Jim Cramer Sees 2018 Parallels in 2026 Market Without Predicting a Repeat

Jim Cramer sees a 2026 market that echoes the environment before the painful 2018 selloff. He did not go so far as to predict the downturn would fully replay.

During his CNBC program Mad Money, Cramer laid out the parallels investors have been watching. He then described how, in his view, individuals ought to get ready for the next stretch.

The 2018 Parallel Comes Back Into View

Both 2018 and 2026 land in the second year of a Trump presidency, and each one saw a powerful stock rally.

The rise in oil prices and Treasury yields that marked 2018 is showing up again now. Inflation is also above the Fed's target in each case.

Back then, the S&P 500 lost roughly 20% between its September peak and Christmas Eve. Powell's hawkish stance was a factor in setting off that drop.

The rebound did not take long. Powell then cut interest rates on three occasions, and the S&P 500 ended 2019 close to 30% higher.

Now the pressure is on Fed Chair Kevin Warsh, who succeeded Powell in May. Crude oil is trading near $100 a barrel, and the 10-year Treasury yield is heading toward 5%.

Traders now put about 90% odds on a rate hike at this month's Fed meeting.

Trim Some, Stay Invested

Cramer is not urging anyone to abandon stocks.

“I’m not saying you should just sell everything because history’s going to repeat itself.”

Cramer

His advice instead is to take profits on winners and accumulate cash.

At his Charitable Trust, the cash share of the portfolio has moved into the mid-teens. That is above the trust's normal level. With a bigger cash cushion, he can buy quality stocks back if prices come down.

Cramer does not expect Warsh to reproduce Powell's 2018 missteps. He also thinks market participants have a better read on this administration's pressure on the Fed than they did back then.

Even so, he described the parallels as unsettling enough to monitor. History may not play out the same way twice, he said, but the cadence could be similar.