Cramer: This market has eerie parallels with 2018. Here’s what investors should do

CNBC’s Jim Cramer on Friday said a familiar combination of rising oil prices, stubborn inflation and higher interest rates is flashing a warning sign for investors heading into the final months of the year.

“At the end of the day, there are some eerie similarities between the current moment and the fall of 2018,” the “Mad Money” host said. “I don’t think history will repeat this time, but it might rhyme, and that’s something you need to keep an eye on.”

Cramer pointed to several parallels between 2018 and 2026. In both periods, stocks posted strong gains during the second year of President Donald Trump’s term, while oil prices and Treasury yields rose, inflation ran above the Federal Reserve’s target, and a new Fed chair was weighing further rate hikes.

But the fourth quarter of 2018 was brutal. The S&P 500 fell roughly 20% from its late-September high through Christmas Eve as investors worried about rising rates and escalating trade tensions with China.

Cramer sees similar risks today, with oil near $100 per barrel, the 10-year Treasury yield approaching 5% and inflation remaining above the Fed’s target. That has increased pressure on new Fed Chairman Kevin Warsh as investors anticipate a potential rate hike.

Still, Cramer isn’t predicting another 2018-style collapse. He said Warsh appears less aggressive about fighting inflation than former Fed Chair Jerome Powell was at the time, while investors are also more familiar with how Trump responds when his policies pressure markets.

“I’m not saying you should just sell everything because history’s going to repeat itself,” Cramer said. “Kevin Warsh was around in 2018; he’s probably not going to repeat Powell’s mistakes.”

Instead, he recommended investors prepare for potential volatility by trimming some winning positions and keeping cash available.

“If things do start getting squirrelly for stocks, don’t freak out,” Cramer said. “If you’re worried about a repeat of 2018, trim your winners — take something off the table. That’s what we’ve been doing for the Charitable Trust. If you’re not panicking and you have a nice cash balance ready, then you’ll be able to use any weakness to buy high-quality stocks.”