Cramer: 5 reasons why investors shun stocks

Cramer's take on market naysayers
Cramer's take on market naysayers   

According to data recently released from the Fed, far fewer Americans own stocks these daysthan before the financial crisis. Jim Cramer think he knows why.

"First there's the endless and fruitless debate over when the Fed must raise interest rates," Cramer said.

And although the "Mad Money" host concedes the Fed will ultimately raise rates, to stay away from the market for this reason is, at best, misguided. Higher rates are a sign of economic improvement, and over the long-term a strong economy is very good for stocks.



Jim Cramer Mad Money
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"The second thing that's driven people away from stocks? The rigged feeling of the market," Cramer noted.

This issue is an issue that frustrates Cramer, no end. Oftentimes he's called for the SEC or other leaders to implement necessary oversight to make the playing field level. However, since 2009, the S&P has almost doubled; staying out of the market for this reason has come with a cost.

"The third reason people are skeptical? We keep hearing the bull's so old that it's on its last legs," Cramer added.

And although this bull market is older than the average bull, it occurred after the worst downturn since the Great Depression. In turn, companies were forced to get lean and mean. Looking at the fundamentals, Cramer says there's no reason for that to change. "We have some of the strongest profit cycles I've ever seen: autos, aerospace, oil and gas, even the airlines for heaven's sake." Again, Cramer says it's not a good reason to stay on the sidelines.

"Fourth, the big declines of the era, the 2000 tech crash and the great crash of 2008 to 2009, have made many bulls nervous about getting too positive in public, so they hedge their enthusiasm," Cramer said.

However, bears aren't subject to the same degree of criticism. Therefore, Cramer believes some individuals are avoiding stocks, simply because they're encountering far more negative commentary than positive commentary.

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"Fifth, and finally, is the sheer lack of pure homework about individual stocks," Cramer said.

In other words, if investors did careful research, Cramer thinks they'd find a large number of companies are reporting steadily rising profits, as well as increasing buybacks, and paying bigger and bigger dividends." And he says all of those reasons are reasons to buy, not sell.

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