Cramer Says SELL Stocks This Week!
This morning on The Today Show, Jim Cramer said if you own stocks and will need cash from those investments within the next five years, you should sell those investments this week! Why say this on national TV? Obviously, he expects stocks to fall an additional 20% from today's level.
Keep in mind that as of Friday's close, 80% of stocks in the Russell 3,000 are down year-to-date, and a whopping 17% are down more than 50%. Jim Cramer is the host of CNBC's "Mad Money" and co-founder of TheStreet.com.
A few prior posts on stocks & the economy:
Govt. Take Over Of Fannie Mae and Freddie Mac Could Cost Billions
Stocks of Housing Giants Suffer Huge Losses
Former Fed Chief … Would Not Be Surprised If The Housind Drop Was “in double digits.”
Stock Market tumbles 146 points . . . The Perfect Bull Trap on Sub-Prime Woes
Bicoastal Housing Recession Forecast By UCSD Economist
Real Estate vs. Stocks – Which is the Better Investment?
Biggest Loss in jobs in more than five years
Labor Department reported today that the economy experienced the biggest drop in jobs in more than five years.
There was a net loss of 159,000 jobs in September, the ninth straight month the U.S. economy has lost jobs. The August job loss was revised to 73,000 jobs, taking year-to-date job losses to 760,000.
The real bad news is that by the Labor Department's own admission, their reporting model performs poorly at economic "turning points", so, a doubling of current job losses may be very possible after the data is revised.
Related posts:
Unemployment Rate Hits 6.1%
Jobless rates jumps to largest rise in 22 years
National Association of Realtors Forecast for 2008
Worst Conditions Ever Seen by the Modern Mortgage Industry
Real Estate and Construction Misery Dramatically Slows California’s Job Growth
New-home construction in August Hit 17 Year Low
The Commerce Department reported today that Construction of new homes and apartments fell to a 17-year low in August, dropping to a seasonally adjusted annual rate of 895,000 units.
Mark Zandi, chief economist at Moody’s Economy.com said: “The housing market is just cratering … sales, prices and construction are all down. That is the fundamental reason why the economy is having so much trouble.” San Diego real estate sales
Jobless rates jumps to largest rise in 22 years
The U.S. unemployment rate jumped by the most in 22 years in May, reaching its highest level in more than 3-1/2 years and underscoring the recessionary risk the economy still faces. The jobless rate rose to 5.5 percent last month from 5 percent, its highest level since October 2004, the Labor Department said today. Some 49,000 jobs were cut from payrolls in May, the fifth straight month of job losses. San Diego for sale by owner
Not a recession?
The economy grew at a pace of just under 1.0% in the first quarter of this year. While this is not a cause for celebration, it is growth and the very definition of recession requires that the economy is contracting instead of expanding. Even consumer spending grew an anemic 0.2% last month. Therefore, regardless of the fact that Warren Buffet says that we are in a recession already, the statistics do not yet show this fact. What if we do not fall into a recession?
Well, a recession would mean that rates stay low and the Federal Reserve Board is focused on stimulating the economy. Low growth puts the Fed focus on inflation first as we have entered into a period of "stagflation." We have already seen rates rising to reflect this difference. While there may be only 1.0% difference in growth rates between one and the other, the economic remedies and market reaction can differ significantly. Since the housing sector is the weakest within the economy, this sector needs lower rates as part of the stimulus package.
On the other hand, don't get mesmerized by the numbers. Warren Buffet could very well be right. An important segment of growth in the first quarter was due to a lower trade gap and this was fueled by a lower level of imports. We import less when our consumption goes down. Even consumer spending did not grow when inflation was taken into account. So there is room for the economy to slide further and this may reduce upward pressure on rates. San Diego California Realtors