Cramer’s top 10 worries for 2018
CNBC’s Jim Cramer knows that part of smart investing is learning from everyone.
So when Carlyle Group co-CEO David Rubenstein said that the only thing he’s worried about for the next two years is some sort of unexpected geopolitical event, it got Cramer thinking.
“The only thing we have to worry about, I think, in 2018 and 2019 is some unanticipated geopolitical event, the so-called black swan,” Rubenstein told CNBC’s Net/Net dinner in Washington, D.C. on Tuesday.
While Cramer doesn’t like the phrase “black swan” because he wants to be ready for anything and everything, he did compile a list of 10 concerns he has going into 2018.
“A black swan is a thing you don’t see coming, but we’ve got more than enough concerns that can be anticipated,” the “Mad Money” host said. “Let me tell you what weighs on me every day.”
With Congress on the cusp of passing the GOP’s tax reform bill, Cramer said that he’s “very concerned” about what happens with tax reform.
“We have almost no idea what it says,” he said. “But we know it’ll lower corporate taxes, and at the very least, that will spur more dividends, more buybacks, more infrastructure [and] more spend on growth.”
But if the bill doesn’t pass, Cramer said investors would sorely regret paying up for shares of domestic companies, which are currently in the Wall Street spotlight as the biggest benefactors of potential corporate tax reform.
“The domestic stocks now need this bill to pass or they’re going to sell off,” he said.
North Korea seems to grow more unstable by the day, and President Donald Trump power plays grow increasingly risky as the hermit kingdom develops its nuclear missile program.
“We also have the potential for a new blowup in the Middle East because President Trump just recognized Jerusalem as the capital of Israel,” Cramer said. “This market’s not ready for another ground war in the Middle East, and while I don’t think that will happen, it’s certainly on my radar screen.”
Cramer’s third worry lies with the ongoing investigation by special counsel Robert Mueller into the Trump administration’s ties to Russia.
“I often find the whole thing abstruse — I mean, aren’t you allowed to talk to Russia? — but having lived through the impeachment of Richard Nixon, I know the stock market’s in trouble if Mueller finds anything that leads to an indictment of the president,” Cramer said.
More and more strategists are concerned that the market’s getting too expensive, and Cramer’s concerned about them turning bearish and sending stocks into a beginning-of-the-year nosedive.
Fifth, Cramer’s worried about cryptocurrencies, particularly bitcoin.
“Somehow bitcoin, the most speculative thing out there, is regarded as an investment” rather than a gamble, Cramer said. “This is some non-stock-market-related froth that I think could spill into our world via futures and ETFs and whatever kind of device exchanges create to equitize bitcoin.”
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Even though the market can handle an interest rate hike by the Federal Reserve right now, it won’t be long before investors start dreading more rate hikes.
“When that happens, stocks do not fare well,” the “Mad Money” host said.
Antitrust laws are muddling the fate of the widely anticipated AT&T-Time Warner deal, and Cramer’s worried that that means the “golden age of takeovers” could be over.
“Now, some people think it’s just the White House trying to punish CNN, which belongs to Time Warner. I don’t care. All I’m saying is if they’re going to start enforcing the antitrust law this broadly, it’ll take away one of the key props to the bull,” he said.
8. Taxes… Again
Cramer thinks the market might be underestimating what will happen to major cities in states like New York, New Jersey and California if tax reform is passed.
“The loss of the state and local tax deduction is going to cause huge ripples throughout many important regions, especially when it comes to spending and housing,” Cramer said.
9. Health Care
Cramer’s ninth worry is the cost of health care for U.S. citizens.
“The average worker is poorer than we believe, and the health care system takes too much of their paycheck,” he said. “Not being political, I’m just saying that if Washington lets the insurers dictate how much we have to pay, you know it’s going to hurt all of us. It’s going to hurt the whole economy.”
10. Cyber attacks
Finally, Cramer is concerned about cyberterrorism, a major threat to the rapidly growing internet of things. Frankly, he said he couldn’t believe something major hadn’t happened already.
“I fear it will, and when it does, there will be major financial consequences,” he said.
“Here’s the bottom line: I gave you this list of my worries because I want you to be ready and to develop one yourself,” the “Mad Money” host said. “We don’t want any unexpected black swans. Now they’re not black swans — I just identified them! And the only way to prevent them is by hammering out all of your concerns so that you’re prepared, for your portfolio, for anything.”