Cramer's Plea To New Investors: Don't Just Listen To Me, Do Your Homework

Common logic dictates not to take stock advice from anyone without due diligence, even if that someone is Jim Cramer.

Cramer explained during his daily "Mad Money" show Wednesday that recently three viewers of his show thanked him at a bar for touting one of the hottest stocks over the past two years, NVIDIA Corporation NVDA. Each time, Cramer would quiz the investor to see if they know what the company does and its future potential.

In each case, the investor was able to tout Nvidia's exposure to artificial intelligence, data centers, video games and self-driving cars.

This was encouraging for two reasons, Cramer added. First, investors always need to do their homework and not buy a stock because Cramer renamed his dog Everest to Everest Nvidia.

Second, it shows investors are taking advantage of the superior returns of individual stock picking rather than investing in exchange-traded funds that hold both winners and losers.

"They knew the story, not just the dog. One day, maybe they'll just know the dog and it'll be time to skedaddle," Cramer said. "But when you can go toe-to-toe with random drinkers at a local tavern about a stock that you adore, that's a really good sign."

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