Jim Cramer says that investors seem to take one of two extreme positions – either the market is on the verge of another historic run or it’s going to self-correct by 10%.
It’s an understandable position, he writes.
There are up days and there are selloffs, Cramer says. The important thing is that investors "get an unfathomably good basis that sets you up for tremendous long-term performance when people realize it is not the end of the world." Read more of his investing ideas, trading strategies and analysis in this Real Money column.
The logic is seductive. If the delta variant of COVID can't be stopped, then we have some serious times, times that will freeze economic activity and put an end to the amazing service, travel and leisure boom we've had.
That's been a gigantic influence on the Great Reopening. That can spell the end to everything from the nascent rally in Boeing (BA) - Get Boeing Company Report to the attempts to get back into the black from Southwest (LUV) - Get Southwest Airlines Co. Report, United (UAL) - Get United Airlines Holdings, Inc. Report or the hotels and restaurants and small retailers that had been booming.
And if the delta variant can be tamed, something that Dr. Scott Gottlieb, the former head of the Food and Drug Administration and a CNBC contributor, thinks could happen soon, then everything you would be buying under the first, the doomsday scenario, you would be selling and crushing it and thanking your lucky stars that you didn't listen to the jeremiads of the myriad bears in the audience.
The only problem under this scenario is that markets are never this black and white, Cramer says. There really is no disaster scenario or a heaven-sent bull run.
Cramer pointed out Lowe's (LOW) - Get Lowe's Companies, Inc. (LOW) Report stock recently mirrored a decline in Home Depot (HD) - Get Home Depot, Inc. (HD) Report stock, but then bounced back. Why? "Because its circumstances were much different from Home Depot. Lowe's is in a major transformation to localize the stores and to make them more pro-friendly -- a market hitherto dominated by Home Depot -- but Lowe's also doesn't want to alienate DIYers.
Cramer said placing too much emphasis on aggregate numbers and anecdotes tends to seduce investors into negativity. He pointed out how light retail sales data, and a spending slowdown by non-pro shoppers at Home Depot "made everyone suspicious of every retailer, even the good ones, like Walmart (WMT) - Get Walmart Inc. Report, which reported a fine number, and the group was pummeled."
How can investors thread the needle, as Cramer describes it, between a tougher market and signs we are seeing a solid recovery?
Cramer says, "If you think we are on the verge of starting to beat COVID, then it’s easy: You buy the stock of Walt Disney Co. (DIS) - Get Walt Disney Company Report, which has now given up pretty much everything it made after that amazing quarter." But if you think there's going to be more lockdowns? "Then Disney+. Outside, Disney theme parks. Inside, Disney+. I love the optionality of this choice."