- CNBC's Jim Cramer tied the stock market's weakness to the increasing competition offered by U.S. government bonds.
- He suggested investors take advantage of this market weakness and buy stocks that can do well even in a higher yield environment.
CNBC's Jim Cramer said Tuesday that investors should view recent stock market weakness as an opportunity to buy, despite the increasing competition offered by U.S. government bonds.
Treasury yields have been climbing this month, with the yield on the benchmark 10-year note rising to 4.566% on Tuesday, a new 15-year high. The 30-year Treasury also hit a 4.7% yield on Tuesday, a level not seen since 2011. The S&P 500 has fallen 5.2% so far in September, while the tech-heavy Nasdaq has lost nearly 7%.
While the additional leg higher in yields has pressured stocks in September, Cramer argued that eventually interest rates will at some point top out after the Federal Reserve tames inflation. That "means you need to buy some stocks here, not sell them," Cramer said.
"Just don't do it all at once. Do it on a scale. Some here. Some lower. Because if Treasury yields do go to those levels, you want enough cash left over to buy more stocks," he continued.
Cramer suggested investors look for companies that can perform well and turn a profit even in a higher rate environment. To Cramer, investors should be searching for companies like his longtime favorite, Nvidia, saying, "I don't want to find more 10-years. I want find you more Nvidias."
"You buy stocks when you're trying to get rich; you buy Treasurys to stay rich," Cramer said. "I think a mix of both is fine, but if you go all bonds now, I now think you're liable to miss something real good in stocks, even as that seems downright impossible. It always seems that way. It never is."
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Disclaimer The CNBC Investing Club Charitable Trust holds shares of Nvidia.