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Seeking insights, Cramer revisits the Flash Crash

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

Few events in the history of the stock market still evoke such deep feelings of frustration and disgust as the so-called Flash Crash of 2010.

As you likely remember, on May 6, 2010, an unprecedented drop sent the Dow Jones industrial average down almost 1,000 points in a handful of minutes, triggering as much as $1 trillion in losses. "That's right, the market fell apart, literally in minutes," said Jim Cramer.

The decline remains the biggest one-day point drop, on an intra-day basis, in Dow Jones industrial average history.

Michael Scavone works on the floor of the New York Stock Exchange on Thursday, May 6, 2010. The Dow Jones Industrial Average had its biggest intraday loss since the market crash of 1987.
Daniel Acker | Bloomberg | Getty Images
Michael Scavone works on the floor of the New York Stock Exchange on Thursday, May 6, 2010. The Dow Jones Industrial Average had its biggest intraday loss since the market crash of 1987.

Then, as you may also remember, the Dow recovered significantly, regaining more than 600 points of the loss by the close.

In the months and years following these events, different conclusions have been drawn about events. Time and again, they've been disputed by other theories. However, one common theme that emerges regularly is the role of high-frequency trading. Most experts agree that, if nothing more, HFT exacerbated the declines.

And high-frequency trading remains a significant force in the market.

The "Mad Money" host believes that as recently as April 2014, HFT caused unusual price action in Internet and 'service as a software' stocks.

Cramer says high-frequency trading needs additional oversight, if for no other reason than to protect individual investors.

"I sincerely believed then, and still believe now, that the machines are the enemy of all investors because they distort the markets and suck out liquidity," Cramer said. "The exchanges have put through some safeguards but the horse has left the barn." That is, Cramer believes the Flash Crash and other somewhat mysterious moves in the market have eroded the trust of individual investors.

"The government must actively level the playing field," Cramer said. Until then, he believes individual investors will remain skeptical.

But Cramer doesn't want investors to become so discouraged by high-frequency trading that they avoid stock investing all together.

He often says that would be the worst ripple of all.

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Read more from "Mad Money" with Jim Cramer
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Jim Cramer believes individuals can outperform their professional counterparts by building a strategic and diversified portfolio of five to 10 stocks.

Ultimately, he believes stock investing will lead to prosperity. But like Cramer so often says, you have to be in the game.

Call Cramer: 1-800-743-CNBC

Questions for Cramer? madmoney@cnbc.com

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

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