It seems like every day one or another broker recommends them with a new price target. The whole group rallies accordingly, again and again. Even today the memory plays seem unassailable. But I got news for you. They're not. And that's because there's another set of companies with momentum stocks that are going higher, ever higher, ever higher. That's the semiconductor capital equipment makers, which are busy trying to create more memory supply. We don't know when supply will catch up with demand because we know there are companies in Japan and Korea that are also trying to pump out as many storage devices as possible to make as much money as possible. And they're using these very same capital equipment plays: Applied Materials, Lam Research, and KLA.

There will come a day when we will see, this is going to happen, people, when there'll be a marginal increase in disk drives and flash memory chips, and then the prices for those products will plummet. You cannot afford to get caught holding a lot of these stocks when that occurs. It won't be tomorrow, I know. And you'll say, "Well, why didn't you tell me to get out?" No, I don't know when. So, what do you do? After these monster parabolic moves, you need to cut these positions pretty sizably.

Take profits. Let the rest run. That's fine. They're great companies, but the unseen competition might be right around the corner. And then you'll say, "Why didn't he tell me? Why didn't he tell me?" Final group, gold and silver, tough. For some, these are hedges, basically insurance. But for others, they're just speculation. In either case, the moves have been parabolic. You know what I say about parabolic moves. I can justify the gains because these companies, like the memory plays, have actual earnings. But a parabolic move, no. If you own them because you want precious metals as insurance, I'll bless it. If you're speculating, you got a remarkable moment to take out your cost basis and let the rest run.

One other consideration, we're seeing a changing of the guard in this market. Depending on what you include, as much as 40 to 50% of the S&P is tech right now, and we're noticing that tech, especially large cap tech, is underperforming to start the year. If you want to take a longer term view that everything's fine and tech will come back, all right, I get that. But I don't agree, which is not, and that's why we're not doing that for the investing club. Only one of our recent buys is tech as we spread out into many other tremendous secular themes. Which themes? Non-data center tech, consumer goods, retail, aerospace, banking, healthcare. You saw how those act much better than tech. Is tech done? Of course not. But could you have too much tech exposure in your portfolio? Absolutely. If you love 40% tech or more, may I suggest you take some profits? Put that money in cash. Then wait and see. Guys, I'm really asking you to do this. All right, I asked you to do it in September, October, and I was right. And I really do think I'm going to be right this time. Again, the bottom line, there are better non-tech stocks to own in this frothy market. It's time to diversify. Remember, you want to make the most amount of money with the least amount of risk. That's what this business is about. And right now, that's simply not tech. Make these changes, and I think you'll be glad you did. No panic, just be smarter. Gil in Virginia. Gil.

No, I would hold it. I met with the CEO last week. I kind of like them a lot. Now, I met with Dave Ricks from Lilly, and you know, he's my favorite, but I'm not going to go against owning some Novo. I think they're making a turn here. I think that head start they have in the pill is very good. Let's go to Ambarish in Missouri. Ambarish.

Thank you. What's up?

I have been watching the stock just shed points and shed points and shed points as the street turns on it because it sells at a very high price-to-earnings multiple. People no longer like the high price or these multiple stocks right now. We have to obey that and watch it come in and own it for the long term, or sell it and come back later, which may be the way that I would approach Spotify. All right. Look, if most of your money is tied up in tech stocks, I think you got to take some profits. It's time to diversify better. You'll be much better off without so much tech. And when it comes to speculation, the whole show is going to be devoted to froth, how to spot it, what to do, and getting out or at least taking profits. Okay. Oh, man. I tell you, I am kicking off my series on what could go wrong in the market after we've had so many things go right for the investors over the past couple years. Remember, it's not a get out now. It's a take profits on some. Then I'm going on froth watch to break down why the price action in speculative stocks is at the top of my list of concerns with this tape, not the president. And I'll review what happened to the market the last few times we saw this kind of frothy action and how you can prepare for what might come next regardless of what happens with Greenland. So stay with Cramer.

