In stocks, loyalty is futile

This is not politics. It's about making money. That's why I've changed my mind on Apple.

By Jim Cramer Sep 24, 2013 9:27AM

thestreet logoBusinessman looking at piggybanks standing on desk © Jamie Grill, Tetra images, Getty ImagesIt's time to talk about the way this business really works, instead of how some less experienced players think it works.

 

I hadn't thought much of Apple's (AAPL) new phones going into last week's launch, because I had read the Wall Street research that said the new models weren't going to sell well. I had no reason to disagree with that view. The analysts were certainly closer than I was. They follow Apple for a living. The three downgraders -- analysts from UBS, Credit Suisse and Bank of America Merrill (BAC) -- all said they were disappointed with the phones and the pricing.

 

So I figured they must be disappointing.

 

But then, last week, The New York Times' David Pogue and a number of other assembled opinion-makers -- who collectively do determine what we buy and don't buy -- came out and said, "Buy." So I changed my mind. Said so immediately. Many of these critics had become wholesale enthusiasts for Samsung's phones. No more.

 

Now, in politics you can't switch like that. You will be labeled a flip-flopper. Your base will throw you out. You will lose in the primaries. Your party will not support you in the general election. You will most likely have committed political suicide.

 

But, in this business, if you stay negative in the face of those critics' glowing reports, you will lose money. There is no political base. There is no primary. There will be no general election. There is no flip-flop. Something has occurred that you could not have gamed: The critics really like the phone. The key to nailing these last 30 points in Apple was to change your mind immediately on the stock, recognizing that the critics, not the analysts, were in control.

 

That's what a good trader does. He or she seizes that moment and recognizes that the three downgraders were wrong because the phones were better than they had thought. All of their checks and approximations were wrong. Their presumptions were wrong. Because they didn't recognize the greatness of either the new operating system or of the phone itself. Or, more important, they didn't understand how powerful the critics could be. They didn't recognize that the phone was good enough to charge a premium for, which was the underlying notion of the comments by the critics.

 

Should I have been able to game what Pogue & Co. were going to say? Wrong question. It didn't matter. The stock was barely up when their recommendations came out. There was plenty of time to switch. You didn't need to anticipate a thing. 

But you did have to bet that the critics would matter and that they do have tremendous sway here.

 

Of course, I was immediately lambasted @JimCramer on Twitter for changing my mind even, as I said contemporaneously that these reviews were needle-movers, which was the gutsy call. The naysayers are like members of a base that isn't there. They are non-voters in a district that doesn't exist. They are people who either didn't read or didn't see that I had a good trade going in switching direction, or who don't think that directions should ever be switched.

 

They think they are being intellectually honest, but they are simply being financially barren. Look, at no time is this business about pleasing anyone. It is about getting it right. I liked Apple at $50. If I stayed liking it at $700 and still liked it now, I would be someone who is "true blue" on Apple. But "true blue" to what? Apple's not a country. It's not a flag. It's a company with a stock.

 

You not only have every right to change your mind when something salient happens that can change the direction of the stock. You must change your mind if you are going to be any good and make as much money as possible.

 

Trading stocks is not and has never been about pleasing anyone or getting someone's vote or trying to toe the line through thick and thin.

 

It's about making money. It's undignified. It's not loyal. It's not friendly. It's just a question of "Will I make more money doing X or doing Y?" If you do X and it makes more money than Y, you have succeeded. If you do Y and it makes less money than X, you have failed.

 

The fact that I even have to defend making money shows you that there are plenty of people who think that X and Y don't matter or are the same.

 

They aren't.

 

Which is why so many people lose money in this business and then leave it.

 

They simply don't understand that it's not primary season, it is not an election, they are not single-issue voters and there is no Congress.

 

There's just money.

 

 

 

Jim Cramer is a co-founder of TheStreet and contributes daily market commentary to the financial news network's sites. Follow his trades for Action Alerts PLUS, which Cramer co-manages as a charitable trust and is long AAPL

 

 

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108Comments
Sep 24, 2013 9:57AM
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so then the emotional swings are okie-dokie!  in fact, they are encouraged! 

 

smell the swings as they approach!  jump in, jump out!  that's "investing". 

 

this differs from gambling on games like roulette because........well..........it's different.........

Sep 24, 2013 10:13AM
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At this time there is NO DIFFERENCE between politics and finance because both are working to adverse aspects against the consumer. There has been ZERO family-sustaining wage jobs, ZERO help for the former Middle Class, ZERO relief from military and war pursuits, ZERO alleviation from Twitting, ZERO responsible pursuit of corruption by Homeland Security and ZERO pursuit of False Elitists and wealth omnipotence. It's as if we elected a BOOB to text in the White House to go along with the PUPPETS in Congress while New World Order set up shop and secured the borders!
Sep 24, 2013 12:12PM
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Another favorite for the contradictory header column...

"Home prices rise more than 12% in a year..."
"Citi laying off lots of mortgage people..."

But wait... tomorrow gets even more stupid Kool Aid.

Harvard... half of last year's graduating class cheated... half of this year's freshmen cheated... We need these degrees... why? Oh yea, Harvard grads can't feed themselves so giving them degrees and omnipotence compensates for the lack of fundamental survival skills. 
Sep 24, 2013 1:02PM
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Remember it is a FACT that the middle class is shrinking and that the divide between Rich and Middle Class is growing wider.

