Jim Cramer often teaches investors about game changing elements of the stock market that can impact a portfolio. He has spoken in the past about everything from earnings to commodity prices, but this time he sees something different. This is one thing that could bring down the entire market, and perhaps change history.
The deadliest trend out there is supply. And for the longest time, there hasn't been a ton of it. We currently have approximately half the amount of IPO deals that we had last year at this time. Companies seemed to have a big appetite for their own stock, and buybacks have become a staple.
Wednesday marked the first day of a trend that could change the game and kiss the value of stocks goodbye. Cramer saw a flood of stocks deals from companies that offered shares that investors didn't want, or required investors to liquidate other stocks so they can buy new ones.
"The stock market is like a department store that can only stock so much merchandise. At a certain point…you have to discount the existing merchandise to get it to move," Cramer said.
The plethora of IPOs from companies like Etsy and GoDaddy with questionable fundamentals, and secondary deals form companies like Abbott Laboratories that worried Cramer the most. He wouldn't be so worried about these deals normally. But they are coming in right after seven offerings from seven biotech companies that have lost money over the years. It's too much!
Granted, no April has ever been down in the third year of a sitting president. Cramer is aware of this, and agrees that the market could be due for a bounce after Friday's key employment numbers come out.
But in the end, the biggest enemy of a bull market is supply. Cramer can't ignore the fact that there is an overwhelming amount of it right now, and wants to make sure this is on the radar of investors as we begin a new quarter.