Jim Cramer's guide to investing: Don't forget about bonds

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When investing in the stock market, you should always keep your eye on the bond market, CNBC's Jim Cramer said.

"Look, I know the bond market is boring as all get out, but it's much larger than the stock market, and more importantly, it's very important to the overall direction of stocks," Cramer said. "It's simple: If the bond market competition gets more attractive, and the stock market gets less attractive, this can become a giant zero sum game."

Similarly, when long-term interest rates rise, it might be a sign that the entire stock market could be worth less, Cramer explained. One to watch in particular, Cramer said, is the yield on theCramer compared stocks and bonds to a game of basketball. If the players in the stock market have the ball, the bond market is a bit like the players without the ball, those on the defensive side who can still determine what happens to the ball and whether it finds its way to the basket.

"When you see a CEO step down for no discernible reason, you know what? You should presume something is wrong and you got to do some selling," Cramer said. "I say, shoot first, ask questions later."

 

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