Jim Cramer: Investing in Companies That Are Pausing Hiring Is a Good Idea
Inflation and volatile markets have triggered a surge of layoffs at several companies, in seemingly every sector of the economy. Now, fears of a potential recession are making even giants like Apple take preventative measures by planning to slow hiring in the next year.
From crypto companies to tech behemoths, hardly any have been spared. Ford is the latest company to announce such a move, saying it would cut 8,000 of its workers in the coming weeks, according to Bloomberg.
One analyst, however, views hiring slowdowns as a reason to invest in such companies, as he believes the adjustments are proof of smart executive decisions in the current economic environment.
“If you want to invest with profligate companies, be my guest. I want to invest in well-run companies … with very smart CEOs,” Jim Cramer said on CNBC on July 20. “That means buying the stocks of those companies that think twice about continuing to hire in this environment,” he said.
Cramer’s comments were triggered by Google announcing it would pause hiring for two weeks, according to CNBC.
The Information reported that Prabhakar Raghavan, a senior vice president at Google, said that the company would not make any new offers until the pause was over.
“We’ll use this time to review our headcount needs and align on a new set of prioritized Staffing Requests for the next three months,” Raghavan said in an email, according to The Information.
According to CNBC, Cramer recommends investors focus on long-term strategies in “what you like” or to “simply buy a very good index fund in terms of the low cost, and hold it.” He added, “That’s been the best form of investing and it’s one that historically handily beats inflation.”
“It is still ridiculous that anyone is freaking out over these stories, still. These stories about a hiring slowdown, as unfortunate as they are. … When you hear ‘Fed-mandated slowdown,’ that means less hiring and more layoffs,” he concluded.
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