Jim Cramer says smart investing is as simple as buying growth stocks when interest rates begin to fall.
When there’s not enough of anything, everything gets more expensive, Jim Cramer told his Mad Money viewers Tuesday. But eventually, things get so expensive they stop selling. Today we learned that Target (TGT) – Get Target Corporation Report has a glut of hard goods like appliances and TVs. And while that’s bad news for Target, it’s a welcome sign for consumers and investors.
When retailers have too much inventory, prices get slashed and outlets thrive. That’s great news for cash-strapped consumers. It’s also great news for the Federal Reserve, as its the first sign that our economy is cooling. The Fed might soon not need multiple 50-basis-point rate hikes, instead relying on a more measured approach.
Target’s 2.3% decline Tuesday is also great news for investors. It signals that the most beaten down names, like tech, may have finally bottomed.
The tech stocks broke down in November, when the Fed first signaled rate hikes were coming. But now that the first signs of a slowdown are upon us, those future earnings at tech companies will quickly come back into vogue. Remove inflation and technology now offers growth at a reasonable price.
Investors can also look into the recession stocks, like healthcare and consumer packaged goods. Both JM Smucker (SJM) – Get J.M. Smucker Company (The) Report and Eli Lilly (LLY) – Get Eli Lilly and Company Report closed higher, as investors fled to safety.
You don’t have to overthink it, Cramer concluded. Investing is as simple as buying growth stocks when interest rates begin to fall, as they did earlier today.
