Cramer explains why it's not wise to stick with stocks booted from the S&P 500

After the S&P 500 knocked three stocks from its ranks last week, CNBC's Jim Cramer told investors why it is usually not a good idea to stick with these companies.

The S&P 500 evaluates the performance of roughly 500 of the largest publicly traded stocks and is seen as a bellwether for the market."When you see a stock that gets expelled from the S&P 500, please don't bother to try to catch a bottom — you're most likely catching a falling knife," he said."Historically, the odds are very much against you. If Standard & Poor's doesn't want them, well, you probably shouldn't want them either.

Although buying an index fund is usually considered passive investing, Cramer said the S&P 500 is more actively managed than many realize. "The team at S&P Global does a fantastic job of deciding which stocks to add and which stocks to subtract — that's one of the reasons why I'm so comfortable with telling you to put a big slug of your savings in an index fund that mirrors the S&P," he said."There's nothing passive about kicking out the weak and adding the strong."Los Angeles Lakers

South Africa South Africa Latest News, South Africa South Africa Headlines

Similar News:You can also read news stories similar to this one that we have collected from other news sources.

Cramer explains why it's not wise to stick with stocks booted from the S&P 500CNBC’s Jim Cramer reviewed the performance of stocks that have been removed from the S&P 500.
Source: nbcsandiego - 🏆 524. / 51 Read more »

Jim Cramer's top 10 things to watch in the stock market MondayWall Street was little changed heading into Monday's open after U.S. stocks increased for the week, led by the Nasdaq.
Source: CNBC - 🏆 12. / 72 Read more »