Jim Cramer, the widely recognized financial commentator, recently took to Twitter to share his insight into the current state of the stock market. He emphasized that the recent rise in stock prices is not due to strong fundamentals, but to the actions of the Bank of Japan, which have somewhat alleviated the pressure on the market.
I don’t want anyone to think that a stock is going to go up this morning based on fundamentals. It’s the easing of the pressure from the Bank of Japan. We’ve seen this nonsense many times in the 90s. You never knew who or where the sellers were coming from…
— Jim Cramer (@jimcramer) August 7, 2024
Don’t miss:
According to Cramer, this situation is similar to what happened in the 1990s, when the market was often influenced by unclear factors and the real reasons for major stock sell-offs only became clear later.
He is frustrated by how people are quick to blame every market downturn on fear of an impending recession. He believes this is too simplistic and that investors need to look beyond short-term market fluctuations to understand what is happening.
This follows the recent stock market decline, which led to widespread speculation about a possible recession in 2024.
Trending: Elon Musk and Jeff Bezos are optimistic about a city that can dethrone New York and become the new financial capital of the US. Investing in the booming real estate market has never been more accessible.
The current state of affairs in the stock market
Despite recent events, the stock market has proven its resilience throughout the year. Even with the recent downturn, the stock market is still up 12.15% year-to-date and 19.06% in the past 12 months (at the time of writing).
These numbers suggest that while short-term declines can be a cause for concern, they don’t necessarily signal long-term economic problems. The overall strength of the market has helped prevent more serious declines, so it’s important for investors to keep this broader perspective in mind.
Trending: During market downturns, investors learn that unlike stocks, High-yield real estate bonds yielding 7.5% to 9% are protected by resilient assets, which provide a buffer against losses.
Factors That Contributed to the Recent Stock Market Plunge
The market took a beating recently, with the Nasdaq down 3.4%, the S&P 500 down 3% and the Dow Jones Industrial Average down 2.6%. This was caused by a combination of factors, including rising geopolitical tensions, disappointing economic data from major global economies and central banks tightening monetary policy.
However, a major factor was the recent decision by the Bank of Japan to raise interest rates, which strengthened the yen. This major decision could reduce demand for Japanese exports and its currency, thereby reducing investment in U.S. assets.
See also: Don’t miss the next Nvidia – For just $10 you can invest in the future of AI.
Are we in a recession now?
Many investors are now wondering whether recent market behavior means a recession is coming. However, current economic data does not indicate that we are in a recession. While factors such as rising inflation and tighter monetary policy measures are challenging, they do not point to an immediate economic downturn.
Cramer’s message reminds us that not every market decline heralds a larger economic crisis. It’s easy to worry when stocks fall, but it’s important to understand what’s driving the changes before drawing conclusions about the economy.
Read more:
“SECRET WEAPON FOR ACTIVE INVESTORS” Boost your stock market game with the #1 “news & everything else” trading tool: Benzinga Pro – Click here to start your 14-day trial now!
Want to receive Benzinga’s latest stock analysis?
This article Jim Cramer Says ‘We’ve Seen This Nonsense Many Times in the 90s, ‘We Need to Stop Saying Every Drop in Price is Due to Recession Fear’ originally appeared on Benzinga.com
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
