Investors should shun FAANG and Big Tech stocks such as Apple Inc (NASDAQ:AAPL) and Alphabet Inc (NASDAQ:GOOGL) (NASDAQ:GOOG) and turn to value stocks, according to “Mad Money” host Jim Cramer.
What Happened: Cramer said that FAANG names representing Meta Platforms Inc (NASDAQ:FB) — the parent of Facebook, Apple, Amazon.com, Inc (NASDAQ:AMZN), Netflix (NASDAQ:NFLIX) and Google’s parent are likely to be hit hard as the U.S. Federal Reserve raises rates, reported CNBC.
“For the moment, I do think we have to forget most of FAANG and focus on the money centers. The oils. Retailers with tremendous scale,” said Cramer.
The TV host told investors to focus on money center banks, oil, retailers with scale, health insurers and big pharma instead of tech stocks. Big pharma does not include biotech, according to Cramer which is susceptible to the vagaries of inflation.
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Why It Matters: Cramer advised those with tech-heavy portfolios to reposition and said investors should not be overweight on anything except oil because of the “industry’s newfound discipline on drilling,” according to CNBC.
Cramer touched on inflation — pushed higher by soaring oil and food prices due to the ongoing conflict between Russia and Ukraine. He also pointed out the COVID-19 issues plaguing China, which are detrimental to supply chains. Both factors play out against tech names.
A recent poll conducted by Reuters expects the U.S. Federal Reserve to raise interest rates to mitigate rising inflation. A 50-basis point hike in rates is forecasted in May and June by a majority of those polled.
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Photo courtesy: Mad Money on Wikimedia
