CNBC’s Jim Cramer will use the Fed’s last double rate hike and 2000 aftermath analysis to become a profitable company on Thursday if the Fed implements a double rate hike by half. Advised investors to invest.
“We know what works when the Fed aggressively tightens. The lesson of 2000 sticks to profitable companies that offer real products and services that also have meaningful dividends and repurchases. To sell the rest, “he said.
“Mad Money” host comments halved in May and June in response to traders’ pledge that Federal Reserve Chairman Jay Powell will take strong action against the surge in inflation on Monday. After predicting an increase.
Thursday’s Dow Jones Industrial Average rose 1% and the S & P 500 rose 1.4%. The Nasdaq Composite Index rose 1.9%.
Kramer said the dot-com bubble collapsed two months ago when the Fed Chairman Alan Greenspan doubled the rate hike in May 2020. He said the Federal Reserve has already raised interest rates five-fold in the last 11 months, and interest rates in May have ended their tightening cycle.
According to Cramer, Nasdaq lost 78% of its value from its March peak of the year to October 2002, with 60% of the loss after Greenspan doubled the rate hike. According to Kramer, the S & P 500 fell 50% from its peak, nearly 90% of the decline occurred after a rate hike, the Dow Jones Industrial Average fell 39% from a high, and 80% fell after a rise.
Winners included healthcare, energy and financial stocks, but he added that tech stocks plummeted due to the dot-com bubble burst.
However, the host reminds viewers that there are external factors, such as the current war between Russia and Ukraine and the recession in the early 2000s, that make both the current market and the 2000 market unique and incomparable. I did.
“I don’t think we’re seeing a one-on-one replay of the dot-com company collapse, but I’m experiencing more pain on average, especially before the Fed’s meeting in early May. You wouldn’t be surprised. An unprofitable company in Nasdaq that makes heavy use of high tech. “
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