As interest rates keep increasing, people start to worry about the competition to stocks, Jim Cramer said on his
"RealMoney" radio show Wednesday.
In this type of market, just like in 1999 and 2000 when the
talked about being vigilant toward inflation, people begin to sell stocks, invest less in them and spend less, Cramer said.
And the next thing you know, you have a crushed economy.
Commodities prices were completely out of control about a month ago. If the Fed believes that it has won at controlling the prices, maybe the market will witness only one more rate hike, Cramer said.
Gold is down right now, oil is starting to come down and copper is getting crushed.
Until the Fed is finished with its crusade against the market and is on our side, people have to be cautious, Cramer emphasized.
index has been down 10 straight days, the longest period it has consecutively been down in 22 years, Cramer said. What people need to focus on at this time is what will happen after it is finished declining.
In 1984, the last time the Nasdaq was down for this long, it went down 6.7% in nine days, and 0.3% the next day -- then it went up, Cramer said.
Also, toward the end of 1984, there was another instance when the Nasdaq lost 11.2 %, and the year after it went up 31%.
Those who are patient and use this sell-off as an opportunity to buy may not be immediately rewarded, but will be rewarded in time, Cramer said.
Cramer says that although a year seems like a long time, there are a lot of opportunities in a decline that may not be in the near-term. Bet on the worst-case scenario, he said, and be cautious.
Ups and Downturns
There are selloff opportunities in every sector during a downturn, Cramer said
Among those stocks Cramer likes are
"The whole aerospace group is growing now," he said referring to Boeing. And Best Buy is a stock that has been going down for days -- even the CEO of the company was selling his stock -- but the company had a blowout quarter, Cramer said.
"Don't use a broad brush when painting a bear market," Cramer advised. "Stay focused."
The price of oil is also coming down. The amount of crude oil stored is at its highest levels in 20 years, and China is buying as much of it as the country can.
Although natural gas is much cheaper than oil, he said, the price of natural gas is going up. It's tough to gauge where the price of oil is going. It may fall from $68 to somewhere in the $50 range, Cramer said.
Cramer believes that the world will have more than enough copper, coal and iron in a few years. But even though there is plenty of oil available now, he believes it will be in scarce supply down the road.
The oil sector is a good buy, he said, recommending two oil companies in particular,
In the financial sector, Cramer said people have the chance now to buy
, because its insiders are selling.
Right now, Henry Paulson, whom President Bush just chose to run the U.S. Treasury Department, will have to sell all his shares of Goldman Sachs.
"The stock is going down because of Paulson," Cramer said. "Buy small and hope it comes down so you can buy more."
A trader is probably going to beat an investor in this type of market environment, Jim Cramer told a caller on his
"RealMoney" radio show Wednesday.
( PALM) is near bottom. This is one cheap stock, and therefore a buy, he said.
When asked about
, Cramer said he believes that refinery plays are going to be OK.
Cramer said he would buy Hess in increments because it is a company that is up year over year and may fall even more. He called Hess the second best refinery after
Cramer told a caller who asked about
that he recently sold his shares of the bank, which he owned for his charitable trust,
Action Alerts PLUS.
They were not making as much money as we thought, he said. The company's estimates were coming down, and now the stock is getting hammered.
"All bank stocks are going down," Cramer said. "It is a very bearish market when bank stocks go down. It is because people are worried about credit risk."
The banking group was a sector that had been a leadership group, but now the whole aerospace group is growing. When the bank group goes down, Cramer said it makes him cautious.
, which he owns for his charitable trust,
Action Alerts PLUS, a thumbs up and told another caller to be careful with
He also told another caller to be cautious about
because it is a high-multiple stock.
Cramer said he wouldn't buy it until it came down to $60. The stock is at $66 right now.
When a caller asked about
, Cramer said he sees so many high-quality oil stocks that he's not going back to coal stocks right now.
"When oil comes down, I am not tempted by Peabody, even though it is a good company," he said.
( WFMI) has held up better than any other stock in its sector. But when Dick Fisher says the Fed is going to keep raising rates, a little pressure begins to build up, Cramer said.
Expensive stocks have been coming down, and Whole Foods is one of them. Cramer said he'd be careful.
was one of Cramer's biggest wins when he owned it, he said. It is doing terrifically, and he believes that people will make some money from it between now and Christmas.
Buy it, but remember to purchase it a little at a time, Cramer said.
At the time of publication, Cramer was long Ingersoll-Rand.
Jim Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. Outside contributing columnists for TheStreet.com and RealMoney.com, including Cramer, may, from time to time, write about stocks in which they have a position. In such cases, appropriate disclosure is made. To see his personal portfolio and find out what trades Cramer will make before he makes them, sign up for
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