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Playing the Upgrade Game

It's always an uphill battle to determine whether an upgrade will hold water.
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The market misjudges upgrades all the time. Take this morning's Hewlett-Packardundefined upgrade by Laura Conigliaro at Goldman Sachs. Conigliaro doesn't idly upgrade something that has been as tortured as Hewlett. This company has burned people way too many times.

Yes, Hewlett barely opened up -- at least for a tech stock -- adding a point. That was a great opportunity, in my opinion (I bought the opening), because a major upgrade of a dog like HWP can really get the thing going.

Most of the time upgrades and downgrades are done right after the announcement of a quarter and there really isn't an opportunity to do much. Everybody has the same information at that point and it is usually worthless groupthink. (Check out


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today if you want to see what that is like.) But other times someone upgrades because they have done a massive amount of homework and realizes that there could be a change, a major change at the margin.

That's how I read Conigliaro's HP upgrade. So far, the market is telling me I am right.

James J. Cramer is manager of a hedge fund and co-founder of At the time of publication the fund was long Hewlett-Packard, though positions can 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 by sending an email to