Cramer's 'Playbook' For Profiting From A Fed Rate Cut

The U.S. Federal Reserve could cut interest rates by 25 basis points Wednesday, and the classic playbook calls for investors to transition from high-quality growth stocks to industrial sectors that stand to benefit, said CNBC's Jim Cramer.

What He Said

Investors need to accept that a rotation will occur if the Fed cuts rates Wednesday, and the immediate casualty could be high-profile cloud stocks, Cramer said during his daily "Mad Money" show Monday.

Savvy investors will understand the need to seek out high-quality stocks and "stick with them" as long as the businesses continue performing well, he said. 

Why It's Important

The transition away from one sector almost always implies weakness will be seen — and this represents an opportunity to buy "cloud king" names like salesforce.com, inc. CRM at a discount for the longer term, Cramer said. 

"When this kind of rotation gives you a pullback in a group like the ‘cloud kings,' that's a long-term buying opportunity," Cramer said. "Just remember that you can afford to take your time ... [because] I don't think" the rotation has ended.

What's Next

Before investors fully transition, they should be aware a Fed-induced rotation is only complete once the entire "rate cut drama plays out," Cramer said.

Some fund managers will always be late to the party, and the trade talks with China could ruin any stock rally if they fail to show results, he said. 

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