Sep 24, 2013 10:50AM
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Ring Ring:

cgt1: Hello 

Caller: Hey CGT1 it's us scumbags calling to accelerate the selling ...can you pass this on to the internet...

cgt1: got it will do ...

Caller: cheers mate you're a mensch 
Sep 24, 2013 10:13AM
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Buy, Buy, Buy;  Maybe one day a few sentences about what didn't work out such that the "Street" has a voice that might have a little credibility.  Not everyone is a long and not every little uptick is a sign folks need to lament about not being in on.  You can't screw em all or own em all Jim.  In life each individual is responsible for their own actions and as well as in investing.  Your own time, due diligence, and decision making is all you can really be held resposible for.  I know the Street folks like to think their services are invaluable in that that is how they; at least for public discussion, make their living.  So let Apple go where ever it may.  It will drop soon and folks will make it on the short side.  then it will go back up a bit and then longs can trade it.  The point being this is not a lost opportunity for any one Jim, only if your attempt is to play on folks greed and weakness. 
Sep 24, 2013 2:09PM
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Papa Doc = Obama, still just sounds stupid...No need to make connection.

 

Well I have a road trip to see a very sick cousin....I'll let you decide who wins.

Sep 24, 2013 2:11PM
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We should have a constitutional amendment to make it an act of treason for our Politicians to tae money from foreign interests ...be they israeli, saudi, qatari, mexican, Irish or whatever .....

You can only be loyal to one master !
Sep 24, 2013 1:41PM
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I am against ALL wars that mean sending American boys and girls to die for a foreign countries interests or to enrich scumbags and zionists.
Sep 24, 2013 1:05PM
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Well, Veteran Lender is a staunch supporter of holding quality beer brewing equipment and supplies, so I definitely support him on that.

 

 

Sep 24, 2013 11:15AM
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So here's a thought... the government remains at odds and America stops functioning in a week. Did it occur to anyone that Wall Street will keep functioning while citizens mound up DEAD in the streets because it's more important to uphold "business platforms" than actual people? Isn't that the TRUE purpose of QE? I mean... not ON PENNY actually went to people, just to entities and trust funds. 
Sep 24, 2013 1:34PM
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DHL2448: Bernanke has a job to do.Europe has had some very hard times in recent years.

Before 1930 our government thought it`s only job was the balance the budget.We couldn`t and

shouldn`t allow another depression.Not only did I study that in school, I had older parents

that went through the depression.If Bernanke can prevent one I`m all for it.That invisible hand

the government used to believe is a myth.I don`t think most people realize how much thought

has the president and Fed chief have put into turning things around.

Sep 24, 2013 11:57AM
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Did you see all those kids standing in line like they were waiting to get in a Lady Gaga concert?  I do not think they determine what I buy. Of course half the crowd were Apple clerks. This to will pass.
Sep 24, 2013 1:34PM
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Don't need to look up Papa Doc , nor his kid Baby Doc...Know who they are..

And I really doubt any of us on here ever voted for either...

 

That is why you are making little sense, and must be losing it....Take the Meds NOW...

Ranting about douche bags and cretins, just adds to your Circus.

 

Having a $5000 or $10000 dollar deposit in a 20yr. CD or Bond in an IRA...
Isn't really what I call investing...arf, arf, arf.

Sep 24, 2013 11:03AM
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"Past Performance is No Guarantee of Future Results".
Sep 24, 2013 10:16AM
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You know Jimmy at one time, Crack-Berry was the King and we all know how that's turning out. People that buy Apple's products mostly do so because everyone else is doing it. For now, that's allowing Apple to print MONEY for quite some time, witness their huge Cash Balance sheet. The fact of huge Carrier Subsidizes isn't hurting either. However, that same look at me factor is why it's not trading at new highs. Why, Folks can change their taste literally at the drop of a dime. When that happens, Apple will survive for a very long time but it's stock price will take a major hit. Nothing that revealing here other than how folks continue to be foolish about phones. Keeping up with the Jones, it will be end of us all.
Sep 24, 2013 3:41PM
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Dear President Obama ......thank you so much for showing up every day to annoy these dumb @ss teabag types ....

Just think 3 more years to raise their blood pressure and we can only hope a lot of them are not around to vote for that canadian/cuban fellow Rafael Cruz ...

; )
Sep 24, 2013 1:25PM
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RE-Tog: Trying to reason with Barry is like trying to reason with the likes of Charlie Manson

or Nixon.They`re both in a fantasy world.

Sep 24, 2013 11:31AM
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"Trading stocks is not and has never been about pleasing anyone.  It's about making money. It's undignified."

 

Boo yah!  Old Jimmy gets off some pearls of wisdom every now and then.  I like it!

 

New brokered CD available this a.m. from Schwab.  1st Financial Bank.  Matures in 20 years.  Can be called in one year.  FDIC insured.  Pays interest monthly.  Annual interest yield is 4%.

 

SDT trading at $13.00 a share.

 

All is well in Happy Valley!

Sep 24, 2013 2:35PM
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ah!  gotta love the midday "discussions!"
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