Cramer Puts Stock Market Losses in Context

After the Dow Jones industrial average and the S&P 500 index logged their fourth day of losses on Monday, “Mad Money” host Jim Cramer tried to put things into perspective.

“In the last five years, we had 67 instances where the Dow fell more than 250 points,” Cramer noted. “Even at the ugliest moment in today’s sell off, we came nowhere near that level of pain.”

The Dow Jones tumbled 130.55 points, or 1.00 percent, to end at 12,929.59. The blue-chip index is below its 50-day moving average for the first time since December. Meanwhile, the S&P 500 declined 15.88 points, or 1.14 percent, to close at 1,382.20. The Nasdaq slumped 33.42 points, or 1.08 percent, to finish at 3,047.08.

“We’ve had 101 instances in the last five years where the market fell more than two percent,” Cramer continued. “Again, we came nowhere near that today, either.”

Nevertheless, Cramer said his critics complain he is too confident. He thinks they would prefer he recite the stock market adage “Sell in May and go away” – the belief that growth is slow from May to October, so investors should sell stocks at the start of May and then use any proceeds to buy stocks back again at the end of October.

Cramer thinks it would be a mistake to sell here, though. If he thought it was a good idea for investors to sell, he would make that call.

But right now, he doesn’t think it’s the right move. Given the market’s recent losses, some have called Cramer “complacent.” But Cramer thinks he could say the same of his critics. Avoiding stocks for years because it was deemed risky turned out to be very costly, he said. Those who thought they were being wise for not buying stocks in the third quarter of 2011 missed a big move higher, he continued.

“Staying on the sidelines was anything but prudent,” Cramer said. “Given how much performance you missed, I could argue that you were downright reckless to pull out of stocks six months ago. You might not get another chance to make money in stocks like this for many, many years.”

— with wires

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