With major averages closing in the red on Tuesday, Jim Cramer reminded investors to think of the stock market like a card game and play the hand they have been dealt. As bad as it is out there, you cannot throw it back and give up. The trick is to look at the cards and figure out how to make something work.
The problem right now is that Cramer sees two different groups of investors playing their cards. The first group has resigned itself that the Fed will be raising rates. This group just took their cards and threw them back with the reasoning that if the Fed is going to tighten and the global economy weakens—then it is time to get rid of everything.
The other card players are the ones that recognize they have a not-so-hot diversified hand. They think about the stocks they can throw back into the pile, and look for better ones. This group will tend to toss out industrials, oils and anything connected to machinery.
The key is that this group does not leave the table. They use the weakness caused by investors selling everything in order to pick up high-quality stocks. What are the high-quality stocks to look for in a slowdown?
"How about the companies that can outrun a slowdown, especially one that is exacerbated by the Fed tightening when it is obvious that, despite the strong employment numbers, things are looking real bad in many other areas of the economy," Cramer said.