Investors and “longer view” to survive the volatile market

  • CNBC’s Jim Cramer said Tuesday that despite scary events in recent weeks, investors shouldn’t make decisions based on daily fears.
  • He explained that history often shows that owning shares in high-quality companies is the recipe for navigating a volatile market.

CNBC’s Jim Cramer said Tuesday that investors are operating too much on fear and instead need to take a long-term view of the market and “accentuate the positives.”[ads1];

Cramer acknowledged that investors’ concerns are not unfounded, and that on the surface this market looks like “the sum of all our fears.” The past year has been characterized by a consumer under pressure, economic tensions with China and Russia, a falling office property market and, most recently, massive bank bankruptcies.

But pulling out and selling in these precarious times is not the answer, Cramer said, especially since “we have no idea” what the ultimate long-term impact of these external events will be.

For example, Cramer pointed to the recent fall of Silicon Valley Bank, which sparked initial concerns about a repeat of the Great Recession. That led to a sell-off in oil and industry, which people assumed would be affected by bank-driven contagion. But First Republic Bank and regional banks were steady Tuesday after Treasury Secretary Janet Yellen said bank deposits will be protected, sending investors hopping back into oil and industrials.

That reversal proved that investors make choices based on short-term concerns rather than long-term analysis.

Furthermore, Cramer observed some people in the market refusing to do anything Tuesday in anticipation of Federal Reserve Chairman Jerome Powell’s announcement of his next rate hike on Wednesday. He said that those who make investment decisions based solely on the fear of the day are not thinking long term enough.

The bottom line: “Anyone who thinks they know what’s going to happen in the next hour or two has been proven wrong this time. But if you look further, owning stocks of high-quality companies that have good balance sheets … history says that you tend to be a winner,” Cramer said.

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