Welcome to the world of forgive-and-forget investing

Most of us aren't used to giving companies the benefit of the doubt. That's why it's so hard right now.

By Jim Cramer Feb 20, 2013 10:01AM

thestreet logoHandshake copyright CorbisWhen I first saw the News Corp. (NWSA) numbers, I shuddered. What a shortfall -- miserable. Fox was terrible. American Idol flailing. Way too short a World Series, and with teams nobody seemed to care about. Pro-football playoffs ratings disappointing, a bunch of small market teams. European cable a nightmare and maybe getting worse. Terrible numbers out of Australia. It was a first-class rout, and I saw the stock tick down immediately, from $28.50 to $26 and change, right as I was doing "Mad Money."

 

We own it for ActionAlertsPlus -- and here I was, so excited about the coming break-up into the fast-growing Fox entertainment properties and the slower-growing publishing enterprise, that I neglected to look at the near-term.

 

What a doofus I was. What a terrible mistake. I was kicking myself for thinking long-term when the game was all about short-term performance. I should have worn a News Corp. Post-It note on my forehead to show how I had forgotten the cardinal rule of investing: Never invest for the long-term.

 

Or is that rule now meant to be broken? What if that rule now gets broken every day?

 

Fast-forward a couple of weeks, and guess what? News Corp. has hit a fresh 52-week high. You had to join the fearless buyers at $26, not the feckless, foolish sellers. You had to brave the negativity, not embrace it.

 

Traders may have despised the quarter, but investors actually took at face value that Fox had hit a dry spell. Yeah, you have to admit the company had rotten luck with the playoffs and the Series. That won't repeat itself. What did anyone really expect from Idol, or from Europe and Australia, anyway?

 

No, what mattered was the future and how it almost has to be better than the past, given that break-up and the possibility, held out -- dangled, even -- by management, that an ESPN competitor could be right around the corner. An actual honest-to-betsy challenge to the most lucrative television enterprise, ESPN, might be upon investors. (Also see The Street's: "Mad Money" recap: the urge to merge.)

 

Welcome to the new world of forgive-and-forget, of turn-the-other-cheek investing, of thinking about the future and not the past.

 

It's not just News Corp. Remember the disappointing quarter and lumpy outlook offered by Cisco (CSCO) CEO John Chambers? Remember those bid-hitting panic-struck traders who tried to sell at $20 and a half because they figured it would be just like last time when the stock fell to $17? Nope, another 52-week high. People have faith now that things will get better for Cisco, not worse.

 

Or how about Norfolk Southern (NSC)? Have you seen that stock lately? Less than a month ago, this company told you that its profit had fallen 14% -- a dramatic drop-off -- but that the long, painful slide in diminished coal hauling was over. We had heard that before, right? A couple of times. Here's a stock that had rallied from $56 to $66, all during the period when the company had told us not worry about coal, and then Norfolk reported, sure enough, that coal wasn't good at all.

 

Get ready for the double-dip?

 

Nope. The stock just kept rolling higher. Moving up another eight points. Why? Because we now believe management when they say that coal's better. In fact, we don't want to miss that train as it pulls out of the station.

 

Most of us aren't used to forgiving and forgetting. Most of us are used to being bagged and losing money when companies tell us that things are getting better. That's why it's so hard right now. We get hurt if we are too skeptical. But when I look at stocks like Yum! Brands (YUM) or Whole Foods (WFM), whose management teams have told you that things are soft and might get a little softer still, I now think: Wait a second. Buy Yum -- as my trust is doing -- or consider Whole Foods. The company deserves the benefit of the doubt.

 

Turn the other cheek. Forgive and forget. Benefit of the doubt. Welcome to the world of 2013 investing, where dreams seem actually to come true -- and, alas, for once, I don't mean nightmares.

 

 

Cramer

 

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 NWSA, CSCO, and YUM.

 

 

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34Comments
Feb 20, 2013 10:48AM
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So now the cardinal rule of investing is to never invest for the long term?  Did Cramer just really say that?  This whole thing has become one big, sad, pathetic joke.  Uh, buy and hold, you'll always make money.  Wait, nevermind, forget I said that.  Uh, buy IPOs, you'll always make money.  Wait, nevermind, forget that.  Uh, set up a DRIP, you'll always make money.  Wait, nevermind, that's not right.  Uh, buy tech stocks, you'll always make money.  Wait, nevermind, forget I said that.  Uh, start daytrading, you'll clean up.  Wait, nevermind, bad idea.  Uh, buy a house even if you can't afford it, you'll always make money.  Wait, nevermind, definitely forget I ever uttered those words.  Buy ETFs and bonds and Spyders, you'll always make money.  Wait, nevermind, bad idea.  Now it's "never invest for the long term".  Brilliant.
Feb 20, 2013 11:31AM
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He should have mentioned Google going over $800 a share.They pay their employees top dollar,

have great chef`s and have free lunches, child care, great benefits and respect their em-

ployees.I pay top dollar for my employees and don`t have a turnover.I don`t want to waste

capital and time by treating my employees like garbage.What goes around comes around.

they appreciate Christmas bonuses and the like.

Feb 20, 2013 11:11AM
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You mean, forget and forgive stuff like this?\
Washington plutonium leak poses 'long-term threat'

A tank leaking plutonium at a contaminated nuclear waste site in Washington has prompted the state's governor to sound the alarm over the threat it poses.


Over the years, more than a million gallons of radioactive waste have already leaked into the ground at Hanford.


