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Individual Stocks Matter Again

Just a week and a half into a new year of trading, Cramer has noticed something especially exciting for stock pickers in 2012: Individual stocks matter again.

“Stocks are no longer trading in lockstep as though they’re merely some basket of commodities like bushels of corn or pounds of copper or barrels of oil, which is what we saw endlessly last year,” the “Mad Money” host said. “That kind of lockstep action makes a mockery out of the very notion of stock picking, so I’m glad to see the end of it.”

Cramer has noticed two changes in particular as to how the market operates. First, if a company delivers, its stock immediately shoots well ahead of its cohort. If the company fails to perform, its stock plummets. Second, if a company’s stock got hammered last year, it is roaring back this year regardless of whether it should be rallying.

To Cramer, the first change makes sense, but the second is a little concerning. He doesn’t think the “worst to first” phenomenon is sustainable.

The banks, for example, performed terribly last year only to see some pick up yet this year. But Cramer would be skeptical of buying the worst performers and avoiding the top dogs. Instead, he would look for companies with earnings and the power to increase their dividends. That’s why he’s backed U.S. Bancorp and Wells Fargo , but not Bank of America or Citigroup .

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