Jim Cramer: Buy stocks slowly, ‘we’re getting closer to a bottom’

"I'm urging you to have a lot of cash on the sidelines and put money to work gradually 'cause there may be more bad [coronavirus] stories" next week, the "Mad Money" host said.

Wall Street is in deep correction territory, stocks have been discounted and the embargo on putting money in securities is now over after a tough week of trading shrouded in coronavirus uncertainty, CNBC’s Jim Cramer said Friday.

“We’ve had back-to-back days, though, where 10 times as many stocks were falling versus going up, and that is highly unusual,” the “Mad Money” host explained. “It suggests we’re getting closer to a bottom … though we probably may not be there yet.”

Cramer came to that conclusion after $3.18 trillion of value was cut out of the market during Wall Street’s worst week since the financial crisis in 2008. Investors transferred money from riskier assets to safe havens such as bonds as worries mounted about the novel coronavirus’ impact on businesses and a slowing global economy.

Cramer said investors with stock in travel, leisure, automotive and housing companies should consider offloading their holdings and building cash. Those businesses will likely miss their quarterly projections, meaning they have not seen the end of the rout in their valuations, he said. The public should expect more negative COVID-19 headlines to come out during the weekend that can impact trading on Monday, Cramer said.

“This is the time to high grade your portfolio, regardless. I want you to take some losses and move to better stocks,” he said. “I know these groups have already been crushed. That doesn’t mean they can’t get crushed some more.”

The host recommended a basket of stocks, ranging from gold to consumer staples to pharmaceuticals, that he thinks are investible here:

Barrick Gold — $25.60 per share, down 12.6% from Monday
AbbVie — $85.71, down 12% since Feb. 12
Abbott Laboratories — $77.03, 16% under Jan. 22 close
Coca-Cola — $53.49, down 11% from Feb. 21
Moderna — $29.16, 11% off Wednesday’s close
Zoom Video Communications — $105, 7.5% off Thursday’s close
Etsy — $57.81
Shopify — $463.31, down 15% from Feb. 19
Teladoc Health — $124.96, off 7.5% from Thursday
RingCentral — $235.75, off 5% from Feb. 19
Verizon Communications — $54.16, down 12% year to date
AT&T — $35.22, down 12% from Jan. 8
“I’m urging you to have a lot of cash on the sidelines and put money to work gradually ’cause there may be more bad stories,” Cramer said. “You buy slowly in stages. Next week is stage one. There will be more stages, likely at lower levels.”

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Stock Market Crash of 2020 – My Recession Plan

Will There Be A Stock Market Crash in 2020? Here is my investing plan for the recession

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Will there be a recession in 2020? The stock market is at it’s all time high. CNBC just published an article on their theory of what is pushing stocks so high, and it turns out it’s not institutional investors like mutual funds and index funds. Instead, it’s hedge funds playing catch up to this bull market. That's not a confidence inspiring sign.

I've been a dividend investor since 2014, saving my money, investing (using brokerages like Robinhood, WeBull, M1 Finance, and Vanguard). Over the last 5 years, with some luck, minimalism, and money management skills, I've managed to save and invest over six figures and $7,000 of passive income.

A lot of beginner investors ask me if they should wait for the stock market crash / economic recession, or start investing and buying stocks today. What is the right answer?

In order to understand the answer to that question, we have to understand why everyone is afraid of a financial meltdown in the first place.

Indicator #1 something called the inverse yield curve. What it means is when long term investments yield lower interest rates than short term investments. There is an increased risk in investments that are longer term, which doesn’t make any sense. If you’re going to invest and lock your money away for many years at a time, you want it to have a higher yield than a lower one.

When we’re talking about the inverted yield curve, it looks at bonds to see their yields or “interest rates”, and if short term bonds provide higher interest rates than long term bonds, then we get the inverse yield curve. When this happens, it is often times seen as an indicator for an upcoming recession and investors believe that interest rates will fall.

Historically, we have seen this in the past and it’s been a reliable indicator of showing us the last 7 recessions successfully. This happened in the 80s, during the Dotcom bubble bust around 2000, and it preceded the 2008 recession as well.

Indicator #2 – The ISM Index. This is a big one, this is is called the Purchasing Manager’s Index. This index looks at the economy’s manufacturing sector month to month. Specifically it looks at orders, employment rates, production, supply chains, and inventories in the manufacturing space which is a big sign of the health of the economy.

A PMI Index of more than 50 means that this important part of the economy is expanding and growing. A score of 50 means no change from last month, and below 50 means the economy is contracting and slowing down. As of right now, the PMI Index is 52.4, with forecasts for that number to be increasing. This means investors can probably expect to be bullish on the stock market in reaction to the higher profits when this index is above 50.

Indicator #3 – Warren Buffet indicator. You may have read somewhere that Warren Buffet has an excessively large cash position of close to $130 billion dollars. Does this mean Warren Buffet is preparing for the worst economic crash in US history? I don't believe so, and the video addresses why that is.

Indicator #4 Ray Dahlio. A very smart billionaire made an insurance bet of 1% of his hedge fund – the equivalent of 1.5 billion dollars indicating the market will move lower.

With all these indicators, what is going to happen to the economy and what is your plan?

Coronavirus causes impact on supply chains, business, and the global economy

Yahoo Finance’s Editor in Chief Andy Serwer joins Alexis Christoforous and Brian Sozzi to discuss data coming out of China regarding the coronavirus, how supply chains and businesses such as travel are being negatively impacted and the how slow downs in the business will affect the global economy.
#China #coronavirus #Chineseeconomy

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