CNBC’s Jim Cramer said he was not participating in the vendor parade on Tuesday because major US stock indices posted their worst one-day decline since June 2020 on Tuesday.
“Listen, I can’t blame anyone for freaking out after we have yet another scorching Consumer Price Index figure, showing that non-commodity inflation hasn’t peaked yet,” said the “Crazy Money” the host said, acknowledging that it was a “horrible day, no matter how you slice it.”
However, Cramer said investors rarely make sound decisions when panicking, so it’s important for long-term investors to focus on the big picture on a day like Tuesday, when just five stocks in the S&P500 ended in positive territory.
“I’m not saying you have to buy anything here again,” Cramer said, noting his Charitable Trust, the wallet used by CNBC Investment Club, bought a single stock in the middle of the wreckage. “We know a rebound may not be in direct sight,” he added. “But the end result? We were definitely not selling.”
Cramer said the reason he didn’t sell was based on his belief that the market entered Tuesday’s session in a dead end position. On the one hand, he said he thinks bearish investors overreacted to the August CPI report, pointing out that it was only marginally worse than consensus estimates, even though it likely guaranteed a third consecutive aggressive interest rate hike from the Federal Reserve next week.
At the same time, Cramer said that if the inflation data had, hypothetically, been slightly better than expected, bearish investors would have found a way to turn the narrative to a focus on whether the Fed was too aggressively when price pressures were already easing. .
Cramer said he chooses to look beyond this “false dichotomy”. Instead, he said he believed even after August’s CPI report there was still room for the US central bank to “thread the needle” and raise interest rates. to control inflation without plunging the economy into a Great Recession-like downturn. “It’s not 2007 or 2008,” he said.