“Get out now.”
That was Cramer’s message to investors back in October 1998. An East Asian financial crisis and Long Term Capital Management’s implosion had sunk stock averages by as much as 40%. The market’s future, at least for the near term, looked bleak. Even perma-bull Abby Joseph Cohen lowered her earnings outlook for the S&P 500 that year.
So Cramer wrote up a story for TheStreet.com telling everyone that they needed to cash out – immediately. Cohen’s capitulation, along with a string of other bad financial news, gave rise to his own. He fired a warning flare over Wall Street and put in a load of sell orders at his hedge fund.
Of course, market veterans know what happened next. The Federal Reserve held an emergency meeting to save the markets. The announcement came over CNBC just minutes after Cramer clicked publish on his story – five minutes to be exact – and the market roared back.
That day Cramer was a perfect example of how one should call a bottom. Granted, not one that boosts the ego, but an example nonetheless. When sentiment on the Street is that negative, that dire, when all the bulls are gone, most likely that signals an end to declines.
So what did Cramer do once then Federal Reserve Chairman Alan Greenspan started cutting rates? And what other lessons can be learned after 20 years of CNBC’s business coverage? (This month is our anniversary.) Watch the video to find out.
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