U.S. President Barack Obama asserted that the Chinese should pull back from military activity in some of the disputed regions of the Pacific on Wednesday. But Jim Cramer wants to know — how the heck can the president back that statement up?
Right now, it appears to Cramer that the Middle East is an all-hands-on-deck situation. Supplies may be limited, considering that the U.S. is still hanging around Afghanistan and continues to remain vigilant against Russia after its incursion into Ukraine.
"I'm not trying to be a warmonger or a fear-monger or a profiteer, but I have to wonder, do we even have enough aircraft carriers to do all of those things? Do we have enough planes? Do we have enough missiles? Do we have enough soldiers in the right places?" the "Mad Money" host asked.
In Cramer's perspective, the United States is overstretched. And regardless of his political perspectives, the situation in Syria and Iraq has not played out the way anyone wanted it to.
At the end of the day, Cramer is a stock guy. So when he heard about the president's message to China, he immediately thought about defense stocks. After all, China will not listen to the president unless it is clear that they cannot get away with doing whatever they want.
If I am right, then you need to know what happened in 1980, since it could play out all over againJim Cramer
Cramer added that when the U.S. tries to act like a policeman in Southeast Asia, it rings hollow, especially since Western powers appear to be gearing up for war in the Middle East, a place where aircraft carriers may be the best way to battle terrorists.
This moment reminded Cramer of the post-Vietnam era in 1980 when Ronald Reagan ran on the promise to build a 600-ship Navy to show the Russians that the U.S. military was no longer in retreat.
Given that the presidential primaries are only months away, Cramer's guess is that the candidates from both parties will try the same approach as Reagan. He expects the majority of candidates to discuss re-arming the military to project power everywhere.
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"I'm not advocating a political position here. I'm simply giving you my best-guess prediction about something that could be very important to your portfolio. Because if I am right, then you need to know what happened in 1980, since it could play out all over again," Cramer said.
As the election grew closer and closer in 1980, the military industrial stocks moved higher in anticipation of the Reagan build-up.
Just as they did in 1980, Cramer believes that defense stocks like Northrop Grumman, Raytheon, General Dynamics, Harris, Lockheed Martin and Huntington Ingalls will all rally into most of the presidential debates.
And even if he is wrong about the U.S., allies will beef up their defense spending and order from the same contractors.
"I think it's their time and I would be remiss, having profited from the defense stocks back in 1980, not to mention that I think this coming election year will be a replay of the same situation," Cramer said.
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