A bottom is beginning to form in financial stock, Jim Cramer said on TheStreet.com TV's Wall St. Confidential Web video Wednesday.
Cramer said he's been comparing the current market to that of 1990, when there was a free fall in financials until an Arab investment saved
During 1990, there was also a sense that the
would ease rates, as well as a lot of "shotgun marriages," he said. "We saw today
Bank of America
talking with Citigroup," a stock Cramer owns for his charitable trust,
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Cramer: Financial Stocks Are Near a Bottom
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, continued Cramer, was down 11% in that time period and right now it has gone down 10.5%. "Where we are is where we bottomed in 1990," he said.
A lot of people have said the current situation is much worse than it was in 1990, being that that was a $200 billion problem with the resolution trust, whereas this is a $500 billion problem, Cramer said. However, people must also take into account that the economy is much bigger now, so as a percentage of the GDP, $500 billion is not that much.
Another sign that we're beginning to get a bottom in the financials is the fact that
reported horrible news and the stock went up, he added.
In his bottoming thesis, Cramer said some banks and homebuilders must fail. Although it hasn't happened yet, he believes it will. "What I think you have to do is cover all your shorts financial and start picking the ones you're comfortable with."
Moreover, there is no way to give a timeline as to how long this bottom will last, Cramer stressed. In 1990, it lasted seven months, but it may be longer or shorter than that this time, he said. "What I think matters is that we're seeing the same signs."
At the time of publication, Cramer was long Citigroup.
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