Whats even more alarming is it's proximity to badly needed food and clean water sources.


http://www.cbc.ca/news/canada/british-columbia/story/2013/02/17/bc-nuclear-leak-hanford.html?cmp=rss





Feb 20, 2013 12:24PM
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Of course people like cramer don't want you to invest for the long term ....how would he make any money if people bought good companies and then left them alone ....he certainly has shown he cannot make money following his own advice .....his company the street dot com has lost about 95% of it's value over the last few years .....

He makes money selling p*ss poor advice to the gullible for $700 a year ....

Feb 20, 2013 10:41AM
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Nine days left, Mr. Cramer. You fail to grasp what the sequester does to dead cats pumped up with hot air. How many publicly traded American businesses make a product improved from indigenous raw materials by American workers, sold in local retailers and purchased by regular people? Not many. It's pretty clear that the sequester isn't a cliff, it's a shift and shift-happens to houses of cards made out of cardboard. We are where we are because Bernanke lifted us here and now he can't print more or we fall through the floor from financial compromise. If there are 400 million Americans and half are older and children, that leaves 200 million viable consumers. If half of those are under or unemployed, you are down to just 100 million potential consumers. Likely half of those are over-indebted and half of the remaining 50 million are not consumers, they are wealthy and do not equally participate in economy or society. What's left, my friend? We can't cut taxes. We can't give banks anymore anything. We can't eat gold, guns or ammo and none of those are productive, just destructive. Lawyers, bankers, financiers, politicians and insurers take FROM an economy, they do no good as it compresses. The dominance of paper and button pushers ends and the balloon goes with them. Monday is going to be a BEAR. That only leaves you this week to wake up, snap out of the Kool Aid coma and figure out if you can make it without tons of fake money showing up in your ficticious electronic online account that funds your credit card. All those things are directly impacted by the sequester. It's not doom and gloom, some of us recognized the gorilla in the room when the Kool Aid was first poured and know what was in it.

Feb 20, 2013 12:14PM
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We've been trying to hang in there all morning....News were not that good this morning, especially housing...A few minutes before 1100 hrs manipulators started doing their thing...We are well in the red now...Lets see if we can keep hanging in there this afternoon, will not be too easy, volume again low and plenty of crooks around...More later.
Feb 20, 2013 12:47PM
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To the (TBTF)   DIE BANK OF AMERICA  DIE   !!
Feb 20, 2013 5:22PM
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He did it again, recommended to his followers to jump in the market the day before it crashed !!! Way to go, clown !!! 
Feb 20, 2013 1:58PM
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"This article is about forgiving and forgetting - in other words, not selling stocks in a reactionary way."

 

We are about to see an awful lot of knee jerk reacting. How does his advice help? The bottom line is-- unless you are one of the six super giants, your activity will fall behind and you will lose. Having 1500+ positions is nice when things are great, really tough to bring in when the sequester closes the gate. The time to shift your 401K, pension or retirement fund was last week. Did you? If not, you got squat next week.

Feb 20, 2013 11:25AM
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Lets talk about investing in leadership and training.  I would say the last instruction any responsible teacher could or would say about investing  is "don't invest for the long term".  How about lets not learn for the long term, or lets not get married for the long term, or lets not practice religion for the long term, or better yet lets not live for the long term.  Did you actually say what I read?  Now if I remember reading my bible it said to beware of all things about money. That money never did fall under a religious tenet because it was so earthly or something to that effect.  But nowhere do I recall it saying turn the other cheek  in regards to money.  But  most Liberals well they have their own bible, made up as required, with plenty of hypocrisy and loads of judgment.  But not to invest for the long term.  Now that is a new one on me. 
Feb 20, 2013 12:49PM
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MIRAGE GUY: not everyone is as fortunate as me to get a good education and have

a few breaks along the way to start and operate a business.I fail to see why you think

everyone is so lazy.I believe in the Zig Zigler belief that "there`s no such thing as a

lazy man, only an unmotivated man".

Feb 20, 2013 2:50PM
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Like we said earlier, manipulators have been taking over slowly but surely since about 1100 hrs...Trying to keep things in check....We will see what the Fed says...Don't be surprised if they accelerate and we go down the toilet by 1600 hrs...That's their plan anyway.
Feb 20, 2013 5:45PM
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We call it as we see it folks and these scumbags started early, at about 1100 hrs to take over slowly but surely....What the Fed said was irrelevant; at about 1440-1450 hrs they were in complete control and started doing their thing like we knew they would so, the market went down the toilet...They planned it and executed it flawlessly....For the umpteenth time, news do not move markets, people do and when cheaters and crooks take over down here....That's all she wrote.
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just throwing your money at Wall Street bankers -- buy Apple
Feb 20, 2013 1:28PM
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This article is about forgiving and forgetting - in other words, not selling stocks in a reactionary way.  While Cramer's opinion means diddly-squat (DDLYSQT) to me, people are misreading this...
Feb 20, 2013 5:26PM
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he's not the clown.....his followers are
Feb 20, 2013 2:30PM
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FLASH CRASH CRAMER ! DOW UNDER A THOUSAND !  TAKE YOUR MONEY AND RUN !!

Feb 20, 2013 3:47PM
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DHARMABUM....Nice to see you kicking a little also.

Knowing that you had an interest in Bio-Techs or may have invested in a few in the past..??

 

I left a question on one of blogs sections..for you.

And wondered if you had any knowledge of or opinions on Spectrum Pharmaceuticals(SPPI) ?? 

Feb 20, 2013 3:40PM
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There are a number of People (in the hundreds at least) that write articles about investing, saving and saving money on goods or products...

 

Why do some of you, get all bent out of shape or wired about what one guy blathers about.??

 

There are many ways to invest also...Just pick the best that works for you.

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