Cramer explains how to maintain a ‘balanced’ portfolio as the economy slows

CNBC’s Jim Cramer on Tuesday said Wall Street is currently going through a tricky stage of the business cycle with the economy slowing but the Federal Reserve not yet cutting interest rates. He said it’s wise for investors to maintain a balanced portfolio and prepare to weather some losses.

“I’m not telling you to relax, I don’t do that on this show — not with the averages so close to all-time highs,” he said. “I’m just saying we are going into the valley of death here, and you should fear no evil as long as you have a balanced portfolio.”

Cramer laid out a few secular stocks — ones that don’t rely on the health of the broader economy — to hold as things start to slow down. He named the usual Big Tech high achievers —Nvidia, Meta, Alphabet, Amazon and Apple — as well as pharmaceutical stocks Merck and Pfizer. Cramer said he likes these drug companies’ anti-cancer treatments.

But rate cuts from the Fed may be coming sooner than some think, according to Cramer. So he also suggested investing in companies poised to soar when the Fed starts to bring rates down, like Builders FirstSource. Shares of the building supplier sank on Tuesday when its CEO revealed during the earnings call that customers were having “affordability issues” as high interest rates persist.

“If you put all your money in stocks that need rate cuts to win, you will be slaughtered,” Cramer said. “But if you go all tech and drugs, you’ll be left in the dust when the Fed finally starts cutting.”

Meta, Alphabet, Amazon, Apple, Merck, Pfizer and Builders FirstSource did not immediately respond to a request for comment. Nvidia did not have a comment about Cramer’s remarks.

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Disclaimer The CNBC Investing Club Charitable Trust holds shares of Nvidia, Meta, Alphabet, Amazon and Apple.