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Jim Cramer on What Investors Should Do if the Markets Close

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2:41

Let's talk about the possibility of a market shutdown. 

Jim Cramer explored it in his Real Money column on Sunday night

"I want to explore a concept that I have been loath to consider because I think it is always vital to keep the markets open," wrote Cramer. "Consider this, though. Our markets used to be the place where companies, both new and used, so to speak, can raise capital. It's been since the Great Recession that we have seen many underwritings of already public companies although we have seen insider selling secondaries from time to time."

Video Transcript:

Katherine Ross:
Let's play this hiatus out. Let's say that the markets do go on a vacation for two weeks or whatever. What should investors do if the market's close?

Jim Cramer:
Okay. I think that what we have to do, you have to divide the entire S&P, and you can go do utilities too, and say all right, what's essential and what's not essential? If it's essential, it might be a buy. If it's not essential, it might not. When you want to screen the essential, what you have to say is, do they give you an accidentally high yield, and if so, can they pay that dividend? That is the list of stocks that you're going to want to buy when we're down through the level that we were at in December of 2018, which is my operative level of where we have to go for the S&P. When you look at that, you realize we are still not there, and because we're still not there, and I'm just getting my levels, because we're still not there, I think we're too bullish, because I think we're going to have a recession.

Jim Cramer:
Now, the Secretary told me, "Listen, the term recession is really not anything that you want to lay down." It's not exact. It's kind of an abstraction, because it may, if we get some sort of, any sort of vaccine, any sort of something that gets us out, if I borrow, then the recession is over and there's going to be tremendous pent up demand. Why call it a recession? I was searching for a word like interregnum. There's an interregnum where the economy really plummets, and then if we've got something, or if we have a similar to 1918 decline, you're going to say, "Why did Cramer keep me out of the S&P?" It's always going to be me. Why did Cramer keep me out of this? Why did Cramer keep me out of that? But I would say that we're almost there, we take out that level, and then we start looking.

Jim Cramer:
Katherine, there's a pernicious nature to what's happened in the common stock market. That is that we have come to believe that individual stocks are too risky and that the index is too risky, the index, not the individual stocks, but the index, because the index is put together when we have okay times. It's not put together for something like now.

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