Cramer Says There's A 'Stock Shortage'

A quiet trend continues to emerge in stocks that isn't receiving enough attention, according to CNBC's Jim Cramer: a stock shortage at a time when the average American is saving more money and investing in risk-averse index funds.

What He Said

The economy continues to perform well for the average American who is saving a larger percentage of their earnings, which are being invested in index funds, Cramer said during his daily "Mad Money" show Tuesday evening.

The timing is ideal, as American corporations as a whole are on track to buy back $1 trillion of their own stock in 2018, he said. As a result, investors benefit from a "serious boost" in stock value or, at the very least, a new layer of downside protection.

Why It's Important

The $1 trillion in combined share buybacks also creates a scenario where there is a "stock shortage of epic proportions," Cramer said. Each one share a company buys back implies there is one less share "to go around until sellers materialize." The problem for new investors looking to enter the market is that even bearish money managers are "afraid to sell," the CNBC host said. 

What's Next

Is a stock shortage good or bad for the markets? The answer isn't simple, Cramer said: the stock market is like any other market in that it is controlled by supply and demand. 

"When there's not enough supply, prices go higher," he said. "End of story."

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