Selling software service stocks on trade worries is a 'big mistake,' Jim Cramer says

Don't give up on the entire technology sector of the market, according to CNBC's Jim Cramer.

The "Mad Money" host advised that selling off would be a poor miscalculation, urging investors to "ask yourself what you're selling."

"If you're dumping an ETF, be my guest — those are just moronic amalgamations of stocks slapped together by people who make a living by convincing you that the tech sector is still a real, cohesive thing," he said. "But if you're dumping the kind of tech stocks that are working here — especially the better run software-as-a-service names — I think you're making a big mistake."

Cramer sought to dispel thoughts that it's time to get cautious about the tech stocks that have powered the market to new highs or because of potential escalations in the U.S.-China trade war.

Software stocks like ServiceNow, Salesforce.com and Adobe may still face pressure from the trade front, as President Donald Trump continues to pressure Chinese trade negotiators with more tariffs to agree to a trade deal, but Cramer continues to put his faith in the group.

"In fact, these stocks will probably be the first to go down again because the algorithms ... sell them on any trade worries," he said. "But after that, their stocks tend to come bouncing back with alacrity because these companies are forces of nature."

Pointing to Kohl's, whose shares deflated nearly 20% to almost $42 per share in Tuesday's session on a disappointing earnings report and forecast cuts, Cramer noted that retailers have to equip themselves with the right software to stay competitive.

Management blamed its quarterly earnings and sales declines, along with its reduced profit outlook, in part on an "increasingly competitive promotional environment."

"The lesson here is simple: If you want to stay competitive in retail, you need to pay these software-as-a-service companies a fortune," Cramer said. "That's why I rebel against this idea that you need to lighten up on tech [stocks]."

Disclosure: Cramer's charitable trust owns shares of Salesforce.com and Kohl's.

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