CNBC’s Jim Cramer warns against growth stocks

On Thursday, Jim Cramer of CNBC predicted that the market would shift to a bullish trend for recession-proof equities instead of pricey growth stocks.

Caution on pricey growth stock as Fed moves to combat inflation

You’re not supposed to acquire pricey growth equities when the Federal Reserve moves to combat the increase in inflation with high [interest] rates. The Mad Money host said that until the tightening cycle is virtually over, the hedge fund strategy suggests that you should sell equities such as Amazon. Cramer added:

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We’ve got a new bull market in recession-proof names that can keep putting up good numbers even in the face of a slowdown.

The Dow Jones Industrial Average climbed 0.25% on Thursday, while the S&P 500 gained 0.43%. On the other hand, The Nasdaq Composite, which is heavily weighted in technology stocks, rose 0.06%.

Traders should avoid top tech stocks

Cramer also feels that traders need to avoid purchasing shares of top tech companies in the present market. He added that he is adamant that investors should be conservative regarding FAANG names and their group. FAANG is an acronym standing for Facebook, Amazon, Apple, Netflix, and Google

Interestingly of all growth stocks, the only two that he will invest in are Google’s parent company Alphabet Inc. (NASDAQ: GOOGL), and Facebook’s parent Meta (NASDAQ: FB)since they are not pricey on next year’s earnings. 

Surprisingly Cramer cautioned that a pivot is unlikely to occur right away. He said:

Pivots don’t happen on a dime, even if it feels that way. This one’s very hard because, for a long time, the whole stock market has bowed to FAANG and friends. It was a bull market in a handful of stocks, a bear market in hundreds, if not thousands of others.

The bear is already transitioning to a bull, and the majority of this will occur within the next month.