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The stock market got off to a good start in 2021, after strong gains last year despite the coronavirus pandemic. One of the reasons for the continuation of the rally in stocks, according to CNBC’s Jim Cramer, is simply the lack of people willing to sell.
“There isn’t enough inventory for everyone,” Cramer said on “Squawk Box”. “The stock market is not divorced. The stock market reflects the strength of individual firms. There are 500 firms in the S&P. Probably 400 of them are doing better than they thought” than they would for a pandemic.
On Thursday, the Dow Jones Industrial Average and the S&P 500 closed above 31,000 and 3,800, respectively, for the first time. The Nasdaq also eclipsed 13,000 during the session, its first trip above that level. On Friday, the Dow Jones was fundamentally stable, while the S&P 500 and the highly technological Nasdaq rose early in the session.
Making sense of the actions being taken on Wall Street amid a lingering pandemic, continued economic disruption and unrest in Washington may seem difficult for some people, Cramer acknowledged. “It’s a very strange, different time. All about this time, there’s no playbook,” the “Mad Money” host said later on CNBC.
“People come in and talk about value versus growth. We liked value in the morning and the next day every growth stock was way more than value,” he said, referring to a generic scenario. “Is there a model here? Yes. People want to own stocks and there isn’t enough of them. There just isn’t – not yet.”
Some leading investors have worried about the massive surge in stocks since the end of March, when the coronavirus-induced sell-off hit its low; the S&P 500 has been up about 70% since then. Carl Icahn issued a warning to CNBC’s Scott Wapner earlier this week and said he was covered accordingly.
“In my day, I’ve seen a lot of wild rallies with a lot of mispriced stocks, but there is one thing they all have in common. Eventually, they hit a wall and go into a major painful fix. No one can predict when this will happen. happens, but when it does, look below, ”the billionaire investment titan said Monday.
The pandemic and its impact on the stock market created a different situation than in the years leading up to the dot-com crash, Cramer said. Highly speculative internet stocks helped push the Nasdaq up over 500% between 1995 and March 2000, when the bubble burst.
“It’s not 1998 [or] 2000, “Cramer said of the current market rally during the pandemic.” If you open up the economy, then you’re robbing the Disney’s of the world. And since the economy remains closed, you have a whole bunch of stocks, Amazons, stealing. There are a lot of things that fly. “
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