GO
Loading...

Cramer: Could the Fed Destroy the Bull Market?

(Having trouble playing the video? Click here!)

If there's a good reason to be skeptical of the rally it's the Federal Reserve.

Ben Bernanke created the rally on Wall Street and therefore he could quash it too. That's the argument that bears are making right now in the face of the Dow's historic run.

"There's no denying that the Fed has created a very helpful investment climate by making it clear that it isn't about to stop its bond buying program any time soon," explained Jim Cramer.

For years a bearish bet was akin to fighting the Fed. It made no sense.

Now the bears argue the major market catalyst - the Fed - is about to shift. They say as the economy recovers the Fed will start to focus less on stoking employment and more on containing inflation. That is, they will step away from the market.

That may be the case, but "Those bears fail to remember that companies play a big role in the bull, too," Cramer said. And from the looks of things, Cramer thinks Corporate America looks great.

"They have returned capital in the form of higher dividends and big stock buybacks," he said. In addition, those same companies have grown more efficient, they've pared down debt and grown more profitable.

Also, they've cut costs, tackled labor issues and learned to become much more nimble.

That's why investors buy stocks.

Source: Federal Reserve | Flickr

In other words, "Bernanke may have provided the opportunity, but he didn't provide the smarts, and he didn't provide the execution—he just created a backdrop that allowed companies with good management and good businesses to prevail," said Cramer.

And in that kind of stock market, Cramer thinks investors will see stocks as values.

"There are many high quality high growth companies that sell at just 13 times earnings or less," Cramer explained.

-------------------------------------------------------------
Read More from Mad Money with Jim Cramer:
Cramer's Gatsby Index: An Affluence Composite
Cramer's Tantalizing Netflix Idea
Cramer: 3 Stocks About to Play Catch-Up
-------------------------------------------------------------

The Mad Money host thinks that's just too darned attractive to pass up. And even when the Fed takes its foot off the gas, Cramer believes corporate health will matter more to investors.

Therefore Cramer believes the shrewd investment is long stocks.

"Sure, it has to end one day, and maybe it will end badly, but while it lasts, I think you'd be nuts not to try to benefit from it."

Call Cramer: 1-800-743-CNBC

Questions for Cramer? madmoney@cnbc.com

Questions, comments, suggestions for the "Mad Money" website? madcap@cnbc.com

Featured

Contact Mad Money

  • Showtimes

    U.S.
    Monday - Friday 6p ET
    Australia
    Saturday 8a, 1p, 7p SYD
    Sunday 12a, 1a, 8a, 7p SYD
    New Zealand
    Saturday 10a, 3p, 9p NZ
    Sunday 2a, 3a, 10a, 9p NZ
  • Jim Cramer is host of CNBC's "Mad Money" and co-anchor of the 9 a.m. ET hour of CNBC's "Squawk on the Street."

Mad Money Features

  • Grab the latest CNBC gear from the NBCUniversal Store!

  • Get a behind-the-scenes look at how Cramer formulates his investment advice. "Inside the Madness" is a column, which features e-mails and more with Cramer and his researcher Nicole Urken.

  • You’ve always wanted to hit the “Hallelujah!” button. Here’s your chance.