Jim Cramer Suggests Waiting for Interest Rate Rise to Buy Assets
Jim Cramer, the host of CNBC’s “Mad Money” and a well-known market analyst, has advised investors to hold off on buying assets until interest rates increase again. According to Cramer, the subsequent sell-off will result in lower prices, making it a more favorable time to invest.
Cramer believes that investors should wait for the next move up in interest rates, which he predicts will trigger the next stock market sell-off. He emphasizes the importance of thinking long-term and staying committed to companies that are performing well. However, if you’re unable to do so, Cramer suggests considering 5% Treasuries until the market conditions improve.
The Schism Between Company Worth and Stock Trading
Cramer points out that there is a “schism” between the value of some companies and their current stock prices. Several companies, including Coca-Cola, 3M, General Electric, and Verizon, recently announced their earnings. Despite struggling before their reports, their stocks rose after revealing positive results.
Cramer attributes this phenomenon to low expectations from investors. He cautions against betting on a beat and raise quarter that relies on the performance of S&P 500 futures contracts. Instead, he advises waiting for the market to go down before purchasing stocks, as he believes there will be more opportunities.
Federal Reserve Chair Jerome Powell’s Insights
Federal Reserve Chair Jerome Powell recently discussed the resilience of the U.S. economy and the impact of monetary policy in an interview with Bloomberg TV’s “Wall Street Week.” Powell acknowledged that higher bond rates are affecting financial conditions, which aligns with the goals of monetary policy.
According to Powell, movements in the bond market could potentially alleviate the need for the Federal Reserve to continue raising rates. However, this is yet to be confirmed. Powell emphasized that current evidence suggests monetary policy is not overly tight. He reiterated that the Federal Reserve’s primary responsibility is to maintain low and stable inflation, even if these actions are not popular.
Hot Take: Waiting for Interest Rate Rise Can Be Beneficial
Jim Cramer advises investors to exercise patience and wait for interest rates to rise before purchasing assets. By doing so, they can take advantage of a potential sell-off that would lower prices. Cramer highlights the importance of thinking long-term and staying committed to successful companies. However, if this approach is not feasible, considering 5% Treasuries could be a temporary alternative.
Additionally, Cramer points out the discrepancy between company worth and stock trading, emphasizing the unpredictability of quarterly reports. He suggests waiting for market downturns to identify better investment opportunities.
In terms of monetary policy, Federal Reserve Chair Jerome Powell acknowledges that higher bond rates impact financial conditions but notes that it aligns with the goals of monetary policy. Movements in the bond market may influence the need for further rate hikes. Powell reiterates that maintaining low and stable inflation remains the Federal Reserve’s primary responsibility.
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