S&P 500 could drop to 4,000 amid market collapse, CNBC's Jim Cramer says

Key Concepts:

• S&P 4000 as a potential bottom.
• Staying the course during market downturns.
• Reordering of investments: moving from international companies to companies without tariff issues.
• Recession as a likely scenario.

Potential Market Bottom and S&P 4000 Target

The speaker suggests that the market has not yet reached its bottom, primarily because the European market's reaction has not been fully realized. He identifies S&P 4000 as a level he is watching as a potential bottom. This represents a significant drop from the current market level.

Staying the Course During Market Downturns

The speaker emphasizes the importance of staying invested in the market, even during significant downturns. He uses the example of the 2007 market crash, where the market dropped 46%. Despite this substantial decline, he argues that staying the course would have been the correct strategy, as the market recovered by 2013. He highlights the potential gains investors would have missed if they had exited the market during the downturn.

Reordering of Investments

The speaker anticipates a reordering of investments, with money flowing out of large international companies and into companies that are not affected by tariffs. This suggests a shift towards domestic or regionally focused companies that are less vulnerable to international trade tensions.

Recessionary Outlook

The speaker acknowledges that a recession is a likely scenario. He states that this is a widely held view, and he is not providing any unique insight by stating this.