Jim Cramer delivers straight talk on tricky S&P 500 market

Jim Cramer isn’t sugarcoating that 2025 has been a tricky ride for investors in the S&P 500.

A few AI-powered giants have been doing the bulk of the heavy lifting, while plenty of stocks are still stuck in neutral.

However, you’re not alone in watching the AI trade play out.

In the most recent episode of CNBC’s Mad Money, Cramer effectively breaks down the trade and what truly matters at this point.

💵💰Don't miss the move: Subscribe to TheStreet's free daily newsletter💰💵

With AI giants charging ahead and small caps not moving, he’s reminding investors to follow his old playbook. It’s all about preparation and being aware of the game plan, instead of just running after every shiny stock in sight.

CNBC host Jim Cramer breaks down why 2025’s gains have been narrow and how to play them

TheStreet/Shutterstock

Cramer’s investing playbook on beating the S&P 500

At the core of Jim Cramer’s special is his investing playbook, which he has effectively shaped through decades of booms, busts, and early missteps.

Invest as soon as possible, even if money is tight.
Reinvest dividends and don't put all your eggs in one basket.
Invest because of a well-thought-out thesis, and stick to it.
Buy what you know and understand.

A big part of that involves getting in early.

Time spent in the market always beats timing the market, and compounding only begins if you start.

Cramer shared his story, explaining that he invested in a mutual fund while living in his car.

Also, reinvesting dividends and diversification are perhaps the biggest wealth-building tools out there.

He had to learn diversification the hard way, though, as an oil-stock wipeout taught him not to bet it all on one industry.

Also, it's best to stick to your thesis.

For example, if you invest in a stock for a quick flip, don't let it become a long-term investment because you're too stubborn to sell, or vice versa.

For active traders, it's best to buy only when there’s a clear catalyst, a well-researched exit, and a strong intuition. This essentially involves aligning portfolios with risk tolerance and goals—growth, income, or capital preservation.

Cramer is also a big fan of the “invest in what you know” mantra shared by legendary investors Peter Lynch and Warren Buffett.

Some of his best calls started with personal experience, including a good meal at Bob Evans or a hiring tip about SPS Technologies.

Cramer’s stock picks double as investing lessons

Jim Cramer’s trip down memory lane in his latest Mad Money episode provided many market lessons for investors to learn from.

Kimberly-Clark got the longest spotlight. He told a story about a Goldman Sachs client buying 1,000 shares as a long-term hold who ignored Cramer’s advice to sell after an $8 pop.

The stock doubled, reinforcing that the best move sometimes is to let winners run.

Foot Locker, on the other hand, was a different story.

Once a remarkably tempting dividend play, its dwindling cash flow led to a payout cut, highlighting the importance of avoiding a dividend trap. Those who stuck around too long paid a price.

Momentum is part of the mix, too.

Eli Lilly has been a top performer because its GLP-1 weight loss drug has tapped into a massive long-term trend. Similarly, Nvidia has rewarded shareholders handsomely because of AI demand, and it remains the poster child of the AI stock rally.

More News:

Cramer also talked about early missteps, where losses in American Agronomics (orange growers) and Bobby Brooks (fashion) were effectively offset by a win in Bob Evans Farms after digging into its expansion plans.

Cramer shares thoughts on this year's stock market

The 2025 market has effectively been a two-act drama. This spring, a sharp 19% retreat in the S&P 500 was one of the worst early stretches in decades, leaving investors on edge. However, the tide has shifted with markets snapping back, erasing earlier losses, and reaching new all-time highs.

Through August 8, the Nasdaq is up roughly 11% year to date, and the S&P 500 is up 8.6%.

The Dow has also climbed nearly 4%, while small caps in the Russell 2000 are mostly flat to slightly negative.

From Cramer's perspective, the winners kept pushing ahead, and anyone who stayed with them came out on top compared to those waiting for a broad small-cap revival that never arrived.

Market leadership has been mostly narrow, with a small cluster of mega-cap plays driving most gains.

AI has been the defining market story. Stocks like Palantir and Super Micro have thrived on the explosive demand for AI-related infrastructure, proving the value of sticking to your thesis and being confident.

Hence, investors following a Cramer-like approach have enjoyed relatively strong gains this year, despite the choppiness.

The best results this year have come from letting winners run.