GO
Loading...

Do you fear stocks in bubble?

(Click for video linked to a searchable transcript of this Mad Money segment)

As Jim Cramer signs copies of his new book "Get Rich Carefully," he meets investors from all different walks of life. And though their investment questions vary widely, Cramer has noticed a few common threads.

Individual investors want to know about Apple, that's no surprise, but lately Cramer has noticed another theme. "People say to me 'It's a bubble isn't it, Jim?'"

In fact, Cramer has found that individual investors have almost made up their minds. They're just looking for confirmation. "They say it to me as if they are simply laying it on the line, informing me of the truth. They do it with an all-knowing voice and a wizened grin."

The trouble is, Cramer doesn't think those investors are right.

Although the "Mad Money" host concedes that some stocks are frothy and some segments of the market may be overbought, largely he doesn't think the stock market is in a bubble.

He says if you dig down, there's plenty of evidence to support the outlook.

Pat LaCroix | Stone | Getty Images

For example, "Leaders in the S&P 500 this past quarter were consumer staples stocks like Tyson Foods and energy stocks such Nabors. How can anyone pronounce that we are in a bubble when stocks such as these are leading the market? (That is, these leaders are not the objects of irrational exuberance.)

Also, Cramer says valuations of stocks that are widely considered bubble stocks aren't, in fact, terribly extended.

"Look at Celgene and Gilead," Cramer added. "They're two alleged bubble stocks, yet they sell at ten times 2016 earnings. That's cheaper than Merck and Pfizer. How does that constitute a bubble?"

Even the price action in high fliers doesn't seem exuberant.

"Tesla, Amazon and Netflix are all well off their highs, declining 50 points, 70 points, and 100 points respectively. If anything those sound like popped bubbles to me."

---------------------------------------------------
Read MoreMad Money with Jim Cramer
Up 300% in a year, Cramer says sell
Why are sellers hitting good stocks?
3 themes losing market muscle?
---------------------------------------------------

All told, Cramer believes fears of a bubble are not warranted. If anything he thinks there's significant value in the market. When Cramer crunched the numbers, he founds stocks such as Caterpillar, Johnson & Johnson and IBM appeared to be relatively inexpensive.

If you're worried about a bubble, really do some intensive homework. If anything, I think you'll find "Some stocks are very cheap," Cramer said.

Call Cramer: 1-800-743-CNBC

Questions for Cramer? madmoney@cnbc.com

Questions, comments, suggestions for the "Mad Money" website? madcap@cnbc.com

Contact Mad Money

  • Showtimes

    U.S.
    Monday - Friday 6p ET
    Australia
    Saturday 8a, 1p, 7p SYD
    Sunday 12a, 1a, 8a, 7p SYD
    New Zealand
    Saturday 10a, 3p, 9p NZ
    Sunday 2a, 3a, 10a, 9p NZ
  • Jim Cramer is host of CNBC's "Mad Money" and co-anchor of the 9 a.m. ET hour of CNBC's "Squawk on the Street."

Mad Money Features

  • Grab the latest CNBC gear from the NBCUniversal Store!

  • Get a behind-the-scenes look at how Cramer formulates his investment advice. "Inside the Madness" is a column, which features e-mails and more with Cramer and his researcher Nicole Urken.

  • You’ve always wanted to hit the “Hallelujah!” button. Here’s your chance.

Mad Money Moments

Cramer's New Book