Jim Cramer said on Tuesday that individual investors are helping drive market action. He believes they are more optimistic than institutional investors. “The individual investor has not lost faith,” Cramer said.
“They’ve practically propelled us the whole way from the post Liberation Day lows.”
Cramer referred to recent data from Bank of America analysts. The data showed that Wall Street has just seen its biggest week of selling in almost a year. Institutional clients led the selling.
Corporate buybacks also slowed to their lowest weekly level since 2023. However, the report showed that private clients have been doing more buying, even as stocks headed higher. Cramer noted that the Bank of America report is just one piece of research.
But he said the company probably has the “best cross-section of people to examine.” According to Cramer, individual buying has helped the market rise. This is happening even as institutions offload shares and Wall Street worries about new tariffs and global trade. Cramer said individual investors believe that stocks represent long-term value.
Individual optimism fuels market growth
He suggested they aren’t afraid that the Trump administration will somehow tank the economy. These investors want to use the market as a way to save, rather than trade in and out.
This attitude is markedly different from that of institutional sellers, Cramer observed. He said the difference is “only going to get more pronounced.”
Cramer suggested that institutional sellers are worried about Donald Trump’s new tariff policies and megabill. They are also concerned about his inconsistency, making it risky to own stocks.
Institutions can be too cynical and focused on the near-term, Cramer asserted. While they focus on the actions of the Federal Reserve, individual investors are paying attention to individual companies’ actions. “There’s nothing wrong with the short-term trading that institutions are doing,” Cramer said.
“But let me give you the bottom line – when I first walked down Wall Street, the Dow Jones Industrial Average stood at about 1,000. Now it’s at 44,000. Perhaps the weight of evidence says you should just keep buying and stick with it.
It’s been right for decades, why should the individuals stop now?”
