Cramer: Bears Missing Two Powerful Market Catalysts
By: There's growing sentiment in the market that suggests stocks are overbought – that the economy is facing headwinds and therefore stock prices must come down. But Jim Cramer thinks skeptics are missing something.
The market is too preoccupied with prices at the pump as well as the end of the tax holiday and the uncertainty caused by Washington's in-fighting, according to Cramer.
Although those catalysts are, in fact, negative Cramer thinks there's something else at play in the market – something much more powerful.
And he's confounded because it's more or less being ignored.
And that is, the impact of 1) increasing home prices and 2) rising stock portfolios the two critical assets for tens of millions of people in the United States.
"If you own a home, you're probably feeling pretty good because all over the country houses are going up in value. If you're one of the 90 million Americans who owns stocks in one form or another, your portfolio is likely worth a heck of a lot more than it was even six months ago," Cramer said.
When taken in tandem these developments make people feel wealthier.
And the so-called wealth effect is powerful. Cramer believes far more powerful than any headwinds the market is currently facing.
Therefore, as skeptics argue that the market is toppy or frothy, Cramer rebuts the argument – he doesn't think it is.
Cramer warns that it would be a mistake to underestimate the wealth effect and it's ability to transcend the day-to-day woes of the market.
"The impact on stocks can be profound," he said.
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