It’s 1991 all over again, Cramer said during Thursday’s Mad Money. Investors who follow the game plan that worked then stand to gain the most.
Eighteen years ago, Wells Fargo announced that fears of a continuing decline in real estate, especially commercial, were unfounded. The bank boldly stated that the worst had passed and we should expect the market to turn up. Of course, no one believed Wells, and the shorts continued to pile in. But they were proved wrong. Investors who bought WFC, Warren Buffett among them, made big money.
How is this playing out today? JPMorgan Chase made similar statements when it reported second-quarter numbers on Thursday. Despite all the negative press about a coming onslaught in foreclosures and a crash in commercial real estate, CEO Jamie Dimon described an environment that seemed to contradict all that. He said that loan loss reserves and delinquencies showed signs of stabilization and losses related to the Washington Mutual acquisition wouldn’t be any worse than expected. That, Cramer said, is bullish news.
But yet again no one believes JPMorgan’s announcement. They’re convinced that the worst is still in front of us, not behind us. Cramer brought this to viewers’ attention because he didn’t want them making the same mistake he did in 1991, which was to side with the naysayers. While he doesn’t think all banks are on the rebound, it’s pretty obvious from JPM’s quarter that some things are improving – yes, even real estate – and they need to be recognized.
Cramer's charitable trust owns JPMorgan Chase and Wells Fargo.
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