Cramer: Five ‘perils‘ of investing in individual stocks

Investors must be aware of potential rewards and beware the potential risks when buying a stock because anything can happen on the stock market, CNBC‘s said Thursday.

There are five current events that illustrate the “perils” of individual stock picking and why shareholders must have a strong stomach, he said. From the top plane manufacturer to the top social media platform to the divided politics across the pond, negative news can change the direction of an equity in a matter of seconds.

“I‘m going to give you five reasons why it‘s so hard to make money in the stock market … [preparing] you for the inevitable pain that comes with owning individual stocks,” the host said. “These have all snuck up on people, making them queasy. If the thought of them scares you, then you might want to rethink how you invest your money.”

There are many advantages in owning stocks, but index funds provide the best market exposure, he said.