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NEW YORK (
) -- "Don't repeat my mistakes," Jim Cramer told the viewers of his
TV show Thursday.
He said now is a great time to take profits and not the time to sell everything.
Cramer said it certainly seems like everything is going wrong at the moment, with unemployment claims sharply higher, China's economy slowing down, tech stocks hitting a wall, gold prices lower, Spain collapsing, taxes rising, QE2, and of course, Libya. But, he said, that doesn't mean it's time to head for the exits and sell your entire portfolio.
Instead, Cramer said it's a perfect time to take profits, and even take a loss on the stocks in your portfolio that you might not like very much anymore.
He said no one ever lost a dime taking a profit, and in the case of losses, your first loss is always your best loss. "Don't even up even more," he said. "You can always buy these stocks back at lower prices," Cramer reminded viewers.
So why not sell everything? Cramer recounted how in the 1990s, he held onto the stock of American Stores, purveyors of the old Acme supermarket chain. He said for years he held onto American Stores, hoping for a turnaround, or a takeover, that never came. That was, of course, until two weeks after he closed out his position in the middle of a panic just like the current one going on now.
Cramer told viewers that surprises like American Stores can happen, and that's precisely why investors should never get out of stocks completely. All stocks don't bottom at the same time, he stressed.
Cramer said the market is in the midst of a brutal correction, there's no mistake about that, and that's why it's time to let go of the losers and the marginal stocks, and start making the shopping list of the good ones to scoop up in the coming days.
How can analysts, those charged with analyzing stocks for a living, get blindsided by upside surprises and huge earnings disappointments? Cramer said it's because they only look at numbers on a spreadsheet, and not at the bigger picture.
"Mad Money" viewers have skepticism and common sense, said Cramer, something the professional analysts sometimes overlook. And that's why they can underestimate a stock like
, which delivered same-store sales growth of 15%, while the analysts were only looking for 5%.
Cramer said while the analysts were busy crunching away at the numbers, customers were busy shopping at Saks stores. While the analysts were thinking
could do no wrong, in reality, it delivered a huge earnings miss.
Cramer said it's easy for analysts to miss social trends, as they're not easily factored into a spreadsheet. That's why the analysts missed the fact that Jack Daniels whiskey has become hip again, sending
That's also why the analysts miss the stunning growth of
( WFMI) and
Chipotle Mexican Grill
, said Cramer. These companies are not just another supermarket or restaurant, they've evolved into something much bigger.
"Use your common sense," Cramer told viewers, and catch the big moves that the analysts miss.
Blindsided to the Downside
In the Thursday "Sell Block" segment, Cramer continued his education on blindsiding by telling viewers how not to get hit with a blindside to the downside.
Case in point, the so-called "tablet bubble" reported earlier this week. Cramer said the news that tablet makers may have over-ordered components has hit everyone from
. But was this news really a surprise?
Cramer said in retrospect, he should have seen this coming. "It's obvious," he said frankly. There is no bull market in tablets, said Cramer, only in
iPad. Cramer owns Apple in his
Action Alerts PLUS portfolio
Then there's the miraculous destruction of
, a stock that was down 39% after the company missed the mark in its optical components business. Here, Cramer said, investors just got too greedy.
Cramer explained that Finisar doesn't sell easy-to-understand consumer products to your local grocery store, it sells complex telecommunications equipment all around the globe. While things may be going well here, analysts failed to catch onto China slowing, a trend that had been accelerating for three quarters.
Finisar was up 200% year over year, said Cramer, and that makes it a hot potato stock that should have raised the alarm. "Don't be greedy," said Cramer, these optical component stocks are in the penalty box until further notice.
Truck Demand Rising
Cramer spoke with Daniel Ustain, chairman, president and CEO of
, a stock that disappointed Wall Street when it reported a seven-cent-a-share earnings miss on declining revenues, but also one that's up 19% since Cramer last recommended it on June 2, 2010.
Ustain said that Navistar has increased production 40% from the first quarter of this year, and the company's order rate appears to be trending even higher. He said demand is coming from aging truck fleets that were not replaced during the downturn, as well as a need for new trucks that meet higher safety and environmental standards around the globe.
Ustain said to be number one in the truck market, you need both great products and great distribution, something Navistar has plenty of. He blamed this quarter's earnings shortfall on a short gap in production that was caused by the last of the company's vehicles being converted to their newest engine technologies.
When asked about rising commodity prices, Ustain said Navistar was able to pass on about 50% of the costs to customers, but has absorbed the other half through hedging.
Finally, when asked about the unrest in the Middle East, Ustain said that Navistar offers vehicles for moving soldiers and protected vehicles for military applications, and both are increasingly in demand.
Cramer continued his recommendation on Navistar, saying that only the future, and not the current earnings miss, is all that matters.
Cramer was bullish on
He was bearish on
Paramount Gold and Silver
American International Group
In his "No Huddle Offense" segment, Cramer defended his comments Wednesday advocating selling gold in the short term. Cramer said he's not abandoning gold, he's just advising traders who bought into gold on his recommendation in late January to take profits and not lose their gains.
Cramer said with governments still printing money as fast as they can, the demand for gold will be solid for a long time to come. Cramer told those investing in gold for the long term to take the short-term pain, because the long term gain is still coming.
--Written by Scott Rutt in Washington, D.C.
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At the time of publication, Cramer was long Apple.
Jim Cramer, host of the CNBC television program "Mad Money," is a Markets Commentator for TheStreet.com, Inc., and CNBC, and a director and co-founder of TheStreet.com. All opinions expressed by Mr. Cramer on "Mad Money" are his own and do not reflect the opinions of TheStreet.com or its affiliates, or CNBC, NBC UNIVERSAL or their parent company or affiliates. Mr. Cramer's opinions are based upon information he considers to be reliable, but neither TheStreet.com, nor CNBC, nor either of their affiliates and/or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. Mr. Cramer's statements are based on his opinions at the time statements are made, and are subject to change without notice. No part of Mr. Cramer's compensation from CNBC or TheStreet.com is related to the specific opinions expressed by him on "Mad Money."
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Some of the stocks mentioned by Mr. Cramer on "Mad Money" are held in Mr. Cramer's Action Alerts PLUS Portfolio. When that is the case, appropriate disclosure is made on the program and in the "Mad Money" recap available on TheStreet.com. The Action Alerts PLUS Portfolio contains all of Mr. Cramer's personal investments in publicly-traded equity securities only, and does not include any mutual fund holdings or other institutionally managed assets, private equity investments, or his holdings in TheStreet.com, Inc. Since March 2005, the Action Alerts PLUS Portfolio has been held by a Trust, the realized profits from which have been pledged to charity. Mr. Cramer retains full investment discretion with respect to all securities contained in the Trust. Mr. Cramer is subject to certain trading restrictions, and must hold all securities in the Action Alerts PLUS Portfolio for at least one month, and is not permitted to buy or sell any security he has spoken about on television or on his radio program for five days following the broadcast.