Why It Was Right Not to Ride Down Philip Morris

The only philosophy a trader can have is to let gains run and cut losses fast.
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Enough of this consistency stuff. This is trading we are talking about, not dogma, or foreign policy or handwriting.

The other day I received an email blasting me for liking

Philip Morris

(MO) - Get Report

in the 40s and 50s and hating it in the 30s. To which I say so what? I am not being cavalier, I am being practical. Morris in the 40s and 50s reflected a calculation that the litigation risk was behind the company. When the big Medicare settlement was upon us, it seemed that MO could now focus on its core business, perhaps even bringing out some value to the company in some sort of realignment or restructuring.

That was wrong! The litigation risk was in front of them. Now such a restructuring seems like a moot point and all that awaits us are more dockets and more verdicts. Not only that, but the verdicts are taking on that same coloration that we saw in asbestos and IUDs and breast implants: revenge and anger toward the defendant.

My decision to get out, communicated here and on TV many, many times, frankly, was not only smart but also consistent with the only philosophy a trader can have: let your gains run and cut your losses fast. One critic wanted to know how I could not see more value in MO now than I saw in the 50s. The answer to that is, of course I do, and I could buy it now without having ridden it down, and be a heck of a lot smarter than if I had ridden it down.

But this stock is a headache to own. It is a battleground, where people have strong opinions on both sides. You don't find my buy list in the battlegrounds. This is one time when I like to be in the rear echelons away from the shrapnel and the hot lead. (Newbies, I don't print a buy list. The only time you ever hear of me and a buy list on this site is when my critics in the press say I have one and it is unfair because I am pumping and dumping!)

I want to be right and make money, not be wrong and lose money. It would have been wrong to ride down MO; it was right not to. It doesn't get any simpler than that. If you want to know why I feel good about my MO jettison all you have to do is click on

Taster's Choice: The Best of Cramer and read down to when my wife, the Trading Goddess, was furious at me about riding MO down from $50 to $35 a couple of years back. You can fill my email box with complaints about my trading style all you want, I just never want to feel the wrath of the Trading Goddess again for bad trading. Believe me, it is worse than a bunch of nasty emails.

Random musings:

Can you imagine if portfolio managers all decided to start writing about the market instead of just me and a handful of other guys? What a revolution that would be. Speaking of revolutionary,

Jim Grant


Grant's Interest Rate Observer

, has been running money at the same time he has been writing. Holy cow! When are the grand poo-bahs of journalism gonna take after that guy?

A couple of skeptical thoughts run through my head: If I had been consistently bearish, would the media be so anxious to attack me? Could that be why Grant has received no heat for writing and running money, while I'm a walking BTU? Maybe the way to get the press critics off your back is to be a bear!

Or, how about this one? Maybe Grant receives no heat because he is a card-carrying member of the dead-tree press with money management on the side. Well, let's see, as of today money management is my hobby and writing is my profession! Poof! You're a journalist!

Get me Orwell. Fast.

James J. Cramer is manager of a hedge fund and co-founder of TheStreet.com. At time of publication, his fund had no positions in the stocks mentioned, although holdings 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 at