Jim Cramer advises buying selectively to deal with the current market turmoil.
CNBC’s Jim Cramer said on Thursday that investors looking to successfully navigate a market churned by inflation, geopolitical issues and Covid need to do two things: buy discriminately and be inquisitive.
“It’s hard to be curious… But in the long run, curiosity is usually much better. [than panic]. Right now, I think the curious mind will be buying stocks selectively rather than selling them indiscriminately,” the Mad Money host said.
The Dow Jones Industrial Average fell 3.12% on Thursday, while the Nasdaq Composite plunged 4.99%, with both falls marking the worst single-day losses since 2020. The S&P 500 fell 3.56%, recording its second worst day in 2022.
The poor market performance came a day after the Federal Reserve raised interest rates by 50 basis points and said it would start tightening its balance sheet in June.
“Right now, I think the market is expecting the worst-case scenario, and there’s a good chance we won’t actually get it,” Cramer said of the Fed’s anti-inflation measures.
He added that curious investors should ask themselves a few questions to assess the state and future of the market. Here are some of the important questions posed by Cramer:
- Is every company worth less today than it was yesterday when the stock market was rising? Kramer said no. “If you only focus on the bond market, we are heading towards a high-inflation world where the Fed must raise rates aggressively. That means you should be buying stocks that are doing well…in a slowdown in high inflation,” he said. said.
- Will the war between Russia and Ukraine or the isolation of China last forever? Kramer reminded investors that this is not the case and predicted that Nike and Starbucks could face a huge rally once the lockdown in China ends.
- Is inflation really that deeply rooted in the market? “When only oil and natural gas continue to hit new highs, maybe that inflation is easier to beat than most people expect,” Cramer said.
- Does a company’s profit still matter? Yes, it is, Cramer said, adding that AMD shares can be bought even at their low levels.
He also said that now could be a great buying opportunity for investors who have the money and are looking to add to their portfolios.
“If you have enough cash, the market will sell off everything, including some great stocks with good returns that have great prospects that will outperform earnings,” he said.
Disclosure: Cramer’s Charitable Trust holds shares in AMD.