Market hasn't been hurt by lack of data amid shutdown, says Jim Cramer

Key Concepts

• Market Pessimism vs. Historical Performance: The tendency for investors to focus on negative news and doubt the market's ability to recover, despite historical data showing a long-term upward trend.
• Government Shutdowns: Historically, these events have had minimal long-term impact on the stock market, despite rhetoric suggesting otherwise.
• US-China Trade Relations: Presidential rhetoric regarding China often causes short-term market volatility, but typically resolves with compromise, leading to investor regret for selling.
• Banking Sector Defaults: Initial concerns about widespread defaults, amplified by high-profile statements, have not materialized, with many banks reporting low default rates.
• Company-Specific News (Apple, UPS): Individual stock performance can be influenced by analyst downgrades, product reception, and broader economic factors like tariffs, but often recovers if the underlying business remains strong.
• Bull vs. Bear Market Mentality: The argument that investors should favor the "bulls" due to historical market performance, rather than treating each trading session as a 50/50 coin flip.
• Investor Psychology: The tendency for investors to sell low and buy high due to fear and a lack of trust in the market.

Summary

The Persistent Doubt in the Market

Jim Cramer opens Mad Money by addressing the pervasive pessimism among investors, often referred to as "shadow boxing the bears." He observes that even when historical data and numbers favor the bulls, many investors refuse to trust the market, actively seeking reasons to dislike stocks. This leads to a cycle of selling at the wrong times and missing out on potential gains, which Cramer argues is why so few people build wealth in the stock market. He highlights a recent day where the market started negatively but rebounded, with the Dow finishing up 0.48% and the Nasdaq climbing 0.89%, illustrating how easily investors can be scared away.

Objections to Owning Individual Stocks

Cramer then delves into common objections raised by intelligent investors, particularly wealthy ones, that make individuals feel like "chumps" for owning individual stocks. He walks through several "steeplechase" events of October to illustrate these points:

1. Government Shutdowns: Despite the rhetoric that a government shutdown, particularly under President Trump, would be detrimental to the stock market, Cramer points out that the market has historically been unaffected. He notes that the lack of economic data and the furloughing of federal workers have not significantly impacted stock performance. He cautions against selling based on this, even with the upcoming Consumer Price Index (CPI) report, suggesting that interest rates rose in anticipation of a potentially "hot" CPI.

2. US-China Relations: Cramer criticizes the media's portrayal of President Trump's statements on China as escalating tensions and economic catastrophe. He argues that the President often negotiates with a hardline approach that spooks investors, leading to sell-offs, only to later compromise. This pattern, he states, causes investors to feel foolish for selling and then prevents them from re-entering the market, thus losing potential gains. Cramer suggests that when the market dips due to these statements, it's often a buying opportunity.

3. Banking Sector Concerns: He references a prominent banker's warning about a period of heightened risk and potential defaults, citing two significant defaults that led to a $170 million charge for J.P. Morgan. The analogy of "one cockroach" suggesting more were present caused a firestorm of selling, particularly in regional banks. However, Cramer counters this by stating that subsequent bank reports have shown some of the lowest default rates as a percentage of loans he can recall, with major banks like Bank of America and Wells Fargo highlighting this. While acknowledging the need for vigilance, he suggests the "cockroach" analogy might have been ill-advised, and the broader industry appears "pretty clean."

4. Apple Stock Speculation: Cramer addresses the skepticism surrounding Apple stock, which had become "suspect" and "scary" due to concerns about the iPhone 17. Analysts downgraded the stock, citing weak lead times and a lack of innovation, with one firm downgrading it from "hold" to "sell," suggesting any positive news was already priced in. Cramer notes that this downgrade sent chills through Apple bulls. However, he then highlights that recent reports indicate the iPhone 17 is a significant hit, evidenced by worldwide lines and strong sales, and mentions the outgoing T-Mobile CEO's positive comments. He implies that selling based on such negative sentiment would have been a mistake.

5. Tariffs: Cramer states that tariffs have not been a significant factor in earnings reports so far, despite media attention. He has not seen downgrades triggered by tariffs, suggesting they are not as impactful as some fear and may have been priced into share prices months ago. He apologizes to those who sold due to tariff fears, advising them not to make the mistake of selling stocks based on the upcoming CPI report, especially if it's influenced by tariffs.

Historical Perspective and Investor Mindset

Cramer then takes a historical view, recalling his early days on Broad Street 42 years ago when the Dow was at 1000. He heard the same arguments then: high rates, expensive housing, out-of-control inflation, and a president criticized for "voodoo economics." The prevailing advice was "get out now." Since then, the Dow has risen from 1000 to approximately 46,000. He criticizes those who dismiss this historical rise, treating the market as a 50/50 coin flip between bulls and bears. Cramer argues that the market is not a series of coin flips but a collection of companies to invest in. He urges investors to consider the bulls as the favorites, given historical performance, and to give them the benefit of the doubt.

Investor Calls and Cramer's Advice

The program then transitions to viewer calls:

• Gregory from California: Identifies as an "over buyer" who finds it hard to sell quality stocks, even those with significant gains. He asks for advice on a stock that beat earnings estimates by 1000% and saw its price surge, but has since come down. Cramer believes the stock is doing "terrific" and will go "much, much higher," praising its data for search engines and its management.

• Dan from New York: Bought UPS as a value play when it was beaten down, averaging around $103. He's concerned about tariff news and asks whether to buy more, hold, or sell. Cramer believes UPS is trying to bottom but personally doesn't favor it, preferring FedEx and J.B. Hunt. He expresses concern that UPS's large dividend might be unsustainable and that the company could use the funds elsewhere.

Conclusion of the Segment

Cramer reiterates his core message: if the market is a battle between bulls and bears, the bulls deserve the points because they historically perform better. He concludes by previewing upcoming segments on General Electric's descendants (GE Aerospace and GE Sharing), IBM's post-earnings performance, and Dover's potential.