Cramer's 'Mad Money' Recap: Cramer's 'Mad Money' Recap: The Smart Investor

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Editor's note: This recap was last published on Dec. 29, 2009.

NEW YORK (TheStreet) -- "It's my job to protect you from conventional wisdom," Jim Cramer told viewers of his "Mad Money" TV show Thursday. He said that anyone who tells you ordinary people shouldn't own individual stocks is just wrong.

Cramer said it's "hogwash" for those on Wall Street to tell individual investors that the market is too hard, and that they should just go with mutual funds or index funds.

He said that no one will ever care more for your money than you do, and that in an era when personal responsibility is at its highest, it's ludicrous to think that ordinary people can't make smart decisions about their money.

During one of the longest bull markets in history, index funds became all the rage, only to crash in 2008. Cramer said while index funds are a valuable and welcome innovation for investors, they're not a way for average investors to play the market. Using only index funds, investors will have a hard time even matching the market, and will never beat it, he said.

Likewise with mutual funds, said Cramer. Many investors think that an actively managed fund will beat the market, and that fund managers will get out ahead of trouble. Not true. In order to gain competitive advantage over their peers, funds remain fully invested, making them vulnerable to mistakes and losses just like everyone else, he said.

Cramer said when it comes to investing, picking the right stocks and knowing when to sell, are the two skills that keep investors ahead of the markets, and not struggling to keep up.