is a stock people have consistently reacted negatively to once it has reported earnings -- and they've been wrong almost every time, Jim Cramer said on TheStreet.com TV's Wall Street Confidential
Web video Thursday.
"There should be no reaction," he told George Moriarty, the host of Wall Street Confidential. "It's literally just another good quarter."
Although Cramer said he recognizes Goldman had a weaker quarter seasonally, the stock, which he owns for his charitable trust,
Action Alerts PLUS, has a earnings power of $20 per share. This means that when the stock was at $230 earlier today, people were selling it at 10.5 times earnings, which doesn't make sense, he said.
"More importantly, on a time sensitive basis, there was a very big put trade being put on all day
Wednesday," Cramer said. "There were lots of guys buying the June 230 puts when the stock ran to $233."
Those buyers, he continued, are "furiously" blowing out those puts, and the effect of that should be to push the stock closer to $230. "I would urge people to recognize that as the short trade is taken off, the stock will go higher," Cramer said.
This week brings a bunch of brokerage earnings report, and everyone is measured off of everyone else, he said. If
has a blowout quarter and Goldman does not, people wrongly conclude Goldman's bad.
People should recognize "that the trading itself during the week of the brokerage earnings has not been indicative of anything," Cramer said. "What's more important is the long-term trend which is
that Goldman is increasing in book value and increasing buybacks." This is really what drives the stock.
"Those that want to do short-term trading on Goldman have been gravely mistaken," he added.
Further, a lot of people have the perception that the stock is always right, Cramer said. However, those who know the market well know that is not the case.
"As a matter of fact, stocks are often wrong," he said. "They're not wrong six months or a year from now, but they're almost always wrong when they trade violently after a quarter.
"I would caution people who are new and even people who are somewhat experienced not to believe a stock," Cramer advised. "Believe your own work."
At the time of publication, Cramer was long Goldman Sachs.
Jim Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. Outside contributing columnists for TheStreet.com and RealMoney.com, 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
Action Alerts PLUS. Watch Cramer on "Mad Money" weeknights on CNBC. Click
here to order Cramer's latest book, "Mad Money: Watch TV, Get Rich," click
here to order his book, "Real Money: Sane Investing in an Insane World," click
here to get his second book, "You Got Screwed!" and click
here to order Cramer's autobiography, "Confessions of a Street Addict." While he cannot provide personalized investment advice or recommendations, he invites you to send comments on his column by
TheStreet.com has a revenue-sharing relationship with Traders' Library under which it receives a portion of the revenue from Traders' Library purchases by customers directed there from TheStreet.com.