- "There's been a move to own individual stocks led by younger, often novice investors who've been captivated by a world of commission-free trading," CNBC's Jim Cramer said.
- "Today we saw the power of positive thinking," the "Mad Money" host said.
- "Now that we've beaten what I call the tyranny of the index funds, the market no longer marches in lockstep as it used to," he said.
After a down day for stocks in Wednesday's session, CNBC's Jim Cramer said the market is giving investors a chance to buy individual stocks now that Wall Street has broken away from the "tyranny of the index funds."
"There's been a move to own individual stocks led by younger, often novice investors who've been captivated by a world of commission-free trading," the "Mad Money" host said. "It took me a little while to realize it, but the no-commissions — it's been revolutionary."
The comments came after stocks traded lower for the second day in a row, with the Dow and S&P 500 pulling back from record levels as state and local governments put new restrictions in place to mitigate the second wave of the coronavirus and researchers continued to post optimistic results from late-stage vaccine trials.
The Dow declined almost 345 points, or 1.2%, to 29,438.42. The S&P 500 also declined 1.2% to 3,567.79, while the Nasdaq Composite lost 0.8% to close at 11,801.60. All indexes finished near their session lows.
"Today we saw the power of positive thinking," Cramer said. "When the market goes down like this ... there's only one thought that's running through investors' minds: Good, now I get a chance to buy."
Cramer took a moment to hail individual stock buying over the popular practice of buying index funds, attributing the revived interest in stock picking to the invention of commission-free trading, which won't eat into a portfolio's gains. The increased activity in stock buying limits the influence of the S&P futures and returns focus to a corporation's fundamentals, he said.
"It's a return to the old days when management's execution really mattered," Cramer said. "Every day, we see individual stocks on the move because the underlying businesses are thriving."
He pointed to the ongoing gains being made in stocks such as Zoom Video, which has been a darling of a remote economy bolstered by a culture of social distancing amid the pandemic. Tesla, Lordstown Motors and Fisker are the popular picks among investors seeking exposure to electric vehicles, while Ford and General Motors are being traded on a booming auto market, he said.
The travel plays, particularly cruise lines and airlines, have been the go-to picks on vaccine progress, Cramer said. He highlighted Qualcomm as a 5G play and pointed to Target and Costco for retail investments.
"Now that we've beaten what I call the tyranny of the index funds, the market no longer marches in lockstep as it used to," he said.
"As long as interest rates stay extremely low and individuals don't get brainwashed anymore into believing they're too dumb to pick stocks, you're going to get more days like today where disparate groups move in opposite directions," he said.