Cramer Sees Rate-Hiking Cycle as Opportunity for Selective Investing

CNBC's Jim Cramer says investors should be cautious but not assume stocks will struggle for the entire period of a Fed rate-hiking cycle. The Federal Reserve raised its benchmark rate by a quarter percentage point to 3.75-4%, its first increase in three years, and Chairman Kevin Warsh said it would support a quicker return to the 2% inflation target.

Cramer notes that previous rate-hiking cycles have lasted an average of 22 months and a median of 15 months, but recessions typically take much longer, averaging 42 months. This means investors shouldn't necessarily treat the first rate hike as a signal to abandon stocks, but rather become more selective and prepared for market leadership to change.

Cramer cites examples from past cycles, where defensive sectors initially outperformed before technology ultimately led over the full cycle. He warns that every cycle is different and advises investors not to stay too bearish on tech after the start of a rate-hike cycle, as it tends to bounce back.