Sometimes my email presents the greatest questions, questions that I know must be answered if there is to be any rigor or pattern or consistency to the often -- at times -- irrational investing process.
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Over the weekend I got an email from someone who wondered why he should possibly buy
, now in the high 50s, when he passed on it when it was cheaper in the 40s.
I think this question is at the heart of a lot of confusion about stocks in general. I want to approach this by first considering two incredibly simple, some would say simplistic, answers, and then delve more deeply into this particular situation.
One simple, clear way of looking at things is to say, "I missed it, and I am going to wait for another Kimberly to come along."
My whole trading being is predicated on a belief that such a view is both shortsighted and wrong.
The reason, coincidentally, is because of an equally simple belief my wife taught me during the years when she ran the trading at my hedge fund: "You should buy a stock if you think it is going to go up, no matter where you are getting in."
In other words, the mere fact that you missed it in the 40s shouldn't even be a part of the equation. It is meaningless. Think about all of the great moves, the companies like
that you would have missed with that same illogic.
It simply has no place in the investing firmament to factor in that you missed Kimberly-Clark in the 40s.
Now, if you don't think that way, let's delve into the specifics. In the 40s, Kimberly was reeling from an acquisition of
The fear in the 40s was that Kimberly-Clark had so overspent that it could never recover. Plus there were rampant fears of tissue price wars and of a suddenly aggressive
Procter & Gamble
taking share in diapers. Europe was also a drag. So was Asia and Latin America, by the way. Things looked quite bad in the 40s.
Now, in the 50s, the price war seems to have abated. The diaper market has gotten less difficult. The overseas markets have all improved. And the company has whittled down debt to the point that it wants to start buying stock back aggressively.
To me, the question is not whether the stock should have been bought in the 40s; it is whether all of these positives are reflected in the 50s.
I think not. That is why I bought the stock.
Investing is an imperfect game. People screw up all of the time. I should have seen the positive changes in Kimberly-Clark. But I didn't. I could kick myself about it. Or I could try to reason whether all of those changes are in the stock.
I bought the stock because I think it will go higher. I think it will go higher because things are getting better at Kimberly. Sometimes that is all there is to it.
James J. Cramer is manager of a hedge fund and co-founder of TheStreet.com. At time of publication, his fund was long Kimberly-Clark, Procter & Gamble, America Online, Microsoft, Intel and Yahoo!. His fund often buys and sells securities that are the subject of his columns, both before and after the columns are published, and the positions that his fund takes may change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Cramer's writings provide insights into the dynamics of money management and are not a solicitation for transactions. While he cannot provide investment advice or recommendations, he invites you to comment on his column at