CNBC commentator, Jim Cramer has cautioned investors against hastily buying stocks following the recent market surge, warning that doing so could lead to financial losses.
Cramer Warns Against Chasing Hot Stocks
Cramer, the host of CNBC’s “Mad Money,” advised investors to exercise caution and avoid purchasing stocks that have already seen a significant increase in value. He suggested that it’s better to wait for better entry points instead of chasing stocks that have already risen by 30% or 40% in the year.
He cautioned that this is often “a license to lose money.”
He also highlighted potential near-term risks in the banking sector ahead of the upcoming earnings season. Despite acknowledging that banks are undervalued, Cramer warned that JPMorgan Chase (NYSE:JPM), for example, might see its stock temporarily affected by CEO Jamie Dimon‘s cautious comments during strong market conditions.
“By all means, own some unloved tech names, but save room for a quality consumer [stock],” Cramer advised.
Caution Mounts As Market Risks Build
Cramer’s warning comes after a period of significant market activity. Just last week, Cramer cautioned investors against chasing oil stocks amid the Venezuela crisis. Despite the potential risks, Cramer has previously expressed optimism about the banking sector, highlighting the potential for significant upside in certain bank stocks.
Meanwhile, Goldman Sachs recently warned, high valuations could lead to increased market volatility if corporate performance fails to impress, making Cramer’s advice to wait for better entry points particularly relevant. Even Fundstrat’s Tom Lee cautioned of a possible 15-20% correction in the latter half of the year.
Price Action: Over the past year, Invesco QQQ Trust, Series 1 (NASDAQ:QQQ) and Vanguard S&P 500 ETF (NYSE:VOO) climbed 22.33% and 18.76%, respectively, as per data from Benzinga Pro.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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