CNBC’s Jim Cramer on Tuesday warned investors against buying unprofitable stocks due to unwarranted optimism about the stock market.

“While I appreciate hope as a mindset, I’m not as confident as a lot of the buyers who are paying up. ... We are seeing a level of enthusiasm here that to me feels unjustified. We shouldn’t be going back to a mentality where we like all stocks because so many of them will miss their numbers and still others will hit us with negative forecasts,” the “Mad Money” host said.

“Right now, we need to bow down to the Fed and the forces of inflation. Anything that brings down inflation, including tough statements from [Fed Chair] Jay Powell, will make big institutional money managers more likely to buy stocks rather than sell them. For the moment, that’s what controls the stock market,” added Cramer, who defended Powell against critics on Monday.

Cramer’s comments come a day after the Fed Chair Jerome Powell vowed to take aggressive action against inflation, including possibly implementing half-basis point interest increases, a week after instituting the first rate hike in over three years.

A company that has high stock prices won’t necessarily stay that way in a volatile market, even if it is performing well, Cramer said.

“There are periods, extreme periods, where the economy gets so out of whack that the stock market itself becomes a pariah asset class, a source of funds for other asset classes, so an individual company’s merits simply won’t be reflected in its share price,” Cramer said.

Cramer, who has touted a strategy of investing in profitable companies for months, also advised investors to refrain from picking up uninvestable stocks like floundering IPOs and SPACs.

“Tons of those stocks just aren’t worth much, regardless of whether Powell steers us into a soft landing or a hard landing,” he said.