In his many years of investing, CNBC’s Jim Cramer hasn’t simply seen bear markets just like the one which dragged shares decrease on Wednesday — he is additionally encountered an actual bear.


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As soon as, when the previous hedge fund supervisor was on a hike, a bear discovered its option to his tent. As an alternative of operating, Cramer stood his floor and used what he had. He put some M&Ms in a can of Spam to bait the bear, then doused them in Tabasco sauce and ran. The distraction labored, and when the bear tasted the red-hot Tabasco, it ran off.

“Now, I am not saying you possibly can outrun a bear. You possibly can’t. I am not saying you need to let him eat all of your meals after which hope he would not activate you,” Cramer mentioned. “I’m saying that it’s a must to be intelligent. You need to assume, ‘OK, I am not going to panic, I will use my head and I will outsmart the darned bear.””

The identical precept can apply to the inventory market, the “Mad Cash” host mentioned. Listed below are his three ideas for traders to guard their portfolios from being mauled:

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1. Give attention to particular person firms

The mere assertion {that a} inventory is “in bear market territory” would not truly have an effect on the basics of the underlying firm, Cramer defined.

“Should you look at particular person firms and take into consideration what represents worth, you are able to do higher than you assume,” he mentioned, calling consideration to the inventory of House Depot, which managed to get better throughout Wednesday’s buying and selling session.

Shares of House Depot plunged Tuesday after the corporate’s third-quarter earnings report . Buyers, involved about how the house enchancment retailer would fare amid rising rates of interest, offered the inventory near its year-to-date lows.

“As we speak, … shareholders outran the bear and House Depot’s inventory went increased. Did the fortunes of the corporate change in 24 hours? In no way,” Cramer mentioned. “So, first, acknowledge that even in a bear market, [you] can trick the ursine attacker by choosing up inventory in nice American firms with fabulous steadiness sheets that may do nicely if the Fed decides to take a break from tightening.”

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Learn extra from Jim Cramer and different high cash consultants

2. Discover the collateral injury

The bears have a “two-pronged fork” that may decimate inventory positive factors, Cramer mentioned. One prong is President Donald Trump tariffs, that are set to rise to 25 p.c on the finish of 2018, and the opposite represents the Fed’s charge hikes , which purpose to gradual financial exercise and taper inflation.

“You could use the vicious promoting to search for shares which might be being slammed although they don’t seem to be truly getting caught by both prong of the fork,” the “Mad Cash” host suggested.

And although market commentators would possibly say “there is no hiding” in shares throughout a bear market, 10 out of the 11 bear markets Cramer has witnessed proved to be nice locations for traders to cover, he mentioned. The one exception was the 2007-2009 monetary disaster, which was too dangerous to endure.

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3. Purchase unintended high-yielders

Third, Cramer really useful discovering shares with “by chance excessive” dividend yields. These unintended high-yielders emerge when the shares of high-quality firms with good steadiness sheets fall so low that their dividend-yield share grows dramatically.

“You are going to really feel excellent about your self when the destructive fog lifts and people shares bounce proper again,” he mentioned.

Closing ideas

Hold Cramer’s mantras in thoughts — there’s all the time a bull market someplace, no one ever made a dime panicking — as you search out alternatives in bear market territory.

“Do not panic. Do not get scared. Do not cease on the lookout for alternative,” Cramer mentioned. “This can be a man-made bear market the place we’re being torn to items by two grizzlies, President Trump and [Fed] Chairman [Jerome] Powell, who do not appear to care in any respect concerning the injury they’re doing to your nest egg. However there are nonetheless alternatives on the market in case you keep calm and you realize the place to look.”


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