Before we get into the most crowded part of the earnings season today, I want to talk to you about what could go wrong with this market. Don't get me wrong, even with today's tariff threat-inspired beatdown, I still think we're in a pretty good place. But honestly, that's the problem. The market's had a terrific run over the past three years, and the averages are within spitting distance of some big milestone levels: 50,000 for the Dow, 7,000 for the S&P 500. Now, it's always worth considering what could derail the market, especially when times are relatively good and you still have the flexibility to reposition your portfolio without swallowing too many losses. And look, once you start thinking about what could go wrong with the market, it's actually not that hard to identify a lot of potential problems. For one, we have stubbornly high interest rates, benchmark US 10-year yield touching 4.3% today. You know, that's the highest level since August. It's also an unclear path that we have forward for the Federal Reserve. I'd put things mildly, I guess. I could also point to elevated earnings growth projections and equally high valuations, creating a situation where many stocks are more or less priced for perfection. That's one reason we've had an inauspicious start to earnings season with the big banks reporting generally good quarters only to see many of their stocks sell off, not all, but many. Plus, there's Washington. President Trump has always been unpredictable. Sometimes that's bad for the stock market. As you know, I don't think anyone in the business world particularly wants to conquer Greenland. And we certainly don't want to pay the cost of the tariffs that the president's threatened to impose on Europe. That's his way of coercing Denmark into handing Greenland over without a fight. Remember, Wall Street hates tariffs. That's not changed. More on that later. On top of that, there are plenty of industry-specific worries like all the money that's being plowed into these AI data center spaces. Specifically whether or not OpenAI, that's the large private one, can cover its $1.4 trillion worth of spending commitments. Don't forget, they're being sued by Elon Musk. That's not good. Meanwhile, the market could be flooded with supply. That's what I really worry about if we get all the big IPOs this year that many are expecting. But tonight, I want to start with something we talked about at the top of the show. We've seen a return of frothy action in many parts of this market in these past few weeks. We've gotten used to high levels of froth in the past few years when stocks rally and rally and rally some more or nothing. But lately, that froth has reached what I regard as extreme levels. First, there's the fact that this market's being led by the small caps with the Russell 2000 up nearly 7% since the beginning of the new year. That's a bad leadership group, people, as many of these companies don't make any money and most, frankly, they're overvalued on an earnings per share basis. Some of them don't have a lot of revenues. It's just not a good group. When you take a closer look at what's been working best to begin this year, the problems start to really come into focus. So over the weekend, what we did was we ran a simple screen looking for US-listed stocks with market capitalizations over $1 billion and total returns of more than 50% year to date as of Friday night's close. That's a staggering gain for less than three weeks' time. Do you know that we found 32 stocks, actually 31 stocks and one ETF, that fit this criteria? And it's a good sample of what I consider frothy action with representatives from many of the groups that have started to get, that are overheating. There are the memory stocks. Those are still white hot. I mentioned them at the top. Other speculative semiconductor plays, lots of alternative energy plays, space stocks, drones, crypto miners turned AI data centers, of course, and other tangential crypto-related names. There's a lot of biotechs in there, plus plays with silver, other metals. Then we got some one-offs, including a wacky Chinese stock with a funny name called Rich Sparkle Holdings. You always see these percolate in the frothiest markets, plus stocks that fall into a category that I call ambiguous AI stories. We'll get into all these groups after the break, but for now, here's something to consider. Of those 32 companies that met our screening criteria, including a 50% plus total return just in the first two and a half weeks of the year, only nine of those companies are expected to have positive earnings this year. And yes, I was generous and I used forward earnings estimates. Remember, that's the PE on the forward numbers because it would look even worse if we asked which of those companies made money last year. Also, of the nine companies that are expected to make money in 2026, three have triple-digit price-earnings multiples, which is insanely expensive in any environment. So, that's the kind of thing that has me worried. It should worry you. As we begin 2026, lots of money is flowing into these stocks, mostly profitless companies. But it's not just that. I'm also concerned by the fact that it appears people are selling the highest quality stocks to fund their speculative purchases.

