Jim Cramer says the market rally shows why you can’t bail on stocks
CNBC’s Jim Cramer said investors who fled the market during the recent volatility may be grappling with the familiar realization that the worst-case scenarios that guided their decisions never materialized.
“What we have is a rally based on nothing,” the “Mad Money” host said Tuesday. “But it really boils down to the fact that most of the things we worry about don’t happen.”
“After weeks of declines due to geopolitical tensions, private credit risks and sluggish performance among many members of the influential group”Magnificent Seven“Stocks have been on the rise since March 30. The rally continued Tuesday, with the Dow Jones Industrial Average up 318 points, or 0.66%, the S&P up 1.2% and the Nasdaq up 2%. The S&P 500 is now inches away from its all-time high on Jan. 27 — a strong recovery that seemed improbable until recently.
Cramer noted that this pattern is nothing new, noting that investors are “scared of the stock market” due to dire predictions that often do not come true.
The latest concerns stemmed from the Iran war, where investors feared that a rise in oil prices and inflation would send interest rates sharply higher, derailing the rally.
“If bond prices had taken a hit and rates had gone up…the market would have been in a real bind, but that didn’t happen,” Cramer said, emphasizing that stable rates remain “the real fuel for the rally.”
Even before war broke out on February 28, Wall Street was increasingly concerned about stress in private loans, especially those tied to firms such as: Blue Owl Capital. Fears have also spread to shares of leading alternative asset managers. Karataş, Apollo Global ManagementAnd KKR.
But Cramer said those concerns have yet to trigger the kind of systemic effects that many predict. “The bears said this would collapse the entire private credit structure, turning the entire group into roadkill,” Cramer said. “Guess what? That didn’t happen.”
Investors also have repeatedly written off megacap tech stocks, Cramer said. Nvidia, Amazon and Google parent Alphabet We face a constant wave of negative narratives, from competitive threats to slowing growth. But these stocks have rebounded sharply, with AI chip giant Nvidia becoming the poster child for the comeback.
Nvidia shares have been under pressure for months; It fell to around $165 on March 30, then rose to $196.51 on Tuesday, its highest close since November.
According to Cramer, markets often move higher not because conditions are perfect, but because commonly expected downsides do not occur.
Still, he warned that the current rally could extend in the near term. “The easy money has already been made,” he said, noting that the Charitable Trust portfolio used by CNBC Investment Club shortened several positions this week.
But in the long run, Cramer said the lesson for investors is to stay disciplined and avoid being pushed out of the market by fear-based narratives.
