Jim Cramer says investors only buying ‘inflation winners’ should be careful

Jim Cramer says investors only buying ‘inflation winners’ should be careful

CNBC's Jim Cramer said Thursday investors who are buying stocks that benefit from an inflationary environment should be mindful that price pressures may not last, underscoring the need for portfolio diversification.

Right now, that's become a very popular trade, the "Mad Money" host said, as money managers follow what he dubbed "the hedge-fund playbook."

"That playbook is very clear about what you need to do when you start to get inflation in a rapidly growing economy: You buy the inflation winners at any price and you dump everything else again," said Cramer, himself a former hedge fund manager.

Some of those stocks are obvious, such as mining company Freeport-McMoRan, as well as steelmakers Cleveland-Cliffs and Nucor, according to Cramer. He said industrial giant Caterpillar is also on the list along with oil companies.

Bank stocks also have become popular despite inflation concerns because "this is not a traditional bout of inflation," Cramer explained. Typically, it can cause problems for the financial industry.

"Right now, commodity prices are rising because of short-term considerations: Tariffs on lumber and steel, an energy policy that discourages new oil drilling, a super storm that trashed much of our plastic capacity, a terrible chip shortage, an intractable ports jam up and higher