Just take a look at the performance of the Magnificent Seven so far this year. Nvidia is now down more than 4% after a big tumble today. It's off more than 15% from its late October high. Apple off over 9%. Oh my god, this could be another eighth week of Apple being down. Look out. Meta Platforms is down more than 8%. Microsoft's down almost 6%. Amazon, the worst performing Mag 7 last year, is doing better, still up slightly for the year despite getting hit today. And the sainted Alphabet, which broke free from the group in the fourth quarter to soar higher, continues its magical run, up a quick 3% to start 2026. We own that for the Travel Trust. Now, there are legitimate questions to ask about the individual Mag 7 components and the staying power of their stocks after some truly tremendous money runs. But in general, I hate to see money flowing out of proven high-quality stocks like the Mag 7 and then flowing right into the most speculative names in the market that I've been describing. This is worrisome. Here's the bottom line. There's plenty to worry about in this environment, but in my opinion, the biggest problem with this market is froth. I want you to stick around after the break and I'll walk you through exactly what that means and why it has me so concerned. Mad Money is back after the break.

Tonight, I'm walking you through what could go wrong with the market. And the biggest problem right now is froth. When prices skyrocket, especially for the most speculative stocks out there without any improvement in the actual fundamentals. This weekend, we ran a screen of companies with at least a $1 billion market cap and stocks that are up 50% or more since the beginning of the year. There were 32 of them and most of these are insanely speculative. That's too much exuberance. Not enough rigor. Let's start with the alternative energy plays which are booming because most of the data centers want clean energy. That's why Bloom Energy is up a quick 75% year to date. You heard me. 75%, after nearly quadrupling in 2025. There is a catalyst here, although it's not necessarily a great one at this point. Electric Power, the big utility, confirmed in a regulatory filing that it's buying fuel cells from Bloom. Though we actually already knew that. This company's also now solidly profitable and its earnings should grow at a 150% clip this year. That's good. But the stock ain't exactly cheap. Trading at 150 times this year's earnings estimates. That's dangerous to me. Meanwhile, EOS Energy Enterprises, that's a battery storage company, is up 51%. Couple nuclear plays, Uranium Energy, Terrestrial Energy, are up 55% and 71% respectively. Again, those gains have all happened in the last three weeks. Do you own those stocks? I mean, we please. Other companies working on smaller nuclear reactors like Oklo, NuScale Power, Nano Nuclear Energy are up 25 to 41%. None of those companies makes money either, and we're seeing some spectacular runs of the uranium producers, too. Meanwhile, the more legitimate companies with nuclear power exposure have all had more tame years. Yes, the so-called hyperscalers want clean energy. That doesn't mean new nukes are going to come on anytime soon. Yet, this market acts as if that's a given.

Do you hear that? What else is frothy? How about the space and drone stocks? AST SpaceMobile, which is building out a satellite-based broadband network, that's rallied nearly 55% this year, even though it is losing a fortune. Redwire, a product of a 2021 SPAC merger, is up a cool 40% year-to-date. Rocket Lab is now a $52 billion company after a 28% year-to-date gain. They're both unprofitable. I wonder if investors are just hiding out in these names until they can get a piece of the SpaceX deal possibly later this year. What a bunch of. Then there are the companies that make drones for the defense department like Kratos Defense and Security, excuse me, the former AeroVironment, bear with me on this one, smaller player Redcat, all three up between 37% and 82% for the year. Now I actually like AeroVironment along with Kratos, actually profitable, but they're both incredibly expensive at these levels. Plus there haven't been any real catalysts for the drone companies aside from the president's saber rattling. Next there's a whole new class of companies that's caught fire over the past year. Cryptocurrency miners that are converting their racks full of servers into data centers for AI. Now, this all started with CoreWeave. I don't know if you saw Michael in Trader. He's over at Davos. The CoreWeave successful IPO last March really caught everybody by surprise. Then we saw Nebius join the fray. Those stocks were up 33% and 19% respectively, by the way, just in 2026. But some of the even newer converted crypto miners are up more than 40% like IREN, Applied Digital, Riot Platforms. These moves are insane. I need you to take profits before they're cut in half. Hey, speaking of crypto, a couple of other crypto-related names have had big pops to begin 2026. Even as the broader crypto market still seems stuck, if anything really negative today, Galaxy Digital and Figure Technology, they're up 44% and 76% respectively. Here's what you do when you hear those and see those and own those.

