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Jim Cramer: Sell Your Stocks

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While watching the Today Show this morning I was very surprised by Jim Cramer's words. He said it is time to get out of the stock market (note: huge caveat follows). Economists almost always say to stay the course and not to panic. Plus we know that when the market is down, you can buy more shares and actually do better than when times were good.

To get back to Cramer for a second, he actually said to get out of stocks if you plan to use the money sometime over the next five years. That's actually fairly standard advice anyway. Then again, I've always thumbed my nose at that expecting that diversification can save me. (Here's yet another good time to reflect on why I'm an idiot... okay, done? Let's move on.)

Cramer went on to say that he's been thinking about it all weekend and said that he really didn't want to tell people to sell their stocks on television. It's one thing if he says it on CNBC, but he's saying it in front of a national audience. The way he said it made it sound like one should panic.

What does this mean for my mother who will be retiring in the next five years? It doesn't really change too much. She should continue to have some funds in conservative investments - things that aren't stocks. This is what almost all financial planners recommend, so it shouldn't surprise you. The one thing that's worth noting is that even at retirement age, she should realize that she's likely (I hope at least) to live for many more years. Thus she should still continue to own stocks for the money that she'll need then.

Perhaps Cramer's "dramatic statement" (Ann Curry's words), really don't mean a whole lot.

Posted on October 6, 2008.

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17 Responses to “Jim Cramer: Sell Your Stocks”

  1. Rob says:

    Wow. Simply wow. Nearly all stocks have taken a tremendous beating over the last year… and this “expert” says it’s time to get out. I’m almost speechless.

    Troubled times are ahead, to be sure, but to issue a blanket statement like that is dangerous. Buying high and selling low is a mistake people make time and time again….. and it sure doesn’t make you rich.

    Unless you just lost your job and are in dire need of cash right now today, tough it out. JMHO.

  2. Lazy Man says:

    In his defense he said that if you need the money in less than five years it’s wise to get out. It’s not like he’s saying sell everything – just have 5 years of money available to you. I think it’s quite prudent – but of course people should have probably been doing this all along. If you did, then there’s no need to sell anything today.

  3. Well, hot damn (as my grandma used to say.) That’s as good of a bottom call as any. Has there been a fund yet that does the opposite of what Cramer says? Because I’d invest in that.

    -Erica

  4. Frank says:

    Jim is a genius. I’ll bet he had a large short position before declaring to the world that everyone should SELL! SELL! SELL!

    The public markets are rife with corruption, unless you are an insider, put your money elsewhere.

  5. DannaTX says:

    I was watching this morning and my mouth about hit the floor. I was stunned!

  6. Yeah wasn’t this the same guy who proclaimed Google hitting 700 earlier this year? Cramer is good showman and he makes a few good suggestions once in a while, but he’s too much of a momentum investor (my opinion) and that style of investing is dangerous unless you’re an active trader.

    I’ve been short the market for a while and plan to stay that way.

  7. Cramer also said to buy Lehman Bros.

    I would think that money needed in 5 years should be mostly high interest savings account even in the good times. 5 year equity returns are all over the map.

  8. I have to agree with Frank. If you find a place to put money somewhere else but stock market, DO IT.

    Investing in businesses could work better, if you know what you doing.(study first) You can even invest your IRA money in businesses. I am still learning. Will post here when I figure it out. I really don’t like public markets and CD and savings account returns is a laugh!

  9. I think everyone is missing Lazy’s point. Jim Cramer didn’t say anything that any responsible stock adviser (or any reasonably intelligent, informed person) would say. That his comment is causing such an uproar is what’s mind boggling. It’s like if Buffett said “Spend less than you make” and it made headlines. It makes no sense.

  10. Sorry, that should read “wouldn’t say” on the second line.

  11. Chad @ Sentient Money says:

    We are getting close to a bottom. You can almost smell the panic. Cramer started it on Monday and tomorrow (Friday) should see a decent sell off.

    I have friends asking me if they should pull their money out. It’s too late. Pulling it out after this big drop is just foolish. It’s the classic “buy at the top, sell at the bottom.”

    This market might be the best buying opportunity in the next 10 years.

  12. Tim says:

    Cramer isn’t a financial guru, he’s very clever at convincing others that he is. he’s been saying, oh don’t panic, yada yada. he’s been screaming why hasn’t the fed, sec, and treasury not listening to me, even though many of his proposals are absolutely ludicrous. he’s a finance shock jock and nothing more. if you are going to take investment advice from a 30 second blip on the cramer show, then you should pull your money out, because you haven’t done the due diligence yourself. i will give cramer credit that he does mention sometimes when he gets things wrong, which seems like a lot lately.

  13. That’s a pretty standard piece of advice for people actually. I wonder why people talk bad stuff about Cramer, when they obviously haven’t stopped for a second what he meant with his words. But of course the investing public always wants to be told what to buy and what to sell ( always for a huge profit) without doing any thinking on its own..

  14. Chad @ Sentient Money says:

    It is standard advice, that’s why it’s bad. Cramer should know better. The decision he is advocating needs to be made before you ever make your first investment with the money. If you need it soon, it shouldn’t go in the market in the first place, or you are just gambling. You don’t wait until the market goes down, and then decide you need it. Just dumb. Kind of like his bottom call this summer…missed it by a mile. This is why people talk poorly about Cramer.

    It’s also impossible to come up with 3-5, or 20-30 counting the lightening round, new great stock picks every day. Which is what his show schedule requires. It’s a recipe for failure.

  15. Cramer isn’t as bad as his TV persona is, actually. If you read his book and a little about his history, you’ll see that. Maybe calling him a little hypocritical/sneaky is spot on, but he’s no idiot.

  16. Stu says:

    So glad I sold my stocks in 2008. I bought 10 year CDs that pay 3.5%.

  17. Lazy Man says:

    Yeah, I would be happier if I stayed in the stock market.

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