Gambling vs. Investing: Jim Cramer Explains the Difference

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Jim Cramer has always been the first one to remind you that time and time again, you’ll make more money choosing individual stocks than investing in index funds.

Recently on Mad Money, Cramer said that while there may a place for index funds in your portfolio, there are better ways to make money, if you’re willing to do a little homework.

“The problem with owning everything is that not every stock is worth owning, Cramer explained. Back when he was growing up, dividend paying stocks like Merck  (MRK) – Get Report made millions for individual investors who reinvested those dividends year after year. But during that same time, there were also plenty of high-flying stocks that crashed and burned. Knowing the difference between these two types of stocks is the difference between gambling and investing,” Scott Rutt wrote in his Mad Money Recap