Sell, SELL, SELL, SELL, SELL, SELL, SELL, SELL, SELL.

How about silver? Okay. One ETF made our froth list for 2026. The ProShares Ultra Silver ETF, 74% gain for the year, 360% gain last year, and it added to those numbers today with a 10.7% gain. This is a leveraged way to bet on silver which has been roaring in price. Again, it feels like a speculative mania. I want some off the table and I want some off the table tomorrow. Okay. Couple other metal companies made the list of stocks up 50% or more. Could United States Antimony up nearly 85%. Critical Metals Corp 147% for the year. I mean that's a rare earth elements producer. You got to be kidding. Of the 32 stocks that made our froth list, seven of them were biotechs and four of them have more than doubled. Some of these moves are easier to understand. There's Revolution Medicines up nearly 46% after reportedly drawing takeover interest from both Merck and AbbVie. That could be a winner. Others have had strong clinical trial results. I like that. But again, biotech is not a good leadership group. This is a boom and bust business where gains can disappear just as quickly as they materialize. At that JP Morgan healthcare conference I went to, the 44th, last Monday, I got a feeling that all sorts of biotechs were raising money here and rallying to pretty incredible valuations often based on nothing more than a press release. That's froth. A few one-offs made the list too, and an ambiguous AI company, Rezolve, that's with a Z, AI, has rallied nearly 38% for the year. I covered it as a homework item in September when the stock was just under six. Now it's at three and change even after rallying like crazy over the past three weeks. Now some of that's because they made positive revenue pre-announcements last week. But then today, Rezolve announced that $250 million secondary offering and crushed shareholders, stock tumbling 23%. Get ready to see a lot of those, too.

There's also Rich Sparkle Holdings, not an ice cream company. This is a Hong Kong-based company that offers financial

printing and other corporate services. I'm guessing the name doesn't really translate. That one soared from the mid-20s to a high of $180 in a matter of days, mostly because they announced a deal with a popular TikToker. This with a TikToker everybody recognizes except for me and 300 million other people. The stock's now breaking down. It sank 36% and then another 29% just today because it never should have been up so much in the first place. This stuff's so painful.

Curiously, we've even seen some housing-related names pop, like one of the nation's largest non-bank retail mortgage lenders. That had a 55% year-to-date gain through Friday. Not anymore, though, as LoanDepot plunged more than 12% as long-term interest rates soared today. Get used to seeing those kinds of declines.

Finally, the memory chip makers. Now, they're on their own. They're on fire because there's a genuine shortage here. This is different. The big four memory and data storage companies, SanDisk, its former parent Western Digital, Micron, and Kioxia Technologies, were the four best-performing stocks in the S&P last year, and they're still roaring in 2026.

Now, I intentionally saved those for last because they're a different beast from all the other froth pockets that I just covered. The memory shortage is legitimate. These companies are printing money, but we're now in year two of the supply shortage. And sooner or later, the semiconductor capital equipment makers will produce enough machinery to ramp up capacity, and then pricing will go down.

You never know when there will finally be enough equipment available to tip the balance out of the shortage. No one does. But almost no chip shortages last more than two years. Plus, the shortage doesn't even need to end to stop these rallies. The first sniff of waning demand or supply catching up is all that it takes to bring the memory stocks down.

