Making the Right Call
"Speculation is not a sin, if it's done right," Cramer reminded viewers, highlighting three such names that have proven him right.
Cramer said he bet on Sprint Nextel (S) CEO Dan Hesse back when shares traded at less than half of what they do now. While the stock languished at first, Hesse delivered on his promises, giving shareholders a tremendous return.
Then there's Sunrise Senior Living (SRZ), a stock Cramer featured on Tuesday's show. Sunrise also has a bankable CEO and a solid business as its core. The turnaround took four years, but shareholders who believed were handsomely rewarded.Finally, Heckmann (HEK), another stock Cramer featured and another company that has a bankable CEO with a proven track record. Cramer said all three of these companies show what speculation is really all about. But compare that to Nokia (NOK - Get Report), a stock Cramer is asked about constantly. He said Nokia is the opposite of smart speculation. The company has neither a proven CEO at the helm, nor a core business that investors can rally around. He said at $2 a share it might now be too late to sell Nokia, but it hasn't yet proven itself worthy of buying. Speculative stocks can go to zero, Cramer reminded viewers, which is why investors must be vigilant and do their homework.