How Jim Cramer Formed WATCH
There's a new acronym in town.
Move aside, FAANG.
WATCH is here.
WATCH is Jim Cramer's newest acronym.
It stands for Walmart , Amazon , Target , Costco and Home Depot .
Curious why Cramer chose to group those five companies together?
"Scale is a wonderful thing.
Scale can make the difference between winning and losing.
And, most important, scale doesn't depend on the Fed.
In fact, it has nothing to do with the Fed even as it is instrumental in moving the averages higher," he wrote in his Real Money column Thursday afternoon.
He explained the reason behind the acronym during TheStreet's Cramer Live Facebook show.
Here's what he had to say: "I'm looking for companies that determine what price they buy their goods at.
And that's Walmart.
That's Amazon, that's Target, that's Costco.
And that's Home Depot.
So in other words, you're a supplier, and you have a price, a wholesale list.
And if you're a company with five stores, you pay that list.
So you pay a pants company $12 and then you sell them at $18 okay.
Watch those companies.
They tell the pants company, listen, the wholesale prices $12 and they say, no, I'm actually paying $8, because I have scale.
And if you haggle it, we'll make it down to $6 so that this is a big change in the economy.
There's just a few stores that survived and now they have so much control that you're getting great bargains," explained Cramer.