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Jim Cramer says be wary of FAANG shares as the Fed’s expected rate hike rejects a market reversal.

CNBC’s Jim Cramer said Thursday that he expects the market to turn to a bull market for recession-protected stocks, not expensive growth stocks.

When the Federal Reserve decides to fight a “higher inflationary spiral” [interest] rates, you should not buy expensive growth stocks. The hedge fund textbook says you should be selling stocks like Amazon until the tightening cycle is almost over,” the Mad Money host said.

“We have a new bull market with recession-resistant names that could continue to perform well even in the face of a slowdown,” he added.

The Dow Jones Industrial Average rose 0.25% on Thursday, while the S&P 500 rose 0.43%. The tech Nasdaq Composite rose 0.06%.

Cramer also said that he thinks investors in general should avoid buying shares of the biggest tech companies in the current market.

“I’m adamant that you have to be very careful with the names FAANG and the like,” Kramer said. “Of all these growing names, only two that I would put fresh money into” are Alphabet, the parent company of Google, and Meta, the parent company of Facebook, because they are not too expensive for next year’s earnings, he added.

FAANG is an acronym for Facebook, Amazon, Apple, Netflix, and Google.

Cramer warned that a reversal to a bull market would not happen immediately.

“Turns don’t happen right away, even if it seems that way. It is very difficult because for a long time the entire stock market was subordinate to FAANG and his friends,” Kramer said. “It was a bull market for a handful of stocks, a bear market for hundreds if not thousands of others. Now the bear market is turning into a bull market, and most of that will happen within the next month.”

Disclosure: Cramer’s Charitable Trust holds shares in Meta, Amazon, Apple, and Alphabet.


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