CNBC’s Jim Cramer on Wednesday offered investors a mental framework to make it easier to buy high-priced stocks.
“In a hot market… you had to have the discipline to buy blue chip stocks so you don’t miss out,” the “Mad Money” host said.
Cramer described a lesson he learned early in his career when a trader he worked with “divided stocks by 10” to reprice and make it easier to commit to high-momentum stocks. use bloom energy As an example, a $230 stock is considered $23, so it’s psychologically easier to pay a little more to ensure you get the stock, he noted.
“Is paying $24 for a $23 stock really going to kill you?” he said. The answer is no.
The insight came as Cramer reflected on the wave of stocks tied to artificial intelligence and data center demand, and while he liked the early days of the rally, he didn’t buy Charitable Trust, the portfolio used by CNBC Investment Club.
chip maker stocks micron and advanced micro device and server manufacturer Dell Technologies Stock prices soared as deep-pocketed investors aggressively bid for shares. These stocks are “runaway stocks,” Cramer said, noting that constant demand and heavy buying orders have kept many of these stocks rising without meaningful declines.
The core of his frustration lies in his own investing style. Mr. Kramer described himself as a “price-sensitive buyer” who prefers to wait for a better entry point. This discipline has served him well for decades, but it can be difficult in today’s fast-moving, momentum-driven markets.
“I don’t like buying stocks that are going up,” he said. “The reason nearly all of these stocks are going up every day is because the buyers are insatiable. Unlike me, there’s no price they won’t pay.”
Cramer emphasized that he is not completely abandoning discipline, nor is he recommending that investors build portfolios made entirely of momentum stocks. Instead, he proposed a more flexible approach that selectively applies this “must-have” mentality to a small number of high-conviction stocks, especially when bull markets are supported by stable interest rates.
“Importantly, if you want to buy these red-hot stocks, don’t hesitate. As long as the bond market remains stable and diversified, I think red-hot stocks can continue to make money.”
