After advising investors to consider staying in stocks just last month, CNBC’s Jim Cramer switched course, saying Tuesday that he would suggest investors toss troubled stocks on any market bounces rather than seek out stocks to buy on market declines.
“It’s really the opposite of buy the dips,” Cramer said on CNBC. “I only think you sell lower quality.”
“I think you’ve got to start buying something,” Cramer said on CNBC last February.
Stocks are now struggling to stay up after testing lows from Wall Street’s worst day since the 1987 “Black Monday” market crash yesterday on concerns about the economic fallout from the coronavirus.
The Dow Jones Industrial Average plummeted nearly 3,000 points, or close to 13%, moving ever deeper into a bear market on Monday, and driving blue chips careening down more than 30% from last month’s all-time highs.
With volatility at all-time highs, the widely vacillating market witnessed up and down movement of over 1,000 Dow points every day last week, finishing Friday with the Dow’s biggest rally since the 2008 financial crisis only to crash and make fresh lows the following Monday.
For investors looking to stay active in this market, WallachBeth Capital’s Andrew McOrmond says using options might be the way to go on a recent ETF Edge segment on CNBC.
“We do know very active traders that don’t use options. I think options are a great thing,” he said. “I would focus on listed options, listed index options, and ETF options, but understand that vol[atility]is high and understand the pricing, meaning that you are going to pay up to put your idea on and, certainly, there’s risk in selling those ideas.”
ETF investors can also look into more diversified sectors WallachBeth explained.
“For ETFs themselves as listed tickers, you could look at liquid alts like QAI and MNA, which are less correlated to the overall market and can dampen volatility,” he said, referring to IndexIQ’s Hedge Multi-Strategy Tracker ETF and Merger Arbitrage ETF, respectively.
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