Cramer Refutes the Market’s Bears

U.S. stocks ended flat on Monday as investors paused after recent gains and looked ahead to the Federal Reserve's monetary policy statement. Some on Wall Street are concerned the market has gone up too much, too fast, but “Mad Money” host Jim Cramer isn’t too concerned.

“Speed is something that means little because it has nothing to do with earnings. As much as we would like stocks to be related to their velocity or to their point gains, we trade and invest on earnings,” Cramer explained. “Right now, as a whole, stocks are cheap relative to where they have traded at other times.”

When Cramer measures a stock against its growth rate, he finds that valuations are just “too cheap” on a yield basis, compared to bonds, or on an earnings basis versus growth rates. With the day's tiny gain, the S&P 500 has closed in positive territory for the past four sessions. Cramer argued that despite this run, stocks just aren’t expensive yet.

Going forward, Cramer said stocks may slip or even fall. The market has been resilient against news of slower-than-expected economic growth in China and the ongoing European debt crisis, though. So he warned viewers that “when you get too negative you miss the next move.” He recommends investors trim marginal positions and stay long on everything else.

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  • Jim Cramer

    Jim Cramer is host of CNBC's "Mad Money" and co-anchor of the 9 a.m. ET hour of CNBC's "Squawk on the Street."

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