Should You Fear October?
Here’s a prediction you should heed: The media will continue its obsession with doomsday scenarios, maybe even as soon as Thursday or Friday, by highlighting October’s crash “history” and alluding to a possible repeat of that “tradition” this year as well.
Reports of all kinds will point to, of course, the crash of 1987. And they’ll remind you of the October sell-offs in 2007 and 2008. But Cramer on Wednesday told “Mad Money” fans to view these stories as mere spoofs, “like Scary Movie 1, 2 and 3.”
“October’s no more scary than Zombie Island,” Cramer said. “You know, the Scooby Doo drama where this time the monsters are for real?”
In fact, October has been “a pretty good month historically,” he said, aside of those notable declines. And more importantly, these stories are detrimental to investors, especially the retail kind. They scare you out of solid, dividend-paying stocks and into bonds with their tiny returns.
So, “Steel yourself,” Cramer said. “The media … will shortly be at it again.”
As proof, he showed how despite constant stories about weakness in Europe the euro has shot higher and business there has proved to be a boon for American companies here at home. There’s been talk of weakness elsewhere overseas as well, yet still copper, a basic material for all the world’s economies, continues to rise in price. And in the US, investors fear the Federal Reserve’s plans to boost our own economy, but Cramer has full confidence in Chairman Ben Bernanke.
Don’t forget about housing either. Cramer had said this sector would continue to be the media’s whipping boy regardless of performance. Sure enough, The Wall Street Journal followed a July 28 headline of “Home Prices Rise but Outlook for Sector Dims” with one on Wednesday that read “Home Prices Edge Up but Outlook Darkens.” Aside of running a near identical headline, isn’t it a surprise that the data’s good this time around if the outlook dimmed despite good data back in July? That’s what Cramer was wondering.
The true cost of this fearmongering is that it cost you a 10% market rally in September if you let it scare you out of stocks. Cramer’s advice? Don’t let the media do that to you again in October.
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