After a day of default for stocks at Wednesday’s meeting, CNBC’s Jim Cramer said the market is giving investors the opportunity to buy individual stocks after Wall Street breaks away from “index funds tyranny.”
“There was a tendency to own individual stocks, led by younger, often inexperienced, investors fascinated by a world of commission-free trading.”Bad money“Host said.” It took me a while to realize, but the non-commissions – it was revolutionary. “
The comments came after the shares hit the for the second straight day Dow and S&P 500 Withdrawing from record highs as state and local governments put new restrictions in place to mitigate the second wave of coronavirus, and researchers continued to release optimistic results from late-stage vaccination trials.
The Dow fell nearly 345 points, or 1.2%, to 29,438.42. The S&P 500 also fell 1.2% to 3,567.79 during the Nasdaq Composite lost 0.8% to close at 11,801.60. All indexes closed near their session lows.
“Today we saw the power of positive thinking,” said Cramer. “When the market goes down like that … there is only one thought that crosses investors’ minds: Well, now I have the chance to buy.”
Cramer took a moment to greet buying individual stocks via the common practice of buying index funds, and attributed the revived interest in stock picking to the invention of commission-free trading that doesn’t hurt a portfolio’s profits. The increased activity in stock buying limits the impact of S&P futures and returns on a company’s fundamentals, he said.
“It’s a return to the old days when the execution of management was really important,” said Cramer. “We see individual stocks moving every day because the underlying businesses are thriving.”
He noted the continued gains in stocks like Zoom videowho was a darling of a remote economy sustained by a culture of social distancing amid the pandemic. Tesla, Lordstown Motors and Fisker are the most popular tips among investors looking to get exposure to electric vehicles ford and General Motors are traded in a booming auto market, he said.
The travel games, especially cruise lines and airlines, have been the main drivers in the vaccine’s progress, Cramer said. He highlighted Qualcomm as a 5G game and pointed to target and Costco for retail investment.
“Now that we have defeated the tyranny of index funds, the market is no longer marching in lockstep like it used to,” he said.
“As long as interest rates stay extremely low and individuals are no longer brainwashed into believing they are too stupid to pick stocks, you will have more days like today with different groups moving in opposite directions,” said he.