Jim Cramer urges investors to fight ‘lazy thinking’ when deciding to sell a stock
CNBC’s Jim Cramer on Monday urged investors to avoid “lazy thinking” in their buy-and-sell decisions, offering recent personal examples where he personally overcame it.
“Deciding when to sell is just as important as deciding when to buy. So, please, do not let your emotions drive those decisions,” the “Mad Money” host said. “We can’t ban lazy thinking, but we can identify it and stamp it out one stupid idea at a time.”
Cramer’s charitable trust owns shares of Nucor, snatching up the stock previously when it traded around $107 on the expectation of a big infrastructure package from Congress. Then, Cramer said he “watched in horror” as the steelmaker’s shares went on to fall to $89.
On Monday, the stock had climbed back to $107, and Cramer said his first instinct was to trim the position because “we’d gotten back to even” with the trust’s first purchase. However, he said discussions with Jeff Marks of TheStreet.com, Cramer’s financial news website, helped changed his mind and allowed him to see all the tailwinds that still exist for Nucor.
That’s “the power of lazy thinking, because in the vast scheme of things, with the stock trading at nearly six times earnings and an infrastructure bill looking like it’s going to be a sure thing, there’s absolutely no good reason to sell Nucor now,” Cramer said.
Cramer said another recent instance involves wholesale retailer Costco. After Friday’s strong jobs report, Cramer said he heard fresh chatter about the Federal Reserve needing to ease of its highly accommodative monetary policy to prevent the economy from overheating.
That led the “Mad Money” host to examine his charitable trust’s portfolio in search of winning stocks in which to take profits. He said he settled on Costco, believing its relatively rich valuation made it more sensitive to the prospect of higher interest rates.
Eventually, Cramer said he came to the conclusion that the spread of the Covid delta variant in the U.S. made an adjustment to the Fed’s rate policy unlikely in the near term.
“There was nothing wrong with the business; [Costco] didn’t miss numbers. I was simply reacting to scaremongering from the inflationistas, even though I disagree them when I take two seconds to think about it,” Cramer said. “That’s the kind of thinking that’s devoid of rigor. Fortunately, I had second thoughts, and we didn’t go through with it.”
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