Jim Cramer appealed to young investors who are novices to the stock market and want to develop long-term wealth on Friday.
Cramer’s remark Friday happened after Robinhood’s fourth-quarter results were released the day before. The investment app, which is popular among millennials, brought in $264 million in transactional income. Options trading accounted for $163 million, up 14% from the same quarter in 2020.
What Are Cramer’s Concerns?
“I’m telling all these younger investors who are flirting with options to please lend an ear: I’m begging you, own something, own it for a durable period of time,” said the host of “Mad Money.”
“If that’s all you can afford, buy two or three shares per month. That’s how I got my start. If you reinvest your dividends gradually and steadily, you have a good possibility of making a lot of money.”
Investors with options have the option to buy or sell a stock at a fixed price in the future, but not the responsibility to do so. Due to their growing popularity among retail traders, options activity reached new highs in 2021.
Cramer was particularly concerned about the prospect that some novice traders might only trade options. He believes it has particularly concerned implications during the market’s difficult start to 2022.
“You’re probably losing a significant amount of money, particularly over the last 10 days, if you’re purchasing call options in this difficult period, pieces of paper that allow you to turbo-boost your returns by taking on a tonne of extra risk without really having an edge,” Cramer said.
According to Cramer, a better long-term plan for young investors is to invest in actual equities. For example, he cited Apple, which also released quarterly results on Thursday night.
“Rather than playing with options on Robinhood, you should be sitting tight in a high-quality company like Apple, possibly accumulating more when others sell,” Cramer added. “I believe it is far preferable to chase modest and steady gains in quality common stocks like Apple, which can pay out over years and years,” he said.
Who Is Jim Cramer?
Jim Cramer is the anchor of CNBC’s “Investing Club” and a former hedge fund manager, TV host, and personality of “Mad Money.” He’s also the chairman and co-founder of TheStreet.com, Inc. Cramer used to sell ice cream at local Phillies games at Veterans Stadium as a kid. Cramer started working as a reporter in 1978.
He covered the Ted Bundy killings in Tallahassee, Fla., where he worked for a Democrat and the (now defunct) Los Angeles Herald Examiner. In Florida, Cramer was robbed several times and was forced to live in his car. Cramer obtained a bachelor’s degree in government from Harvard University in 1977, graduating magna cum laude.
His media career began in college when he was elected President and Editor-in-Chief of the college newspaper. He advanced to Harvard Law School, where he received his Juris Doctor degree in 1984. While still in law school, Cramer began trading in the stock market and even marketed his stock picks. His successful stock picks got him a position as a stockbroker at Goldman Sachs.
Jim Cramer’s Wealth
According to Money, Inc, Jim Cramer is projected to have a net worth of $100 million. He made the most of his income as a hedge fund manager, but he didn’t stop there. Cramer boosted his net worth by using his talents as a hedge fund manager to create a diversified approach with many revenue sources.
Due to his ownership of TheStreet.com’s market cap and cash flow, as well as his notoriety and popularity as the host of “Mad Money,” his net worth has increased. “Mad Money” has succored Cramer to carry his substantial impact in the industry of investment finance. He is a well-known expert in the stock market.