Forget Index Funds, Check Your Refrigerator For Stock Pick, Says Jim Cramer

Shivdeep Dhaliwal
·2 min read

The host of CNBC's “Mad Money With Jim Cramer” says, investors should look at defensive stocks of companies that make goods “we can’t live without.”

Rummage Through The Shelves

Monday saw another day of carnage in the markets with the Dow Jones Industrial Average plummeting 12.93% to 20,1899. Circuit breakers were triggered for the third time in a week as coronavirus worries weighed heavily on investors’ minds.

However, some consumer goods stocks are holding their ground. Cramer pointed to such stocks on "Mad Money." One example he cited was Conagra Brands Inc. (NYSE: CAG). There were other winners too like JM Smucker Co.(NYSE: SJM), and Clorox Co. (NYSE: CLX), the makers of bleach. Conagra closed higher by 9.98%, while JM Smucker and Clorox were up by 4.65% and 4.26% respectively.

The Host With A Bullish Mindset

Cramer, a Harvard graduate, is known for his bullish disposition. He is also a former hedge fund manager and a founder, owner and senior partner at Cramer Berkowitz. His compounded rate of return after all fees was 24% for 14 years at his hedge fund.

Cautioning investors to err on the side of caution he said on the show, “On a horrific day where the averages were down 12% to 13% ... we’ve got to stop buying average... Instead, we should buy quality recession-proof stocks because that’s what works when the economy’s on hiatus.”

Stay Away From Index Funds

Cramer warned, “[T]he problem with the index funds is that you inevitably own both the winners and losers; and the difference between winners and losers has become too stark for that to make any sense.”

He said there are opportunities available for investors but they have to stay away from the index funds. Cramer also cautioned against stocks such as airline, oil, restaurants, entertainment, bank, and tech stocks, and retail as they are “too hard” to hold in the present times.

Opportunities Lie Waiting

The slide in the markets presents opportunities for those who would seek to grab them. Cramer claimed that there were many industries on the ropes that would stay on the ropes for a long time to come unless they fall flat on the canvas. On buying on fresh lows, he theorized, “No more selling without a big up day like we had on Friday to get you better prices than you can expect into the teeth of the panic.”

Photo Credit: Screenshot of Online Stream.

See more from Benzinga

© 2020 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.