Now, there are some important lessons here. First, the supermarket space has gotten incredibly hard lately, a combination of dollar stores becoming more competitive in name-brand offerings, Target (TGT) and Wal-Mart (WMT) moving aggressively into the space and Whole Foods (WFM) taking the high-end consumer from mainstream shops such as Kroger (KR), Safeway (SWY) and Supervalu.
But second, and most important, is that sometimes outsized yields like Supervalu are out-and-out red flags signaling their own reduction or elimination. Before blindly buying into management's assurances, before thinking, "How can I miss with that yield protection?", do the homework. Supervalu was clearly in a long-term spiral down, something that told you to be more skeptical of the company's "confidence" in the dividend than you might otherwise be concerned about.
To me it's another clear-cut case of the need for not buy-and-hold, the preferred conventional wisdom of graybeards everywhere, but buy-and-homework. If you had done the homework, I believe you could bet that management couldn't fulfill its assurances, and you could have sidestepped today's hideous losses, the worst in the S&P 500.
Action Alerts PLUS, which Cramer co-manages as a charitable trust, has no positions in the stocks mentioned.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV