Jim Cramer on the Retail Trading Revolution

Jim Cramer (0:02)

Bloomberg Audio Studios, podcasts, radio, news.

Joe Weisenthal (0:18)

Hello, and welcome to another episode of the Odd Lots Podcast. I'm Joe Weisenthal.

Tracy Alloway (0:24)

And I'm Tracy Alloway.

Joe Weisenthal (0:25)

Tracy, something I think about the market these days is that in the media, there is this incredible drumbeat of experts and ads that support the media, et cetera. All these experts that they say, don't try to beat the market.

Tracy Alloway (0:39)

That's right.

Joe Weisenthal (0:39)

Index, index, index. And actually, indexing is great, because it's cheap and indexes have performed incredible returns. And now, though, for the last several years, it's like the public is becoming unshackled and doing the exact opposite of everything. And we see the most extreme form of day trading and trading on Robinhood, individual names, zero-day options. Meme stocks, options. It's like the public has revolted against this message that it's been inundated with for years.

Tracy Alloway (1:07)

Well, you know what I think is really interesting is not only is retail sort of going out on its own, but Wall Street and the institutional investors are kind of copying what retail does, right? Because retail was the first into something like zero-day or one-day options, and then it became institutionalized. And you saw that big professional volume follow on. So it feels like retail is a really important part of the market now. And rather than retail trying to do what the experts do, it's kind of the experts trying to catch up with retail.

Joe Weisenthal (1:37)

Understand what retail is doing. And again, I love an index fund, and I don't like having to think about...

Tracy Alloway (1:42)

You're an EMH guy. I'm just going to remind you.

Joe Weisenthal (1:44)

I'm like an EMH guy. Yeah, I love it. But I do feel like there's this huge tension, and it only feels like it's accelerating, because now there's more and more things to bet on, and there's crypto. And pretty soon on your Robinhood app, you're going to be able to bet on a prediction market on what the Fed is going to do. So we live in this world of trading against what all of the ninnies, like myself sometimes, on CBC.

Tracy Alloway (2:06)

Close the four pros.

Joe Weisenthal (2:07)

Yeah. Well, anyway, we really do have the perfect guest, someone I've wanted to speak to literally for years, someone who has long been preaching in public that the individual can pick stocks, that picking stocks is a good thing, that you don't have to accept the idea of just being boring and being average and getting the average return. We are going to be speaking with Jim Cramer. He is the host of Mad Money on some network called CNBC. Never heard of it. He is the author of a new book, How to Make Money in Any Market. Jim, thrilled to have you on the Odd Lots podcast.

Jim Cramer (2:41)

First of all, that intro of what you are talking about, just the fundamental of what I am talking about. I want to spend a second talking about the person to my left, Joe Weisenthal.

My wife was looking at the book tour. She goes, okay, you got Today Show. And you got Joe. And Joe is someone who's gonna get it going for you and wake up and he's gonna probably know the book and he's gonna know your stuff. And Tracy, I tell you, when you do these things, they're pretty soulless. So when you get something like you guys, I mean, I just laugh. My dad sold Corrugated. That was his job. When I was a hedge fund manager, I just went exclusively with him. I mean, a reference to the last week show. But I do want to talk totally much, truly about what you're talking about. I wrote this book.

Joe Weisenthal (3:25)

Well, I just want to say, the first line of the book is, congratulations, you've just bought the most radical book about investing ever written, Classic Cramer Models.

Jim Cramer (3:34)

Sure.

Joe Weisenthal (3:35)

Classic Cramer Understatement.

Jim Cramer (3:37)

I love that. But it's true that everyone's been taught these days, you can't pick stocks and you just had to be in index funds. Thank you Warren Buffett for that too, although his stock was the one you should have picked. What bothers me is people are going to do it. You talked about zero day and things like that, they're going to do it. If they're going to do it, why not help them? I mean, one of the premises of the book is that I know that people want to speculate. So look, I say own an index fund for half your money, you've got to be saving constantly, and then take five slots. Try to find four really good stocks and a speculative one. You want to go to nuclear power, you want to go to bloom energy for hydrogen fuel cells, I'm not going to stop you, provided that you try to find the next fang, and I'm fortunate enough to have created fang, because it was just something that seemed funny, but you know, I do that too. But what I'm trying to do is accept the fact people want to do this, do it right. And if they do it right, maybe they do it long term, own stocks. Look, I use the term compounding. How do you compound if you're a day trader? Yeah, right. You can't, you can't. So I mean, I look at this show, and this show is about trends and about long term trends. Like I find that most things that I read about are about trading.