- CNBC’s Jim Cramer linked the stock market weakness to increased competition presented by US government bonds.
- He suggested investors take advantage of market weakness and buy stocks that can perform well even in a high-yield environment.
CNBC’s Jim Cramer said Tuesday that investors should view recent weakness in the stock market as a buying opportunity, despite increased competition presented by U.S. government bonds.
Treasury yields rose this month, with the yield on the benchmark 10-year bond rising to 4.566% on Tuesday, a new 15-year high. The 30-year Treasury note also returned 4.7% on Tuesday, a level not seen since 2011. The S&P 500 is down 5.2% so far in September, while the tech-heavy Nasdaq has lost nearly 7%.
While the additional rise in yields weighed on stocks in September, Cramer said interest rates will eventually rise at some point after the Fed tames inflation. This “means you need to buy some shares here, not sell them,” Cramer said.
“Don’t do it all at once. Do it broadly. Some here, some less. Because if Treasury yields go to those levels, you want enough cash to buy more stocks,” he continued.
Cramer suggested that investors look for companies that can perform well and generate profit even in an environment with higher interest rates. For Cramer, investors should look for companies like his longtime favorite Nvidia, saying, “I don’t want to find more Nvidia products for 10 years. I want to find you more Nvidias.”
“You buy stocks when you’re trying to get rich, and you buy Treasuries to stay rich,” Cramer said. “I think a combination of both is good, but if you cancel all bonds now, I think now you might miss out on something really good in stocks, even if that seems completely impossible. It always seems that way, but it’s never that way.”
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Disclaimer The CNBC Investing Club Charitable Trust owns shares of Nvidia.
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