Swap speculative stocks for more boring plays even as market rallies, Jim Cramer says

CNBC’s Jim Cramer on Tuesday told investors to sell their speculative stocks to fund purchases of more stable stocks.

“It’s time to take profits on the most speculative stocks in your portfolio and move that money into something more resilient,” the “Mad Money” host said. “A mild recession is still a recession. You need to be in quality, not the fanciful,” he added.

Stocks have rallied in recent months after spiraling during the first half of the year as skyrocketing inflation, the Federal Reserve’s interest rate hikes and Russia’s invasion of Ukraine led investors to flee the market.

The Dow Jones Industrial Average is up 15% from its lows in mid-June, the benchmark S&P 500 is up more than 18% and the tech-heavy Nasdaq Composite has jumped 24%.

Among the downtrodden stocks seeing gains are speculative names such as Bed Bath & Beyond, which closed up 29% on Tuesday after Reddit traders jumped on the stock. Shares shot up more than 70% in intraday trading. 

Cramer warned that investors should ditch such risky plays for more boring, stable stocks — especially considering that it’s unclear whether the Federal Reserve will continue its aggressive stance against inflation.

“The more the stock market rallies, the more likely it is that [Fed Chair] Jay Powell will have to lower the boom on us again,” Cramer said.