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Low-Priced Stocks Can Be Expensive

It's time to debunk the so-called wisdom about stocks' price tags; a smaller price isn't always better.
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This article originally ran on RealMoney on May 16 at 3:53 p.m. EDT

The toughest thing is to get people to buy the good ones, especially when the good ones are priced at the uneconomical $90-to-$140 level.

This weekend after some raucous bowling for charity, a bunch of us went to the nearby diner for a little egg sop-up. While I've been on television for years, the maitre d' on the late shift has never, ever noticed me.

Not this time. With my "Mad Money" show on television, he was all over me. Wanted to know what I liked. Wanted three names.

But when I suggested the first one,

Sears Holdings


, a $140 number, he balked. Too expensive.

Of course, no matter that it's a cheap stock on earnings; the price tag was too high.

Well, how about



? Nope, another loser with him; $95 was way too much.

He wanted some low-priced tech stocks. No-can-do.

This exchange made me realize that it was no wonder nobody I know caught

Berkshire Hathaway


25 years ago when it was at $200 -- it was too expensive!

In my book,

Jim Cramer's Real Money: Sane Investing in an Insane World

, I spend a ton of time debunking just this so-called wisdom of the "expensive stock."

But as a mass-market player, I know I have much more work to do when I realize that I could have pushed a truly expensive stock on earnings, like




Sun Micro


, down this maitre d's throat, but I couldn't sell him Sears Holdings.

It is so much easier to give people what they want.

But there is a problem. I want to be able to go back there next time I've had too good a time. And I don't want to get thrown out because of Sun or Gateway -- or any other low-priced piece of trash, for that matter.

At the time of publication, Cramer was long Sears Holdings and UnitedHealth Group.

James J. Cramer is a director and co-founder of He contributes daily market commentary for's sites and serves as an adviser to the company's CEO. Outside contributing columnists for and, including Cramer, may, from time to time, write about stocks in which they have a position. In such cases, appropriate disclosure is made. To see his personal portfolio and find out what trades Cramer will make before he makes them, sign up for

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