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Amid emerging misery, Cramer seeks new opportunity

Wednesday, 29 Jan 2014 | 6:00 PM ET
What emerging threats mean for your money
Wednesday, 29 Jan 2014 | 6:00 PM ET
Mad Money host Jim Cramer looks at how emerging markets impact U.S markets and urges investors to be patient for opportunities could be ahead.

(Click for video linked to a searchable transcript of this Mad Money segment)

Sometimes there are forces at work in the market that override almost everything else.

That's what Jim Cramer thinks is happening right now.

Specifically the "Mad Money" host believes the broad weakness that dragged down the Dow Jones Industrial Average by triple digits on Wednesday is mostly due to woes surfacing in emerging markets.

And Cramer fully expects overseas developments to trump fundamental catalysts such as earnings in the days ahead.

The emerging markets issue is somewhat complex, but at its core is the concern that currencies of some emerging nations such as Turkey and South Africa are devaluing so rapidly that their already fragile economies may run into unforeseen trouble.

In turn, pros are moving to the sidelines, unsure how a ripple will impact their holdings.

As investors step aside and evaluate, Cramer thinks US markets could be facing a 5-6% decline, no matter how strong earnings may be.

Adam Jeffery | CNBC

However, Cramer also thinks the sell-off presents opportunity.

"Many investors seem to believe that this has to be Europe all over again, where we really did take a serious shellacking," Cramer noted. "But the euro-mess was a depression involving 700 million people in one of the world's most developed economies, one that's deeply linked to many of our companies, especially our banks," Cramer noted.

"What's happening now is nothing like that," Cramer added. "I'm old enough to remember investing through several other emerging market panics just like we're having right now."

And whether it was the collapse of the Russian ruble in 1998, the Asia crisis in 1997, Mexico's currency crisis in 1994 or the Turkish lira crisis of the early '90's, Cramer said every time it was a mistake to sell good American companies with little to no direct connection to events.

Instead, he found that buying the panic-induced weakness was a shrewd strategy that led to substantial profits.

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Cramer thinks current events will likely play out as they did in the 1990's, when the sell-off translated into opportunity.

"Therefore, I'm urging patience here in the face of what could be a 5 or 6 percent decline. If you only think 365 minutes out, you might want to dump some bad stocks. If you think 365 hours out, you might trim some good ones. But for the long-termers who think 365 days out? Get your shopping list ready. In a few days you might need it!"

Call Cramer: 1-800-743-CNBC

Questions for Cramer? madmoney@cnbc.com

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

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