Not since 2000 have the markets had all five of these signs pulling in its favor, Cramer concluded -- not until now.
There are two lessons every investor must learn, Cramer told viewers: Don't buy too soon and don't wait too long to sell. Waiting too long to sell is perhaps the worse of the two, he said, explaining the two "false floors" that investors often think will save their falling stocks.
Big buybacks often lull investors into a false sense of security, said Cramer, but most buybacks won't protect a stock from a big market downturn nor falling earnings. The problem with many buyback programs is that any shares purchased are offset by the issuing of more options for executives. Rarely does a company make well-informed purchases, Cramer continued, with many companies overpaying for their own shares at the highs, leaving little to no money to spend at the lows.
The second false floor is the notion of "too cheap to sell." Cramer said even he has fallen victim to this flawed thinking. In reality, cheap stocks can always get cheaper and stocks that find themselves at new lows typically deserve to be there. If investors find themselves thinking that a stock is "too cheap to sell now," that should immediately be a red flag in their minds.Avoid these pitfalls and your portfolio will thank you, Cramer concluded.
Stocking Stuffers FinaleFor the final installment of his "Stocking Stuffers" series, Cramer focused on two more stocks in his charitable trust, Action Alerts PLUS, Johnson & Johnson (JNJ) and TJX Companies (TJX). Cramer said Johnson & Johnson is actually three companies in one -- pharmaceuticals, consumer products and diagnostics. Like many companies with multiple divisions, breaking up J&J would unlock a ton of value. But even as a combined entity, J&J is still up 31% for the year. Johnson & Johnson is a master as cost containment and also has a ton of new products in the pipeline. Trading at just 158 times earnings, Cramer said he'd be a buying under $90 a share. TJX is the parent of TJ Maxx, Marshall's and Home Goods, three retail chains with 2,600 stores in the U.S. with more in Canada and Europe. Cramer said the growth opportunities at TJX make it very appealing and Home Goods in particular is excelling with high single-digit same-store sales growth.
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