CNBC’s Jim Cramer on Thursday rewrote the risk rules for stocks and bonds.
The bond market, considered the safest place to park large sums of money, has ceded its position to some of the biggest names on the stock market, according to the former hedge fund manager.
“This year we’re seeing the torch go away: bonds were the safest assets in 1982 when Treasury’s were in double digits. Now they’re risky assets.”Bad money“Host said.” The truth is that for many of the companies we follow, the stock side … is a much better store of wealth than the credit side for you as an individual. Not all [stocks], but a surprising number. “
Cramer highlighted Microsoft, Apple, Facebook and alphabet This is a smarter choice for high net worth investors looking for investment options that are even better than the predictable returns in the debt markets. The four companies, or “FAAM” as Cramer calls the group, are valued at more than $ 4.7 trillion.
Of the four tech giants, Apple has the largest cash holdings at $ 192 billion. Microsoft has $ 138 billion in the bank and Google Parent Alphabet is $ 133 billion. According to Cramer, Facebook, the smaller company, has hidden $ 55 billion.
Cramer called it the “Fort Knoxes of our time”.
“These stocks are the new repositories for wealth,” he said.
The comments come after Wall Street extended its winning streak to four days. Shares rose despite another record number of new coronavirus cases and another day without declaring a winner in the U.S. President’s race.
Earlier that day, the Federal Reserve said it would Leave the key rate near zero until the economy recovers from the global health crisis. Chairman Jerome Powell reiterated his position to help the economy weather the storm, but Cramer said this creates a “more capricious and uncertain” future for the bond market.
“When you are a young broker who is wet behind the ears Goldman SachsI would tell you to forget about all of these bond ideas. Just tell your customers to buy stocks of great companies the size of a nation-state with fantastic balance sheets, “the host said.” With a lot of money, you’ll do much better, with much less long-term risk and more dividends. “
Disclosure: Cramer’s charitable foundation owns stakes in Alphabet, Apple, Facebook, and Microsoft.