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Jim Cramer (1:22)
Hey, I'm Kramer. Welcome to Mad Money. Welcome to Kramerica. Other people make friends. Hey look, I'm just trying to make a little money. My job is not just to entertain, but to explain. Put it in context. So call me 1-873-CBC. Tweet me Jim Cramer Investors are an unsure lot. Who can blame them? We're taught to be scared. We're taught to sell stuff on any fright. Sell, sell, sell to get out now anytime things look ugly. Oh man, I hate that stuff. But you know what? Let's do something about it right now. You and me. Stories like the US Debt downgrade story from Friday. They are classic get out now items after the close. Really scary stories that scare people out of very fine stocks that could otherwise make them rich. And sure enough, when Moody's downgraded the debt of the United States on Friday, the last of the three big rating agencies to do so, the market opened hideously as the get out now crowd took action. They fled. The market rebounded with the dow finishing up 137 points was up even more at one point the SB advancing point of 9%, NASDAQ inching up 0.02%. Decent day now we've seen a big decline off of debt downgrade before The S&P 500 dropped an ominous 6.66% on August 5th of 2011 after state imports downgrade our debt from triple A to A plus. But it was all part of a hideous rollover that had more to do with potential default of European sovereign bonds than anything really involving Our own solvency. Although there was a ruckus in the budget negotiations, kind of like what we're seeing now. Then the S and P shed 1.38% after Fitch made a similar downgrade. But that was in 2023. Still bad, no 6.66 decline. In both cases, there was a level of fear that was out of sync with the short term prospects of the economy, which is what I care about. I say that because the long term implications of refusing to balance the budget could be catastrophic unless we can figure out how to generate huge growth in this country. Of course, in the long term, we're. We're all dead. So nobody cares about this stuff until the bond market starts making us pay a price for it in the short term. And everyone always feels that's about to happen. But I want to go back to the fear because the fears must be tamed if you want to become a good investor, first you have to be on the front lines to see it, to see where the fear is being generated. Now, I was on the front lines this weekend. I was signing bottles of my wife's phosphoro mescal at a beautiful Total Wine. And more in New York were Norwalk, Connecticut, where I got to chat with scores of investors, maybe you, many members of the CNBC investing club, where we have a meeting on Wednesday at noon. Of the people who were there principally to talk to me about stocks. One in four asked me about the darn dead downgrade. The level of fear was both fascinating and sad. Almost uniformly, they were concerned that the Ready Energies wouldn't pull something like this unless they believe there was a good chance that interest rates were about to skyrocket and rates didn't actually go higher today, causing a lot of people to sell stocks at the open, not listening to me from that talk that I gave them. But then they went right back down because there was no follow through, no ratings agency. Another one downgraded. They didn't. If you sold when rates had gone up in the morning, well, you look like an impoverished scaredy cat now. So that fear turned out to be unfounded. A second fear. What good does it do to invest if we're just going to be wiped out by our national balance sheet anyway? Now this was a little tricky. Our government has a huge budget deficit. Nobody ever does anything serious about it, including Doge, which never really tried to tackle the big issues. The Department of Defense favored cheap drones over most of its munitions. And I mean the real drones, the real cheap ones that Ukrainians and Russia Use instead of expensive aircraft that require five redundancies to ensure pilots don't get killed, we could save a fortune. And if we adjusted Social Security for just a few months, you know, a little few months, if we tax hedge funds, private equity funds, people like everyone else, or if we tax the interest and dividends like ordinary income, we might actually have fighting chance to plug the hole. But raising taxes and cutting spending are unpopular, so the problem never gets fixed. On the plus side, it could be decades before any of it blows up in our face. Everyone who sold stocks in my lifetime because of national debt worries has been proven to be dead wrong. So the idea that you should sell everything because of the debt downgrade is that early warning sign that makes no sense whatsoever. If anything, it's got to be the opposite. You're being given an early warning to invest more, not more aggressively, but more of what you can say. That's the real hedge. If you're worried about the government's credit worthiness not to get out. Now, I've always favored gold as insurance against excessive government borrowing, and that has worked well as of late. And when bitcoin became legitimate, I added that to the roster of what you'll need if nothing good happens with the debt. We have a president that seems to care more about bitcoin, the stock market, so he's a beacon for buying the stuff. But the concept of pulling out of the market because of something that might become a problem in the distant future is totally counterintuitive and wrong. Finally, there's the spur to sell that most upsets me almost immediately. On Friday night when I went to X formerly Twitter, I read post after post after post about how ugly the stock market would be on Monday morning, drenched in red ink. I read that multiple times. One after describe what would amount to be a second Black Monday to a person. These people were graphic about the pain that was ahead. Now, I don't know whether they were certain and stupid that it would happen or whether maybe they were short and trying to spread pessimism. I bet it was that. Oh my God. But it was really effective. But it was the kind of verbiage that would try men's souls to stay long. Now, I did my best to counter a bunch of these. I kept tweeting or xing or whatever. I mentioned the 2011 downgrade was very different because it came at a time when several European countries were fighting off defaults. Sure, we had bankrupts, budget negotiation going on in Washington, and we did get some compromise that was somewhat positive. Was temporary. As for the 2023 decline, barely matter. But the fear mongering was so intense that I gave up trying to counter it. And as the weekend went on, you could bet that Sunday night futures would be drenched with red when they open and then they just get more red. And that's exactly what happened in the NASDAQ particularly. And by the way various Jensen Wong keynote which I really loved. Although boy Was it a 11:15 was hard to keep my eyes open for that. Went back to sleep, then woke up again. Whatever it was terrific. But it didn't change anything. I think the fear feeds on itself. No matter how hard I try to explain. There to be little follow through from the downgrade. People just kept posting the equivalent of get out now to the point where the mainstream media got a hold of it. I'm sure the bears out there were praying we do a special to get more people to sell so they could cover their short positions. In reality, if interest rates had indeed skyrocketed then the get out now crowd might have had their day. But rates did the opposite. They pulled back from their highs. That's what happened. You think that's all she wrote? We were supposed to get crushed. Instead we rebounded nicely. End of story was just one more big buy opportunity. In reality that's not the case. There'll be many other dead out now is being issued ahead of you. You just need to remember two things. One, the people write these are either fools or who know nothing or incredibly shrewd short sellers who need to scare you as part of their business model. The shorts need to spread fear because while we're got a lot of problems, our economy is actually doing fine. Spread fear. Yeah, that's some business. Inflation isn't yet high, unemployment still low. Even if they come, we can deal with these problems and the so called stagflation they produce. Oh, the bears love that word stagflation, don't they? Without dumping everything right now it's hard because it's so persuasive. But you'll have to stick with me and we'll sit through this. Let me give you the bottom line. The crucial thing that we in the media can do and I say this is someone who talks to more individual ventures I that almost anyone in the universe and certainly more than anyone in the media is simply cool it with the fear mongering and cut off guests who advocate it. A little history and some constructive thought would go a lot further. If your goal is not to inflame but to inform. I Want to speak to Trey in Texas who might know what he looks like? Trey.