8 reasons the market isn't worse
CNBC host Jim Cramer says stocks should be crushed by global turmoil. Instead, they're doing fine.
Many investors, including CNBC host Jim Cramer, found the relative strength somewhat curious, given the widespread geopolitical unrest.
Israeli jets, tanks and artillery pounded Gaza again as the death toll from a two-week conflict topped 500. Also, fighting flared in the Ukrainian city of Donetsk as investigators began to inspect the bodies of the victims of the Malaysia Airlines crash. In addition, the United States and the European Union announced further economic sanctions against Russia.
"You'd think the market would get absolutely crushed," noted Cramer. But it didn't.
Here are Cramer's reasons why:
1. Russia's not that bad
Although there's tough talk out of the White House, Cramer doesn't think the stock market believes sanctions on Russia will hurt the earnings of U.S. based companies. (It's a belief that Cramer feels may be misguided; scroll down for more.)
"The flight to quality trade has sent the interest rate for bonds so low that stocks, once again, look pretty darned good by comparison," Cramer said.
3. Aggressive corporate moves
Cramer said Allergan (AGN) may be the poster child for this category. "It announced huge layoffs and issued a 2016 forecast that makes the stock seem so cheap you have to wonder whether you can do better voting with CEO David Pyott than with the hostile takeover offer from Valeant.".
4. Deal making
The flood of M&A has captured the imaginations of investors with pros buying stocks in anticipation of the next takeover.
"This morning we learned that Elliott Management has taken a position in EMC (EMC) and asked the company to fully spin off its fast-growing VMWare subsidiary. EMC's stock has flatlined forever, but this news sent it soaring. When such large companies are vulnerable to pressure from activists, you get very nervous if you aren't fully invested."
6. Good earnings
Strong results from corporate America have cheered the Street. "It's hard to sit out a market when so many companies beat estimates and raise numbers."
7. Fewer IPOs and secondaries
"We're not seeing a lot of new stock for sale, which helps keep supply and demand in balance," Cramer said.
8. Janet Yellen
"The new Fed chief is in no hurry to raise rates. She's waiting. She's patient."
Although the preceding reasons explain why the market was relatively buoyant on Monday, Cramer isn't sure all the reasons are warranted.
He's most worried about sanctions against Russia.
Although the sanctions themselves may not cause significant harm to U.S. companies, Cramer can see repercussions from the sanctions taking a very serious toll.
"I could see the Russians kicking out MasterCard (MA) and Visa (V), which have tens of millions of credit cards there. Russia could put its own system in place, something they buzzed about when Putin first started meddling in Ukraine. We could also see some of the machinery companies get hurt. And Russia could kick out Coca-Cola (KO) and PepsiCo (PEP) as well as some of the other packaged goods companies."
Also Cramer thinks the market is forgetting the ripple that events could have on Europe. "In this case, I would say the market hasn't correctly assessed the downside yet, and there's potentially a lot more downside."
Therefore, Cramer wouldn't put money to work, just yet.
"Now, I'm not saying that this is a perilous situation. I simply want to wait for lower prices before I do any more buying. If that sounds bearish to you, so be it."
More from CNBC
- Gold bulls still sidelined, even with higher risks
- Global turmoil may punish complacency: El-Erian
- 3 ways to trade Russian turmoil: Dennis Gartman
Look 401k plans now have a constant negative drain of money out of their accounts due to retired people taking their money out to live on.
P/E are nearly 40/1 folks that means these businesses will have to stay in business at the level they are at now for 40 years in order to pay someone holding their stocks back.
Things are way way way beyond normal and going to collapse very soon very fast
And this is not even considering that the BRICS have abandoned the US dollar as a trading currency which is going to send a death blow to the US dollar.
Pretty much the Fed and everyone else on Wall Street are in denial of what is really happening
things are getting worse and worse and people are working for less and less money while the market has priced in earnings growths of 100 percent for the next forty years.
Things are just not going to work for much longer.
Through the first 17 comments posted, the opinions expressed are overwhelmingly bearish, fatalistic, pessimistic, what have you.
The points made by the bears are (mostly) valid. I think the opinions (again mostly) reflect the opinions of the majority. There's the rub. The majority is usually wrong when it comes to investment decisions. I remain today where I've been since 1983. Fully invested in Stocks. Very nervous and uncomfortable to be sure, but I can deal with it.
The only . . . and I mean the only . . . reason the market has gone up is because the FED has been stuffing it with Billions and Billions and Billions of phony printed money. As soon as the money printing stops, this market crashes and we complete the Crash of 2008, except worse.
Wall Street and the financial markets received fair warning that they had gone too far, but they will not listen. If you didn't like greed and avarice and completely de-regulated markets then, just you wait. The last 6-years have been worse. Don't like housing bubbles; nuts to you. Don't like having the nest eggs of old age pensioner stolen. You ain't seen nothing yet. Etc.
The stock brokers of today are the used car salesmen of yesterday:
How else can you explain a penny stock with only one employee
who's shares started at 1 cent jumped to $20.00 per share.
We have a system present today that was never equated in
the formula of the DOW of yesteryear .. "The Internet"
With Tweeter and the Web one is able to sell worthless stock
without leaving your office and by using graphs and tweets
one can encourage those who otherwise would have walked away,
but instead choose not only to stay but to buy more ..
With such a system in place a "Bull Market" that would have died
years ago is fed by investors desire to fuel the fires and keep a
Stock Market appearing to be robust but in all reality is dead
by its own weight..
Learn the Basics like understanding what a PE actual is forward or trailing. Take the time to actual READ quarterly Reports. Learn how to compare companies within the Same Industry and their Comparable Growth Rates.
Understand that Dividends can be raised, lowered, or eliminated. Stocks can go to ZERO or you can get lucky and catch an Apple like Stock Run. Bottom line, postings Board are about the Last place anyone should go concerning about figuring out how to invest in Markets. Folks are too concerned about themselves and care not a Darn if you lose it all. Plenty of ways to learn about investing without the NOISE of Posting Boards.
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
It's time for a reality check in advance of the Chinese e-commerce giant's much anticipated initial public offering.
VIDEO ON MSN MONEY
Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.
Contributors include professional investors and journalists affiliated with MSN Money.
Follow us on Twitter @topstocksmsn.