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He blamed skittish traders who were late to realize just how dire the situation was before Bernanke dropped interest rates 50 basis points. The move was a clear acknowledgement of the troubles the markets were in, and these latecomers panicked and immediately took profits. Too bad the market’s turning up now.
“When they finally catch on in six months,” Cramer said, “we’ll sell them the very stocks we’re buying now for a hefty profit.”
So what should investors own? As with any rate cut, financials and retail are recommended. Cramer’s already talked about how banks and brokerages like Citigroup [C
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], Bank of America [BAC
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] and Goldman Sachs [GS
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] benefit from the rate cut, but today he focused on retail, specifically J.C. Penney [JCP
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] and Ralph Lauren [RL
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].
The two companies are collaborating on a new venture called American Living, an aspirational apparel and home products line. “It’s going to be huge,” Cramer said, and should give a healthy boost to the stocks. Luckily for investors, both JCP and RL are down – 41% and 26% year-over-year, respectively – setting up a great buy-in price.
J.C. Penney CEO Mike Ullman expects American Living to be a billion-dollar concept, and Cramer said he believes chief executive. So with opportunities like that in the market, negativity equals stupidity, he said, adding that these two companies are the market’s new leaders.
“I say buy them both,” Cramer said.
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