Jim Cramer says he owns stocks next year that are making a profit, enough of this ‘Silicon Valley gibberish’
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CNBC’s Jim Cramer thinks investors need to buy companies that are actually making money next year so they can see strong returns in their portfolios.
“I think next year is the year you want to own companies that make things, that do tangible things, that innovate,” Cramer said Thursday. “We don’t want companies that just increase their sales but lose tons of money and pay themselves richly in cash and, more importantly, in stocks, while we stay in charge.”
Cramer, who shared the thoughts at a special live event “CNBC Investing Club: Jim Cramer’s Game Plan for 2022,” also advised investors to avoid what he called “Silicon Valley gibberish.” .
Cramer noted that fast-growing companies that didn’t make any money saw their stocks jump for much of 2021, but “once we recognized that inflation was not ‘transient’ … and couldn’t be brought under control without raising rates, that’s it. bad for these companies. “
The broader market recovered in 2021, in part due to favorable monetary and fiscal policies as well as a recovery in the global economy. The S&P 500 is up about 25% year-to-date.
However, the Federal Reserve should largely accelerate the pullback of its accommodative monetary policies and start raising rates next year.
Cramer said the Fed had no choice but to raise interest rates, given the inflationary pressures seen across the economy. He noted that he would like to see the Fed raise rates gradually.
For this reason, investors should keep “profits” in mind at all times over the next year.
Cramer’s stock choices
Cramer also shared some of his favorite stocks as the New Year approaches.
He said Eli Lilly was a buy at current levels, given the positive data from the company’s Alzheimer’s drug. “This one works, it rolls the plate back,” Cramer said.
Cramer also pointed out AbbVie, saying the action is undervalued even after his recent run. Over the past three months, the stock is up 16%.
Cramer pointed the finger at Disney as well as a stock to watch. In fact, he announced that his team will add 75 stocks of the media giant to Charitable Trust’s portfolio following Thursday’s event.
“When you have an iconic franchise like Disney and you can buy it 50 points below what it was, I say you start buying it,” Cramer said.
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