Prominent market commentator Jim Cramer reportedly warned investors on Wednesday that politicians are going to cost them money as the debt ceiling stand-off continues without any resolution in sight.
“Get ready for our politicians to lose you some more money,” Cramer said while pointing towards the earlier stand-off surrounding the debt limit in 2011. “They hurt you then. They aren’t done hurting you now. But unless you trade full time it’s very hard to get out and get back in early enough for it to make a difference, which means most of us need to take the pain,” he stated according to a CNBC report.
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The market expert pointed out that even though the United States ultimately got a deal in 2011 and averted the worst-case scenario, the impasse was enough to make Standard & Poor’s downgrade the government’s credit rating.
Cramer’s comments come at a time when Fitch ratings has placed the ‘AAA’ Long-Term Foreign-Currency Issuer Default Rating of the United States on Rating Watch Negative. The ratings agency said its action reflects increased political partisanship that is hindering reaching a resolution to raise or suspend the debt limit despite the fast-approaching X date – the day when the government is expected to run out of options to fund itself.
The expert also weighed-in the merits of selling stocks before a potential market decline but worried that many investors may not be able to buy them back fast enough for realizing any potential gains.
“I would hate to advise you to sell and then buy back later, though, because we don’t know if you’ll be able to get back in before the all-clear,” Cramer said according to the report. “That said, if you think our leaders are serious about making a deal, then it might be worth trying to sidestep the coming decline — and if we’re following the 2011 script, there’d be about a 12% decline from here until the bottom,” he noted.
Wall Street, too, has begun showing signs of souring investor sentiment. The SPDR S&P 500 ETF Trust SPY closed 0.72% lower on Wednesday while the Invesco QQQ Trust Series 1 QQQ shed 0.51%, according to Benzinga Pro.
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