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Cramer: The 'Are You Better Off' Question Doesn’t Apply to Stocks

Thursday, 6 Sep 2012 | 6:27 PM ET

“Are you better off than you were four years ago?”

Jim Cramer
Jim Cramer

Both Democrats and Republicans are asking that question a lot lately, as each party tries to secure votes for President Barack Obama or challenger Mitt Romney in this fall's presidential election.

(Related: Are You Better Off? Here Are the Numbers)

Are Companies Better Off than Before Obama?
The S&P 500 rose 2.04 percent today, and Mad Money host Jim Cramer explains the vast difference between politics and profits from stocks.

With Obama set to deliver his argument for re-election in a high-stakes closing act at the Democratic National Convention that will spell out his approach to revitalizing the stumbling U.S. economy, Jim Cramer took the opportunity to remind his “Mad Money” viewers that “this business of stocks isn’t politics.

“You should not be voting on stocks based on whether you are personally better off,” Cramer said. “You should be investing in stocks because the businesses behind them might be better off and using that prism, stocks not only have a right to have gotten this high, they actually have the ability to go even higher over time.”

In Cramer’s opinion, politics and investing are “worlds apart.” After all, high unemployment might hurt an individual’s livelihood, but a leaner workforce might help a company’s bottom line, he explained. An employee might benefit from a higher wage, but companies can improve gross margins by hiring cheap labor, he continued.

“We invest in companies because they are doing better, even if you are not,” Cramer said.

(Read More: Is Twitter Skewed Toward President Obama?)

—Reuters contributed to this report

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