Finally, Cramer zoomed in on a trend he sees bubbling up in this market: stock picking might be making a comeback.
“I’ve been investing for 36 years and for the vast majority of that time, we accepted that the market worked a certain way,” the “Mad Money” host said. The widely accepted idea was that half of a stock’s performance was tied to its broader sector’s performance, and the other half was tied to its own trajectory and how management led the company.
But with the rise of ETFs and index funds, all that has changed. Cramer has even seen some estimates that suggest 75 percent of trading is either automated or tied to ETFs, not individual stocks.
“However, something’s happened, really in just this quarter, that makes me think stock picking may be coming back into vogue. I’m talking about the widely disparate performances of stocks within the same sector,” he said, pointing to the stark differences in Schlumberger and Halliburton’s stock performances after their respective quarters.
“Management’s execution finally matters again,” Cramer said. “That means stock picking is, therefore, back in style.”