Jim Cramer gets upset with reason Part 2 - 8.7.2007.2

Continued from Jim Cramer gets upset with reason Part 1...

It’s a real gloom outlook. Like dominoes falling the effects move from the financial sector to every other industry. Once it starts there is really nothing that can be done. This is why so many would tell Mr. Cramer they are afraid. This is why he would demand that the Fed ease rates. It’s not a recession they fear, it’s a depression. It wouldn’t be 1929, but a depression all the same. Economically it’s just part of the cycle, emotionally and in terms of real people it’s quite another.

Most average people are unfamiliar with the terms being discussed by most analysts. Many see Mr. Cramer flipping out and they don’t get it. Such are the markets.

It’s not worth pulling everything out of the market in a panic, to me. It is worth evaluating and planning your investments around. A good plan takes into account that these things may happen and provides shelter for the storm. Just as the markets rebounded from the 2000-1 drop, the up-coming drop will also be survivable. But don’t doubt it will hurt a lot.

Since 2003 the market has gone from around 8000 to 14000, a total of roughly 75% overall or about 19% per year. That is very strong growth. The 7% drop from 14,000 to 13,000 is not enough to balance the growth. I’d expect a drop to 11,000 before things settle out. And at the same time there will be far less credit available. Already that has gotten tougher as Mr. Cramer mentioned. It will get worse.

These are things I expect. I could be completely wrong, and that would be a great thing. How any one person should prepare for this potential problem is a conversation that I cannot have. I would suggest having the conversations with your professionals though, and re-evaluating the potential costs of a mortgage. Preparation is the key.

**Mr. Vass is no-longer a stockbroker, and is not providing any financial advice. The above is an expression of the thoughts of Mr. Vass and do not make or imply a solicitation. Investments of any nature are complicated and highly individualized; it is recommended that any financial advice be sought from licensed professionals. **