Warren Buffett decide to dump airline stocks — here's why MadMoneyOnCNBC's JimCramer says this should be a wake-up call for index investors.
"I recommend selling" some position in the S&P 500 index fund "if the [upward] streak continues," Cramer said.
He also said he thinks "many investors are in denial about how bad things can be for" some of the most vulnerable companies. Cramer, on the other hand, has spent recent weeks advocating that "Mad Money" viewers opt for stock picking over index investing in this uncertain market. The host warns that a basket of stocks — such as the S&P 500, which is largely representative of large-cap publicly traded companies — forces investors to take the high-performing holdings with the laggards.
"If you're in individual stocks and they can grow even in tough times, then you should be in much better shape than the index-fund investors who are really stuck holding the bad with the good, because right now there's a lot more bad than Wall Street seems to think," he said.for the long haul at Berkshire's annual meeting. He said people are paying "huge amounts of money" for "advice they really don't need" through a stock brokerage.
"In my view, for most people, the best thing to do is owning the S&P 500 index fund," Buffett said. "If you bet on America and sustain that position for decades, you'd do far better than buying Treasury securities, or far better than following people who tell you" what securities to buy.
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