With Q2 earnings season in full swing and the S&P 500 posting a 47.4% year-over-year profit gain, CNBC's Jim Cramer used a recent Mad Money segment to walk viewers through 10 investing rules. The guidance comes as 61% of S&P 500 companies have reported, and 86% of those have beaten profit estimates. But the 30-year Treasury yield is near its highest level since 2007, and Cramer warned that the bond market is competing with stocks for capital.
Buy the best, even when it's pricey
Cramer's first rule: buy 'best of breed' companies even if they look expensive. He pointed to Apple and Nvidia as examples. Nvidia is scheduled to report earnings in late August, which Cramer called the biggest remaining test for this earnings season. The chipmaker's stock has been a centerpiece of the AI rally, but Cramer compared parts of that rally to the dot-com bust, cautioning that not every AI stock deserves the same benefit of the doubt.
Patience pays, but watch for red flags
His second rule: be patient with high-quality stocks during rough patches. Cramer referenced his own 2016 call on Apple, when the stock was under pressure. The third rule: don't ignore the bond market. With the 30-year Treasury yield near its highest since 2007, bonds are offering real competition for investor dollars. The fourth rule is blunt: unexplained CEO or CFO resignations are almost always a sell signal. Cramer said investors should take those departures seriously.
Expect corrections and avoid hope-based buying
Rule five: expect corrections and use a proprietary overbought/oversold indicator. Cramer didn't name the indicator but stressed that pullbacks are normal. The sixth rule: do not buy a stock on hope alone. You need to be able to explain how the company makes money. That rule came as Roblox shares fell despite a revenue beat, weighed down by new child safety measures that clouded its outlook. The seventh rule: be skeptical of hype, especially from money managers pitching stocks on TV.
Don't sell winners to fund losers
Rule eight: never sell winning positions to fund losing ones. Cramer argued that trimming winners to chase losers is a losing strategy. The ninth rule: avoid speculating on a takeover of a struggling company just because its stock is cheap. He said that's a trap. The tenth rule wasn't explicitly listed in the facts, but the segment wrapped with a warning about the AI rally's resemblance to the dot-com era.
Samsung's record quarter and the AI question
Samsung reported a record AI-chip quarter, underscoring strong demand. But Cramer's dot-com comparison suggests that not every AI stock will survive the hype. The question now is whether Nvidia's late-August earnings can justify the sector's lofty valuations — or whether the bond market's rising yields will start pulling money out of equities.
