- "Mad Money" host Jim Cramer wonders if the individual investor is returning to the market.
- Average investors coming back into the market can only wreak havoc when they stop doing their homework, Cramer says.
- Cramer uses anecdotal evidence from conversations with fans to review this growing trend.
Despite various investing outlets inciting fear in the stock market about "single-stock risk," Jim Cramer has seen average investors coming out of the woodwork to buy strong individual stocks.
"I know there are tons of statistics showing an almost inexorable decline in interest in the stock market as a whole," the "Mad Money" host said. "But there's something afoot right now, right now after nine straight sessions where the Nasdaq has rallied a total of 4.7 percent."
Lately, more people have been approaching Cramer not just for photos, but for conversations about his view on the market and on specific stocks he has recommended.
For example, a high-profile former executive told Cramer at a lunch that one of his kids once talked him into buying shares of Amazon, so he bought $100,000 worth. When he checked his position the other day, it was worth $8 million.
"Pretty good for listening to your kids," he told Cramer.
"I'd say so," the "Mad Money" host replied. "I'd also say Amazon was one of the most gettable gains in the history of the stock market given its endless dominance and the wonders of Amazon Prime that so many of you partake in. You know what? It's still not too late to buy."
Cramer has also experienced this several times with the stock of Nvidia, which traded at $54 a share this time last year and is now at $165.
Given the market's enthusiasm about the chipmaker's stock, Cramer even renamed his dog Everest to Nvidia, a move he said he made to draw attention to the stock.
"Since the re-christening, I've had not one, not two, but three patrons at Bar San Miguel, my Mexican place in Brooklyn, tell me they bought Nvidia after they heard me rename that mongrel for the red-hot semiconductor stock," Cramer said.
In each case, Cramer asked if the individual investors had done their homework and researched the stock, and in each case they had, rattling off the semiconductor maker's importance to artificial intelligence, data centers, video games or self-driving cars.
"They knew the story, not just the dog. One day, maybe they'll just know the dog and it'll be time to skedaddle," Cramer said. "But when you can go toe-to-toe with random drinkers at a local tavern about a stock that you adore, that's a really good sign."
He also ran into a dad who smartly invested in some video game stocks because his child opened his eyes to the enormity of eSports and the stay-at-home economy.
"This whole theory of mine has less to do with these particular stocks than with the fact that people are beginning to wake up to the idea that owning the stocks of companies they love after doing some homework — not just index funds, but in addition to them — can turn out to be very lucrative," Cramer said.
If that is the case despite the seemingly non-stop rally and the Trump administration's inability to push policies through Congress, then Cramer thinks this market could still get a serious boost.
"Until I bump into someone who's bought the stock of Nvidia because my dog comes running when I shout it, and not because the investor knows what it does, I'm tempted to say, 'Let 'er ride,'" the "Mad Money" host said. "Why not? ... Say you put $10,000 in Amazon back in the day, not $100,000. You'd still have $800,000. OK, not $8 million, but as we used to say on the trading desk, better than a sharp stick in the eye, and certainly a good argument for trying to find the next Amazon."
Disclosure: Cramer's charitable trust owns shares in Facebook and Apple.