Cramer: There's a change happening with investors, and Warren Buffett has something to do with it

Key Points
  • Investors are listening to Warren Buffett on index funds, Jim Cramer says.
  • "People don't pick a lot of individual stocks," Cramer says.
Stealth rally driving stocks to record levels

There's a fundamental change happening with investors: They're putting everything into index funds, CNBC's Jim Cramer said Tuesday.

"People don't pick a lot of individual stocks. People have kind of listened to Warren Buffett more than they listened to anybody else," Cramer said on "Squawk on the Street."

At the Berkshire Hathaway annual shareholder meeting on Saturday, Buffett told investors they should stick to using index funds, saying they are better off. Buffett offered a negative view of actively managed funds, citing high fees and bad results for investors.

"And Warren Buffett says just keep contributing to your 401(k), just keep buying the index fund. I'm not saying that that is a complacent thing. I'm saying that's become kind of the way people save," Cramer said.

Cramer made his comments on the day the CBOE volatility index (VIX), widely considered the best gauge of fear in the market, hit its lowest since December 2006.

An index fund is a type of mutual fund with a portfolio constructed to track the components of a market index.

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