Cramer Busts 5 Bearish Sentiments
"Don't overthink it," Cramer said Monday. "The desire to outthink this market, the temptation to overintellectualize the cues and the data and the noise is a money-losing exercise in futility. And it happens every single day."
The markets were slated for a down opening on Monday, for example, because of comments made by Federal Reserve Chairman Ben Bernanke over the weekend, indicating that the central bank would continue purchasing government bonds should unemployment worsen. To Cramer, Bernanke is using every tool available to improve the economy. His remarks, Cramer said, were upbeat, and so investors’ expectations of the worst don't make sense.
Meanwhile, some people think that because the U.S. dollar is weak, investors are looking for something that retains its value, like crude. For that reason, oil continues to climb. Cramer doesn't buy that explanation, though. He thinks demand is driving oil prices higher and recommends oil stocks because they own a lot of crude, which is being bought by the Chinese, Indians and Latin Americans. Similarly, it is demand that's also sending copper prices higher. He takes these increases in demand as a sign that economies around the world are improving, being as you need oil and copper for residential and commercial construction.
Similar to oil, some argue that the weak dollar is prompting people to hide in gold as well, sending that commodity’s price higher. But Cramer noted that for 10 years, the precious metal has climbed steadily whereas the dollar has constantly fluctuated. So he doesn't see the correlation.
Others argue gold is up because the Fed is going to reflate the economy, meaning Bernanke would cause inflation to offset wage deflation, something the US hasn't since the 1930s. But Cramer countered by saying gold went from $800 an ounce to $1,200 an ounce when the news was deflationary. The bears can't have it both ways, he complained. In actuality, he thinks gold is going up because of a supply shortage and demand increase, especially in the Chinese and Indian markets.
When it comes to housing, Cramer hears that home prices continue to decline in value. But according to several surveys he's read, homes are on average the same price they were this time last year. It's also said that nobody's buying homes, even though pending home sales are at record levels. If mortgage rates start going up, Cramer thinks people will start buying homes in droves, especially those who've put it off.
The bears will continue to spin positives into reasons for stocks to go lower, Cramer said, but investors should embrace common sense and buy when stocks go down.
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