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Cramer on the Markets

The last time the S&P and other averages were at this level, the U.S. economy was about to crash, Jim Cramer said, but not this time. He says we are just getting started with the potential for even more growth once real estate rebounds.

"It was all wrong and the wrong stocks were leading us. First, commodities plays, nothing really anti-inflation was winning. The second thing was when we got back in, when we got to this last level of Nasdaq, 11 years ago, it was all terrible companies that were very highly valued with very high multiples. Now we're in very low multiples with really great balance sheets and companies that have multi-year prospects that are very lean because they fired a lot of people," Cramer said.

But despite companies with stronger balance sheets and lower multiples, enthusiasm has lagged, as stocks trade with lower volume.

"There are a lot of perceptions that have occurred in the last four or five years. One is that our economy doesn't really matter that much, it's about China. We're a huge economy. And the second is that the consumer is never going to come back and that's represented by housing and retail sales. Retail sales yesterday, I heard people pick apart the retail sales. They were great, don't pick them apart," Cramer said.

Earnings, he said, will remain strong as the economy rebounds. In this low interest rate environment, he said earnings are cheap compared to bonds.

"Look at all the 5% yielders, the 4% yielders, the 3% yielders . Recognize that those are better than what you are getting in your bond funds and realize the earnings are going to be pretty good because our economy is getting better," Cramer said.

If housing does bottom and construction begins in commercial and residential real estate turns around, Cramer said the economy will boom.

"We are not anywhere near, we are 50% below where we were the last time we were at these averages. There's a lot of runway. That's the way I want to look at it. There's a lot of runway," Cramer said.

At the time of publication, Cramer was long XXX.

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