The media is always trying to explain the market’s actions. Even if they don’t know for sure, they feel compelled to attribute cause. So when the Dow loses 201 points and the S&P 500 drops 28, as they did on Monday, investors get a number of different reasons for the move.
The truth is that all of these reasons are wrong, Cramer said. Investors took the market down because of pricing. Stocks had gotten too expensive, with no fundamental basis for the move, so we sold off.
Interestingly, though, something very similar happened last month, at least in terms of the sell-off itself. In May, the market saw a five-day streak of losses in a six-day period, only to be followed by a four-day rally. Investors who got in at the bottom earned 5%. Cramer thinks that history may repeat itself, especially as the end of the quarter approaches and mutual funds look for top-performing stocks to boost their numbers.