(Click for video linked to a searchable transcript of this Mad Money segment)
They say prepare for the worst but hope for the best.
"Too may people in this market seem to understand only one part of that equation," Jim Cramer said. "They're preparing for the worst, only."
If you're among those investors, the "Mad Money" host thinks you may be missing out on significant opportunity. "Believe me, the and the S&P 500 didn't get to all-time highs because the worst occurred."
For example, because the market is conditioned to expect the worst, when interest rates fell dramatically, market chatter surfaced suggesting that global growth was challenged.
But looking at recent economic data, Cramer thinks the conclusion is completely misguided. "From and autos to and more, the data is just way too strong for me to think the economy's slowing down."
If the market were just willing to entertain a little more optimism, Cramer thinks it would recognize that in a lower rate environment, homebuilders as well as related stocks such as Home Depot stand to benefit.
Cramer said the banks are another example. "The only thing that's supposed to help the banks is an increase in net interest margin." And with rates stubbornly low, that seems unlikely. Therefore, pessimism prevails in the sector.
However, Cramer reminded that overhang from the financial crisis is starting to lift. And banks seem to be navigating the new rules and regulations with relative ease. "There are good reasons to feel hopeful about banks, too, but the Street is distracted by the gloom."
Cramer said the situation is similar with high multiple momentum stocks. "Skeptics insist they're going to bring down the whole market, just like in 2000." However, Cramer said, the negative sentiment obscured a critical difference between now and then. Today, there are many stocks in the market that are relative values. "Nonetheless, there are bears betting against the entire market because of weakness in the high fliers," Cramer said.
In addition, Cramer said pros remain convinced more IPOs will bring down the market. "But JD.com, the money-losing Chinese internet company, went to a premium immediately after coming public and it has continued to advance."
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The list goes on and on, but ultimately the message is the same. Many investors in the market are so preoccupied with the worst they've forgotten that it might not be that bad.
"I'm all for healthy skepticism," Cramer said. "But this isn't healthy. By all means, prepare for the next correction. But also put together a game plan that will allow you to profit if things work out. I see every reason to believe they will."
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