The stock market started strong in 2021 after strong gains last year despite the coronavirus pandemic. According to CNBC’s Jim Kramer, one of the reasons for the continued rise in shares is simply the lack of people willing to sell.
“There’s not enough supplies to go around,” Cramer said in the Squawk Box. “The stock market is not divorced. The stock market reflects the strength of individual companies. There are 500 companies in S&P. Probably 400 of them are doing better than we thought,”
On Thursday, the Dow Jones Industrial Average and S&P 500 closed for 31,000 and 3,800, respectively, for the first time. The Nasdaq also overshadowed 13,000 during the session, its first trip above that level. The Dow was flat on Friday, while the S&P 500 and tech Nasdaq rose early in trading.
Making sense of Wall Street’s moves amid a continuing pandemic, ongoing economic and Washington turmoil may seem challenging to some, Kramer acknowledged. “It’s a very strange, different time. There’s no game book at all at that time,” the Crazy Money presenter later told CNBC.
“People come and talk about value versus growth. We liked the value in the morning, and then the next day each individual growth stored much more than the value,” he said, referring to a common scenario. “Is there a model here? Yes. People want to have stocks and there are not enough stocks. There just isn’t – not yet.”
Some prominent investors have expressed concern about the massive rise in shares since late March, when the coronavirus-induced sell-off hit rock bottom; The S&P 500 has grown by about 70% since then. Carl Icahn sent a warning to Scott Wapner of CNBC stating that he had been hedged accordingly.
“I’ve seen a lot of wild rallies in my time with a lot of misjudged stocks, but they all have one thing in common. In the end, they hit a wall and go into a big painful correction. No one can predict when it will happen, but when this happened, look below, “the billionaire investment titan said on Monday.
The pandemic and its impact on the stock market have created a situation different from the years before the collapse of dot-com, Kramer said. Highly speculative internet stocks helped the Nasdaq rocket exceed 500% from 1995 until March 2000, when the bubble burst.
“It’s not 1998 [or] In 2000, “Cramer said of the current market rally during the pandemic.” If you open the economy, then you will have Disney flights. And since the economy remains closed, you have a whole bunch of stocks, the Amazons flying. Many things fly. “