We all know Jim Cramer.
CNBC’s “Mad Money” host and outspoken commentator said Monday—a day that saw the Dow fall 600 points, and a retreat for oil—that the market is in “a very serious correction” that has been underscored by the fact that there aren’t very many fundamental reasons why everything is heading downward.
“The thinking behind today’s action is surprisingly simple: money managers are buying the winners and selling the losers,” Cramer said. “Unfortunately, there are a heck of a lot more losers than winners, and I want to put that into context because such behavior, frankly, is highly unusual this close to the end of the year.”
On “Halftime Report,” Cramer discussed the major slump in shares of FANG stocks—Facebook (NASDAQ: FB), Amazon (NASDAQ: AMZN), Netflix (NASDAQ: NFLX), and Google-parent Alphabet (NASDAQ: GOOGL, GOOG)—which have been some of the biggest winners in recent years as investors have piled into them in the pursuit of continual growth.
Each of the FANG stocks are now in a correction, with Netflix and Facebook dropping a third of their value since hitting their peaks earlier this year. Likewise, Apple (NASDAQ: AAPL) fell into a bear market this week as the broader tech sector led the market to five consecutive down sessions by Wednesday.
“Their stock is pretty inexpensive,” Cramer said of the FANG stocks. “They have more than $100 billion in cash. They own search. They own online video. They own the self-driving car market, at least for now. I think it’s an outright buy. But no one cares. All this will start mattering at some lower price, though.”
Cramer noted that the economy is solid. However, he believes the Fed should pause or at least slow down its raising of interest rates in an effort to calm the current market conditions. The central bank is expected to raise rates again at its meeting in December, making it the fourth rate hike in 2018.
As for 2019, Cramer said, “We need to see a trade deal with China or some sign that the Federal Reserve will wait and see before it hits us with more rate hikes next year. We’ve been getting weaker for some time and the Fed doesn’t seem to care – they’re still very committed to the ‘destroy the economy in order to save it’ approach.”
With rates rising and global stock markets tumbling as well, there aren’t many havens to be found leaving investors nowhere to hide.
Bank of America issued a warning for investors looking to buy the dip. The bank’s chief investment strategist, Michael Hartnett, doesn’t think stocks have reached their bottom yet.
“We remain bearish, as investor positioning does not yet signal ‘The Big Low’ in asset markets,” Hartnett wrote in BoAML’s November fund manager survey.