Stay Invested Any Time The Fed Raises Rates, Stocks May Still Bounce Back
CNBC’s Jim Cramer on Friday urged investors to stay in the market despite concerns about a possible hawkish Federal Reserve policy change.
âThe Fed may not be your friend anymore, but it hasn’t become your enemy either, and if the last round of tightening is any guide, it won’t be for a very long time,â the Fed said. host of “Mad Money”. noted.
Cramer’s comments on Friday follow government data released earlier today which showed inflation rose to its highest level since 1982 in November, jumping 6.8% more than expected year on year. ‘other. The Consumer Price Index report comes days before the Fed’s political arm holds its last meeting of the year on Tuesday and Wednesday.
Fed chief Jerome Powell has previously signaled that the central bank may speed up the end of its bond buying program. After the CPI was printed on Friday, Cramer said he wouldn’t be surprised to hear Powell speak on Wednesday about the Fed’s rate hike program.
The prospect of higher interest rates may scare the markets, Cramer said, but stressed that investors need to remember that even recent history shows that it is not the end of the world for stocks.
âIf you look at the whole period from mid-2015 when we started hearing talk about rate hikes like now from then Fed chief Janet Yellen until September 2018 when the new Jay Powell has virtually declared war on the entire economy. , the stock market has seen an incredible run, âCramer said. “The S&P gained 41%, the Dow gained 50%, and the Nasdaq gained 61%.”
Sure, Cramer said central bank policy can ruin the stock market, as it did towards the end of 2018. But the damage usually occurs in the later stages of a tightening cycle, “not near the beginning where we’re at. are, âhe said.
âIf you sold stocks in 2015 because you were worried about a looming series of rate hikes and many did, you missed out on huge gains over the next three years,â he said. he declares.
Positioning in the market becomes of the utmost importance when the Fed begins to brake, Cramer said.
âAs we head into 2022, you want to own companies that make tangible things, sell them for a profit, especially if they return those profits to shareholders through dividends and buybacks,â he said.
Register now for the CNBC Investing Club to follow Jim Cramer’s every move in the market.