CNBC’s Jim Cramer said he wasn’t part of a sell-side rally on Tuesday as major U.S. stock indexes posted their worst one-day decline since June 2020 on Tuesday.
“Look, I can’t blame anyone for panicking after we got another hot CPI showing that core inflation hasn’t peaked yet,” the “Mad Money” host said, admitting it was “terrible day”. no matter how you slice it.”
However, Cramer said investors rarely make wise decisions when panicking, so it’s important for long-term investors to focus on the big picture on a day like Tuesday, when only five S&P 500 stocks finished in positive territory.
“I’m not saying you need to buy anything here yet,” Cramer said, noting that his philanthropic fund, whose portfolio is used by CNBC’s Investment Club, bought just one stock among the wreckage. “We know the rebound may not be immediate,” he added. “But the main thing? We definitely didn’t sell.”
Cramer said the reason he hasn’t sold is because he believes the market entered Tuesday’s session in a losing position. On the one hand, he said he believed bearish investors had overreacted to the August CPI report, stressing that it was only slightly worse than consensus estimates, even though it likely warrants a third consecutive aggressive rate hike by the Federal Reserve next week.
At the same time, Cramer said that if the inflation data hypothetically came in slightly better than expected, bearish investors would find a way to focus on whether the Fed was too aggressive when price pressures had already eased. .
Cramer said he decided to bypass this “false dichotomy.” Instead, he said he believes that even after the August CPI report, the U.S. central bank still has room to “thread the needle” and raise interest rates to control inflation without sending the economy into a Great Recession-like slump. “This is not 2007 or 2008,” he said.