Tags: Cramer | stocks | September | Fed

Jim Cramer: 7 Reasons Why Stocks Might Fall Soon

By    |   Thursday, 05 September 2013 11:03 AM EDT

Jim Cramer, host of CNBC's Mad Money, believes the stock market is going to plunge this month.

Cramer offered seven reasons why stocks might fall:

1. Syria. "We have no idea what's going to happen in Syria," Cramer said on his show. "Not knowing what will happen makes it really difficult to plan your portfolio management. ... We're looking like a hesitant superpower to the market, and hesitancy does not create confidence."

Editor’s Note:
5 Reasons Stocks Will Collapse . . .

2. A new Fed chairman. Not knowing who will be the new Federal Reserve chairman replacing Ben Bernanke also creates uncertainty. Most professional investors prefer Fed Vice Chairman Janet Yellen, but President Obama is not taking outside advice and seems enamored with Larry Summers, his former National Economic Council director.

3. A possible government shutdown. "Nobody, but nobody cares, about the stock market in Washington," Cramer noted. "Our government has no real ability to govern."

4. A weak housing market. Homes are no longer affordable, and if rates rise to 5 percent, housing will get "hammered."

5. Retail sales. "Retail has become totally treacherous. We have no idea how back-to-school's really going. Somehow I don't think we are going to hear good things."

6. Employment. Cramer expects strong employment figures on Friday. That would probably prompt more speculation about the Fed cutting its stimulus, which would push rates up and hurt stocks.

7. September. While he doesn't follow the "sell in May and go way" advice, he fears September. "I am actually fretting about the month of September. It's just a crummy month. I don't like the odds. The odds are bad."

So what should investors do?

"Now you don't need to panic," he said. Rather investors should be prepared and raise cash, because once the market falls, "I expect to see some terrific buying opportunities."

The Dow Jones industrial average has dropped 60 percent of the time in September since 1950, according to CNBC.

"September is usually not a good month for equities, so there are the seasonal issues. Given the volatility in the first half, net-net, September is not going to be great, but October, November and December should be good," said Binky Chadha, chief global strategist at Deutsche Bank told CNBC.

More investors are growing increasingly concerned about this September due to possible U.S. involvement in the Syrian civil war, the Fed shrinking its quantitative easing, and the recent rout in emerging markets.

"You kind of have this triangle of pain," Michael Hartnett, chief global equity strategist at Bank of America/Merrill Lynch, told CNBC. "Could one help to offset the other? There's no doubt that at the margin, Syria has the potential to reduce the tapering at the Fed."

Editor’s Note: 5 Reasons Stocks Will Collapse . . .

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InvestingAnalysis
Jim Cramer, host of CNBC's Mad Money, believes the stock market is going to plunge this month.
Cramer,stocks,September,Fed
464
2013-03-05
Thursday, 05 September 2013 11:03 AM
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