Cramer gets it—you don’t trust the market.
How can you, right? The most recent of crashes, in 2008, hurt much worse than the one that came before, in 2000, and it took down even those stocks outside the most affected sectors, i.e., the financials and techs, respectively.
And what about the “flash crash” in May 2010, where the Dow plummeted nearly 1,000 points in a matter of minutes because the exchanges computers broke down? Or the fact that, at times, it just seems like the whole investing game is rigged?
If you can’t even trust the fundamentals to hold up when they should, and now anything from system breakdowns to fat-cat institutional investors can damage your portfolio as well, then why even bother with the stock market at all?
“How about because, in spite of everything, when it comes to growing your wealth, the stock market isn’t just your best option, frankly, it’s the only game in town these days,” Cramer said. “And as long as you remember to stay diversified and stay disciplined, you can make a fortune in stocks. At the very least, stocks give you the chance to supplement your paycheck with another source of income. It’s a chance you are not going to find anywhere else.”
Bonds just won’t do it, though this asset class is one of the first places skittish investors flee to when the market turns down. Sure, bonds are virtually risk-free, but their upside is capped. Therefore, they won’t generate the kind of money you need to save for retirement, your kids’ college tuition or even that new car you need.
Besides, if you want yield, stocks have that market cornered, too. Names like Verizon and Con Ed often pay out more than 5 percent to 6 percent, where Treasurys offer much less than that.
And dividends are just one way to win in the stock market. Takeovers can definitely boost your gains, as can some of Cramer’s favorite high-growth names. Think Chipotle , Apple , Netflix , Deckers Outdoor or Salesforce.com . Then there are value plays, broken stocks whose underlying companies are still strong.
So even though you may hate the stock market, or feel “mistreated and abused by equities,” Cramer said, “you have to stay in the game, people. You can’t afford to spend the rest of your life on the sidelines.”
When this story published, Cramer’s charitable trust owned Apple.
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