Jim Cramer: Remember the Upside of Market Fear

Editor's Note: This article was originally published on Real Money on Dec. 4. To see Jim Cramer's latest commentary as it's published, sign up for a free trial of Real Money.

Beware of things that are important until they are not. Last year at this time, we were gripped with the possibility of major defaults on sovereign debt. We were concerned that Spain and Italy, gigantic bond markets, couldn't pay their bills. Every day we would come in and be victimized by the ever-increasing borrowing costs. We knew they had the ability to bring down the whole world with their profligacy and their insistence on not raising taxes to pay for their social welfare states.

Turns out that at that very moment that we were saying they could bring the whole world down, we should have been buying them. It was a once-in-a-lifetime opportunity that came and went because the fears far outran the risks. The Europeans offered sensible plans. Responsible governments stepped up to increase taxes and cut benefits -- see, Washington, it can be done -- while at the same time the European Central Bank was able to forge a compromise that backstopped the banks. Many raised debt, too.

It was an all-around tour de force that made the worries look a little ridiculous in retrospect. It is not often you get a double in bonds. But you could have, and given that you could borrow the money to invest in them at very low prices, it may very well have been the single best investment of the 21st century to date.

Now we are gripped with a similar hysteria about our own country, one that is strictly, like Europe's, political. We can reach an agreement, but, more important for stock purposes, we need to be on the lookout for companies that are being obliterated before our eyes by worries about the cliff.

I want to give you a concrete example. Not that long ago, at the bottom in Spain this summer, Banco Santander (SAN) traded at $4.80. The company was perceived to be the biggest loser from the coming Spanish default.

That turned out to be an amazing trade, as the stock has now traveled to $7.70, and I think it goes higher.

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