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.
When 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.
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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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.
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.
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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.
"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.
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".
FLASH CRASH CRAMER ! DOW UNDER A THOUSAND ! TAKE YOUR MONEY AND RUN !!
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) ??
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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