Jim Cramer explains how younger buyers are driving market action

CNBC’s Jim Cramer on Monday suggested that young investors are driving market action by putting their money into newer companies that promote ideas they find exciting.

“Long story short, these younger investors reward bold behavior,” he said. “They punish companies like Apple, which seems to have an aversion to being bold and, instead, like to buy back stock. That’s anathema to these younger buyers — to them, buying back stock is what you do when you’ve run out of ideas.”

According to Cramer, there is “a whole host of stocks that are roaring on what can only be described as a re-valuation of growth or animal spirits.” For example, he said, younger investors like Robinhood because it’s using blockchain to trade stocks in private companies — an idea that some more experienced investors find questionable. But to “fresher-faced buyers,” the development seems like clever financial engineering that should be encouraged. Robinhood finished Monday up 12.77% and hit a new 52-week high.

He also listed Reddit, DoorDash, Cava and Palantir as stocks that have garnered support from newer investors, saying it’s possible they could yield immense earnings some day. Reddit could become the next Meta, Cramer suggested, saying the online forum has strong advertising capabilities. DoorDash, too, he continued, could turn out to be “an advertising power house.”

Cramer said that younger investors are less concerned about the Federal Reserve’s next move. He also suggested that Wall Street more broadly is in an “idea market” that focuses on the power of individual stocks — instead of an environment dominated by hedge funds where investors primarily look to the Fed.

“We’re now in a story-dominated market, even as the coverage is still all about the next quarter point from the Fed and what the hedge funds are doing about it,” he said. “I say that’s for the institutions trying to beat the indices by a percent or two. That’s not worth it anymore. These days, they are about people trying to get rich with ideas. Who’s right? Easy, those who embrace stocks, not indices.”

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Disclaimer The CNBC Investing Club Charitable Trust owns shares of Meta.