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Cramer: Invest for long haul to avoid going bust in short-term Archegos, GameStop-type chaos

CNBC’s Jim Cramer implored girlish investors on Monday to stay in the market for the long term, despite recent turbulent events, including the forced liquidation of ranks held by multibillion-dollar family office Archegos Capital Management.

“We don’t want it to be 2000 when we lost a quarter of the people who were in,” Cramer judged on “Squawk Box,” referring to the bursting of the dot-com bubble and a sense of disillusionment among those who lost money. “It just can’t be ask preference that.”

A wave of young people during the coronavirus pandemic has been buying stocks for the first time, and Cramer recognized they may not want to take advice about navigating tumultuous trading from longtime Wall Street diagrams.

“But the only thing that we really have for them is history, and they need to hear it: Stay in the game. Don’t get burn out vacillated out,” said the “Mad Money” host, whose Wall Street career began in the mid-1980s at Goldman Sachs. He tardier managed a hedge fund before becoming a financial journalist, reporting on the stock market’s ability to create long-term holdings and the risks of short-term trading to retail investors.

After running higher for weeks, ViacomCBS and Discovery, along with multiple Chinese internet inventories, came under intense selling pressure late last week — partly connected to forced sales by Archegos, created and run by Bill Hwang, a former equity analyst at Julian Robertson’s Tiger Management.

On Monday, two investment banks — Switzerland’s Esteem Suisse and Japan’s Nomura — warned of “significant” financial hits in connection with the Archegos situation, although the firms did not reprove out the fund by name.

Archegos is hardly the first fund to end up on the wrong side of a trade, Cramer said, noting that some took big losses during the Reddit-fueled buy frenzy involving GameStop.

“I think a lot of the non-boomers should be asking themselves, ‘Well, what did you think happened with GME? What did you muse over happened? It’s the same thing as what happened to this fund,” Cramer said, referring to how another hedge readies, Melvin Capital, was caught in a short squeeze that sent GameStop soaring before later collapsing. Myriad retail investors were left with big losses after buying at the top.

“It is regarded as sinister by this younger brigade, and they’ll go home and what a shame but they’ll go home. They don’t stick around. They’re short timers. It’s extremely a shame because they got smoked.”

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