CNBC’s Jim Kramer said Thursday that he expects the market to rush to a bull market for recession-proof stocks, rather than the names of expensive growth.
When the Federal Reserve decides to deal with a “high inflation spiral” [interest] Rate, you’re not supposed to buy expensive rising stock. Hedge fund playbooks say you should sell stocks like Amazon until the tough cycle is almost over, says the “Mad Money” host.
“We’ve got a new bull market called recession-proof that could put up good numbers even in the face of recession,” he added.
The Dow Jones Industrial Average rose 0.25% on Thursday, while the S&P 500 rose 0.43%. Tech-heavy Nasdaq Composite rose 0.06%.
Kramer added that he believes investors should generally avoid buying stocks of the biggest names in technology in the current market.
“I’m convinced that you have to name FAANG and be very conservative with them,” Kramer said. “Of all these growth names, only two will have new meanings,” he said, adding that the Google-parent alphabet and the Facebook-parent meta are not expensive for next year’s earnings, he added.
FAANG is an acronym for Facebook, Amazon, Apple, Netflix and Google.
Kramer warned that a pivot in the bull market would not happen right now.
“Pivots won’t happen for a penny, even if it seems like it. It’s very difficult because for a long time, the whole stock market has bowed to FAANG and friends,” Kramer said. “It was a bull market with a handful of stocks, hundreds of a bear market, if not thousands. Now, the bear is turning into a bull, and most of that will happen in the coming months.”
Disclosure: Kramers Charitable Trust owns shares in Meta, Amazon, Apple and Alphabet.