Here's the bottom line. Now you know where we can find the pockets of froth in the market. But why does it matter that so many speculative groups are rallying like crazy? We've got to stick around after the break. I'll explain why this is a real problem that you have to address as soon as you can. Meaning tomorrow. Hal in Arkansas. Hal.

Jim, long-time caller. What's up?

Okay, I like Dell very much. Here's the problem. They are a big buyer of storage. They're a buyer of Micron. They're a buyer of these disk drives. They're a buyer of all the companies that are in tight supply. And those companies keep raising prices to Dell, which means Dell has to eat it and their margins are going to get hurt.

So, you have to wait till it reports, or you have to wait until we finally see some sort of peak in these different lower-end storage companies, like Micron. Let's go to Bill Masters. Bill.

I'm good. Bill, how you been?

Awesome. They are great, and that whole team is good. That's a good team. They get everybody fired up because that's the way we should be. How can I help you?

Great. That's great. That's cool. That's very...

No, my understanding is you're still going to need Vertiv. You're still going to need Vertiv, which is the liquid cooling system. I don't think they're going to stay away.

Vertiv is going to still be used. Emerson is still going to be used, from what I can tell. I do think, and we also think, that Eaton's going to be used. These are all part of this process of getting electricity in, cooling them. So, I'm not backing away from any of those.

However, understand, Bill, this market does not like the data center at this very moment. And all those I just mentioned are data center plays. All right.

Look, the biggest problem with this market is the froth we're seeing in the most speculative names out there. So, consider yourself warned before starting a position in any of these names. And if you have profits, or you just are way too exposed, or you're on margin, I want sales tomorrow.

Watch where we made money. History is always the best guide for the future. I'm taking a look back at the last few times we've had this amount of speculation in the market and what it might mean and what it's signaling for you.

China and the US have taken different approaches to foreign policy in recent months. And with the tariffs front and center on the world stage, I'm going to break down the potential limits to US influence around the globe. And of course, all your calls for the lightning round tonight. This is the lightning round, so stay with Cramer.

Like I mentioned earlier, the market's gotten incredibly frothy since the new year began, with all sorts of highly speculative stocks shooting into the stratosphere. And that's a problem. You know why? Because we've seen this movie before.

Most recently, we saw a ton of froth in September and early October, with the market peaking a few weeks later. Dow and the S&P both fell about 5 to 6% from peak to trough last fall, and they both revisited their highs before the end of the year. Not too terrible. The Nasdaq 100 fell about the same amount, though it has not made it back to its late October high yet.

What about some of the smaller, more speculative names that make up the frothiest action in the fall? We warned you to do some selling, and we got some of you out before much more extreme declines. Consider this.

The Russell 2000, which is the small-cap focused index, it fell 9.4% from its mid-October high to its low in late November. The Nasdaq Composite, which has more speculative names than the Nasdaq 100, fell 8.8% peak to trough in the fall. And many individual speculative stocks were hit much, much harder than that.

Let's stick with the stocks that have really caught fire again in 2026 because those are the things that got really hammered. I mentioned some of these. Bloom Energy plunged 49% from its November high to its mid-December low. Now Bloom is back above that November high, but the darn thing was still cut in half in a matter of weeks.

Then there's Oklo, that nuclear play, which fell 63% from its October high to its late December low. And even after recovering in the new year, it is still down about 54% from its peak.

Other new nuclear stocks like NuScale Power and Nano Nuclear Energy fell 76% and 61% respectively in the fall. Now, this is the type of breakdown that I'm hoping to keep you out of. I do think we could see a repeat of these declines. What else?

AST SpaceMobile, one of the space stocks I mentioned before the break, it fell 52% from its mid-October high to its late November low before catching fire again over the past two months and making it back to new highs.

Redwire, the smaller space name, fell roughly 59% in an early October to late November tumble. Redcat, the smallest of the drone companies we mentioned, fell 65% over roughly the same period. And that is very, very dicey.

