CNBC’s Jim Cramer said investors should take a chance on buying the dip during trading days like Monday — even if it means accepting some short-term losses.
“This is my eighth tightening cycle and I know from experience that if you wait until the [Federal Reserve] is done and inflation’s broken, it’ll be too late to buy,” the “Mad Money” host said, referring to the Fed’s plan to implement several interest rate hikes this year to control soaring inflation.
“You have to anticipate the peak in inflation, just like [Monday] where the market looked so treacherous and then turned placid. You have to accept some short-term losses. … If you can’t take the pain, though, go ahead and swap into Treasurys now that they’re yielding near 3%,” Cramer said.
The S&P 500 and Nasdaq Composite dropped to new lows for the year on Monday but made a comeback before the session’s end. The Nasdaq gained 1.63% while the S&P 500 climbed 0.57%. The Dow Jones Industrial Average, which was down more than 500 points at its low, edged up 0.26%.
Cramer also advised investors that if a company’s stock performed poorly on Monday despite reporting an upbeat quarter earlier this earnings season, it’s a reflection of the current market, not the firm. He cited American Express, Coca-Cola and UnitedHealth Group as some examples of companies whose stocks teetered.
“The market’s simply not willing to pay as much for those future earnings in this new environment — whenever interest rates rise rapidly, price-to-earnings multiples start shrinking,” he said.