Tags: Coronavirus | jim cramer | pandemic | stocks | recovery | investments

Jim Cramer: Swap Pandemic Stocks for Recovery Investments

By    |   Wednesday, 12 August 2020 09:24 AM

Investment guru Jim Cramer has urged savvy investors to prepare for the economy to rebound in a robust recovery.

The CNBC “Mad Money” host told investors to lock in the gains from the run in the pandemic plays and get more exposure to the recovery as the market rebounds from the coronavirus-induced slowdown that started in the first half of the year.

“If you think we’ll be in the clear six months from now, then you have to swap into the recovery stocks now, because if you wait for the” all-clear signal, “I promise you you’ll be too late,” Cramer said on his CNBC show.

“You need to stick with what I call the barbell, meaning own some recovery stocks and some COVID stocks, but I do think it’s time to lighten up on some of those COVID names and swap into more stocks that are like Honeywell and DuPont,” Cramer said.

The top pandemic plays were largely in the technology space, especially stocks of companies that benefited from the work-from-home environment, such as Zoom Video, Big Tech and cybersecurity investments, CNBC explained.

“Now, though, there are plenty of signs that we’re leaving the trough, at least for the publicly traded companies that have been stuck there — the recovery plays,” Cramer said. “I suspect the cyclicals, industrials and banks could lead us from here, not the COVID stocks, although that doesn’t mean they’ll get destroyed,” he said.

Meanwhile, investors are facing a dilemma: stay in or get out with assets of all stripes rallying and the S&P 500 Index approaching fresh records.

Surging U.S. stocks, Treasuries and gold prices have come to the brink of simultaneously notching record highs for the first time in history, while rallies in once beaten-down assets like oil, financial stocks and the euro have accelerated. The S&P 500 is up 50% from its late March lows.

"We are in the 'bull everything' trade," Christopher Stanton, chief investment officer at Sunrise Capital Partners told Reuters. "There are very few losers. Only laggards."

The broad-based gains have presented investors with a conundrum. While many are uneasy owning assets that appear richly valued or trade at record highs, holding too much cash or an outsize allocation to underperforming stocks has hampered portfolio performance during the recent rally.

Another concern is the possibility of a broad reversal where assets that appreciated in tandem sell off simultaneously, leaving investors with few places to shelter.

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Investment guru Jim Cramer has urged savvy investors to prepare for the economy to rebound in a robust recovery.
jim cramer, pandemic, stocks, recovery, investments
Wednesday, 12 August 2020 09:24 AM
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