Mad Money w/ Jim Cramer Mad Money w/ Jim Cramer 12/27/24
Dec 28, 2024
Explore the chaos of market crashes and the pivotal lessons from historic sell-offs, including Black Monday and the 2008 financial crisis. Discover how panic impacted the May 2010 flash crash, revealing market vulnerabilities beyond economic fundamentals. Learn about the role of the Federal Reserve in pullbacks and how margin calls can exacerbate downturns. Gain valuable investment strategies to navigate volatility and identify undervalued stocks, empowering both new and experienced investors to thrive in challenging environments.
AI Snips
Chapters
Transcript
Episode notes
Black Monday Experience
- Jim Cramer recounts Black Monday (1987), where the Dow fell 22% in one day.
- He was trading then and remembers the panic, though a two-day rally followed after intervention from Fed Chairman Greenspan.
Futures Market Impact
- Black Monday, the 2010 flash crash, and a similar 2015 event stemmed from S&P 500 futures in Chicago overwhelming Wall Street.
- This dynamic wasn't understood in 1987, as futures markets were relatively new and their power underestimated.
Portfolio Insurance Failure
- Jim Cramer left Goldman Sachs due to high returns to start his hedge fund before the 1987 crash.
- So-called "portfolio insurance" using futures was offered to lock in gains, but it failed, exacerbating losses.