Trade speculative stocks for more boring games even when the market rallies, says Jim Cramer

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CNBC’s Jim Cramer told investors on Tuesday to sell their speculative stocks to fund more stable stock purchases.

“It’s time to take profits on the most speculative stocks in your portfolio and shift that money into something more resilient,” the ‘Mad Money’ host said. “A mild recession is still a recession. You have to be quality, not fancy,” he added.

Stocks have rallied in recent months after soaring in the first half of the year, soaring inflation, Federal Reserve interest rate hikes and the invasion of the Ukraine by Russia having pushed investors to flee the market.

The Dow Jones Industrial Average is up 15% from its mid-June lows, the benchmark S&P 500 is up more than 18% and the tech-heavy Nasdaq Composite jumped 24% .

Among the underdog stocks posting gains are speculative names such as Bed Bath & Beyond, which closed 29% higher on Tuesday after traders on Reddit jumped on the stock. Shares jumped more than 70% in intraday trading.

Cramer warned that investors should ditch those risky games for more boring and stable stocks, especially since it’s unclear whether the Federal Reserve will continue its aggressive stance against inflation.

“The more the stock market rebounds, the more likely it is that [Fed Chair] Jay Powell will have to lower the arrow on us again,” Cramer said.

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