We saw the same carnage in the crypto miners turned AI data center plays. IREN, Applied Digital, Riot Platforms, each fell somewhere between 50 to 57% from peak to trough. That is dangerous.

And listen, I could go on and on, but the point is that the last time we saw this super-frothy action, basically all the hot stocks had devastating pullbacks. Plus, that's hardly an isolated example.

Again, we've seen this movie many times before. When the market gets really frothy, it means we're getting closer to a big meltdown for overheated speculative stocks. That's what I'm trying to get you to understand here.

We saw this in late 2024, the weeks after the election. All sorts of groups — unprofitable AI stocks, space stocks, crypto stocks, fintech, and alternative energy players — they rallied hard as investors raced to position themselves for the new Trump administration. And then those stocks quickly gave back the same gains.

That late 2024 frothy period preceded a major cool-off. The Nasdaq Composite peaked in mid-December of 2024 and proceeded to fall almost 27% by the time it finally bottomed in early April after Liberation Day.

The Nasdaq 100 and S&P 500 held on a couple months longer. They both peaked on February 19th of last year, but then they both fell more than 20% over the next two months. Of course, now, some of that had to do with President Trump's aggressive tariff agenda, but the extreme froth of late 2024, that was a warning sign.

If you heeded the warning, your portfolio would have held up much better over the following few months. Hence why we're doing this. We're not being scolds, people. We're just trying to remember what happened.

Now, the latest period of froth actually reminds me of some of the things we saw back in 2021. Now, that's the period best known for the GameStop short squeeze mania that took over the market for a couple of weeks. That froth took place right at the beginning of the year, and it came on the heels of what had been a pretty good set of years for the market.

But then, both then and now, it felt like investors were starting the year by chasing some nonsense rather than thinking hard about what stocks could continue a steady climb into the new year.

And that early 2021 froth, it also preceded a harsh decline for the broader market, though that was much shorter-lasting. The S&P 500 peaked in mid-February of 2021, then fell almost 6% over the course of the next three weeks or so. Nasdaq 100 fell 12% during roughly the same period.

Those were quick pullbacks, but painful ones. And the market became a lot more skeptical towards speculative stocks, especially the companies that came public via SPAC mergers. And SPACs are back.

Of course, in 2021 and 2024, those post-froth sell-offs turned out to be buying opportunities. So, as painful and as scary as the post-froth selloffs were — the house of pain — if you stayed invested, you were fine. Let's just say that you were fine a few months later.

But if you were only invested in some of the most speculative stuff — I mean, the stuff that I'm really highlighting tonight — you took a real beating and you have not recovered.

Now, the scariest example of froth in recent years might be the late 2021 period when the market put in what ended up being a longer-term top. That period also featured plenty of froth, mostly coming from the IPO and SPAC markets, as well as other hot themes like cloud software and electric vehicles.

And the correction period that followed was really bad. The S&P 500 fell 27.5% peak to trough from its early 2022 highs to the bottom in October, while the Nasdaq indices both were off more than 30% over roughly the same period.

I don't think we're facing a situation like that, at least not yet. The speculative activity now isn't anywhere near as bad as it was in late 2021. And unlike back then, the Fed is our friend right now.

But if you look back at what happened previously when the market got too frothy like it is now, you see that this kind of action typically leads to meaningful declines. We just saw this in the fall when many speculative stocks were cut in half. I think it could happen again.

Here's the bottom line. My big fear is that this froth might precede a bigger top like the one from late 2021. So far, it feels closer to last fall or maybe the end of 2024. While it probably is not the end of the world, it's still worth worrying about. And to me, again, tomorrow, let's take some action. Mad Money is back after the break.

It is time for the lightning round, of course, sponsored by Charles Schwab, where you play and then the lightning round is over. Are you ready? Let's start with Skip in California. Skip.

Skip, what's shaking?