CNBC’s Jim Cramer told investors on Tuesday to sell their speculative stocks to fund purchases of more stable stocks.
“It’s time to take profits on the most speculative stocks in your portfolio and move that money into something more resilient,” said the “Mad Money” host. “A mild recession is still a recession. You have to be in quality, not fantasy,” he added.
Stock prices have risen in recent months after a strong rally in the first half of the year as skyrocketing inflation, Federal Reserve rate hikes and the Russian invasion of Ukraine prompted investors to flee the market.
The Dow Jones Industrial Average is up 15% from its mid-June lows, the benchmark S&P 500 is up more than 18% and the tech-heavy Nasdaq Composite is up 24%.
Among the understated stocks that saw gains are speculative names like Bed Bath & Beyond, which closed 29% on Tuesday after Reddit traders jumped on the stock. Shares shot up more than 70% in intraday trading.
Cramer warned investors should abandon such risky moves for duller, more stable stocks — especially given that it’s unclear whether the Federal Reserve will continue its aggressive stance on inflation.
“The more the stock market rises, the more likely it is” [Fed Chair] Jay Powell will have to lower the boom on us again,” Cramer said.