On Wednesday, CNBC’s Jim Cramer advised investors to think twice about investing in digitization stocks as the possibility of a recession looms over the market.
“You can’t justify owning one unless you believe [Federal Reserve] will quickly beat inflation without needing to do much more to harm the economy. I think it’s a real possibility, but I wouldn’t want to bet on it by owning too many business services companies,” he said.
The ‘Mad Money’ host’s comments come after all three major indexes posted small declines on Wednesday as investors continued to fear the possibility of an economic slowdown.
Cramer said that while digitalization is inevitable and the current turmoil facing the economy is not of the same magnitude as the dotcom crash, a recession could deal a merciless blow to the industry.
“If the economy goes into a real recession – I mean a big fall from stagflation – the pool of potential customers will indeed shrink. Scanners can’t make that much money if their customers are running out of money,” did he declare.
Cramer added that a frozen IPO market could also lead to “serious shortcomings.”
“There won’t be enough new customers, a lot of the existing ones won’t have enough money, and there are too many competitors in this space fighting, maybe, for a shrinking pie,” he said. he declared.
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