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Cramer: A dangerous market for hedge funds is an innovative one for you

If Jim Cramer got $100 every time someone called the world's markets as "dangerous" at the Delivering Alpha conference, he would be a very rich man.

Delivering Alpha is the conference presented by CNBC and Institutional Investor.

Cramer noted that many discussions among large hedge fund managers at the conference focused on the role of central banks in propping up stocks, or how the Federal Reserve has distorted the economy by creating artificial opportunities that could get taken away one day.

"In other words, the Fed is set up for failure with its easy money policies. However, I am of a very different mindset," the "Mad Money" host said.





David Faber and Jim Cramer host a panel at Delivering Alpha in New York on Sept. 13, 2016.
David A. Grogan | CNBC
David Faber and Jim Cramer host a panel at Delivering Alpha in New York on Sept. 13, 2016.
"When you hear how stocks are dangerously inflated, I want you to think of diligence and innovation"

More importantly, hedge fund managers could not see that the market is made up of individual stocks, not a market of markets. That told Cramer that they are either hopelessly removed from the stock pricing process, or just don't care what companies are doing to improve their situations.

"Every day I interview CEOs, every day. I know some periodically admit that their stocks are benefiting from the Fed's moves — or lack thereof — but their own moves are far more important," Cramer said.

For instance, Cramer interviewed Boston Scientific CEO Mike Mahoney on "Mad Money" on Tuesday. Ten years ago, Boston Scientific paid $27 billion for Guidant in a bid that almost destroyed the company.

Since then, Boston Scientific has struggled back, and now the company is beating its own projections to grow much faster than the 3 to 6 percent numbers forecasted one year ago.

Monetary policy had nothing to do with Boston Scientific's growth, Cramer said. The strength came from invention, ingenuity and competitive spirit combined with leadership and financial management.

But here's the problem: Boston Scientific is only a $31 billion company. That might seem large to some, but it's too small for most of the hedge fund managers at Delivering Alpha.

Hedge fund managers default to a macro perspective of whole markets. Thus, some of the fund managers would have to own all of Boston Scientific, and even then it might not be a big enough position.

It matters to investors trying to manage their portfolios at home, though. Some investors who pick stocks would love to own one like Boston Scientific that is up 25 percent this year.

"So, when you hear how stocks are dangerously inflated, I want you to think of diligence and innovation. Those aren't manipulated. Those aren't supported by the European Central Bank or the Fed or any other government," Cramer said.

Companies are supported by themselves. Boston Scientific trades at $23 because it deserves to be there from what the company has done to save itself, Cramer said. It might not matter to the big dogs, but it does to everyday investors.

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