CNBC’s Jim Cramer said Monday that investors chasing the market’s reaction to Venezuela’s political upheaval are making a familiar mistake: confusing short-term trading opportunities with long-term investing.
Cramer urged investors to focus on owning high-quality stocks and sticking with them, rather than jumping into trades where valuations could swing on every passing headline.
“Along with an index fund, I want you to own individual stocks — not trade them,” Cramer said. “Let the power of compounding do its work.”
Cramer’s comments came as markets rallied broadly. The Dow Jones Industrial Average gained 594.79 points, or 1.23% to hit a new all-time high.
However, Cramer warned that geopolitical stories don’t always translate into durable business opportunities. Even though President Donald Trump’s move to oust Venezuela’s leader sparked speculation around oil and energy stocks, Cramer said much of that upside was already priced in.
He pointed to companies like Chevron, U.S. refiners such as Valero, and oil-services firms including Halliburton as examples of stocks that surged on speculation — even though rebuilding Venezuela’s oil industry could take years and require massive investment.
Meaningful results, Cramer said, will likely fully materialize in years, not days, noting that investors often underestimate how long it takes for political change to show up in corporate profits.
Instead, Cramer said investors should focus on areas of the market where valuations still offer protection if stocks pull back.
Cramer said Goldman Sachs is positioned to benefit from a pickup in mergers, acquisitions and equity issuance. He also pointed to Citigroup, which he believes can continue exceeding earnings expectations, and Capital One, which he called one of the cheapest large banks in the market following its acquisition of Discover.
Jim Cramer’s Guide to Investing