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Cramer: The Insanity of Buying Bonds Right Now

Here’s a telling fact: In 2009, between January and November, $30 billion flowed out of US stocks, while $349 billion flowed into bonds, even despite the Dow roaring to over 10,000 from its low of 6,500 in early March.

“That’s nuts,” Cramer said Monday.

People may think that bonds are the prudent buy right now, Cramer continued, but they are in fact “reckless.” With interest rates at extremely low levels, these investment vehicles return far less than some decent, high-yielding dividend stocks. The latter also enjoys better tax treatment and offers the potential for upside. Consolidated Edison , AT&T , Kinder Morgan Energy Partners and the PowerShares Financial Preferred Portfolio , a basket of some banks’ preferred stocks, all yield more than Treasurys right now.

“If you’re looking for income,” Cramer said, “you want these names, not bonds.”

The Mad Money host also took issue with so-called passive investing. Investors seem to think that simply dumping money in an index fund will generate enough money for retirement. But keep in mind that the S&P 500, a benchmark index, is down 24% over the past decade.

A diversified portfolio of five to 10 stocks – some foreign, some high growth, some recovery names, an energy name, a tech company – could have performed much better than the S&P, Cramer said. And it’s within each retail investor’s power to manage that portfolio his or herself. Teaching you how to do this is Mad Money’s mission statement.

Don’t think you can trust Cramer? Leaving the obvious aside – namely that he told you to get out at the September 2008 high of Dow 11,000 and then screamed buy at the March 2009 low – consider today’s action in recovery stocks like Caterpillar , BHP Billiton , Nucor and others. Their move higher seems to confirm what Cramer predicted in his latest book, Getting Back to Even, that the US economy would recover in 2010 and investors don’t want to be sitting on the sidelines when it happens.

So don’t. Follow Mad Money’s lead and keep tuning in to learn how to generate your own wealth. Especially this week, as Cramer will be highlighting the biggest investing themes of the coming year. And don’t believe the naysayers – you can beat the market, as long as you’re willing to put the work in.

“It’s time for you to take control of your money,” Cramer said. “It’s time for you to take control of your financial future,” Cramer said.

Call Cramer: 1-800-743-CNBC

Questions for Cramer? madmoney@cnbc.com

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