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Cramer: The bull case for staying in stocks through a market dip

Bull case for staying in stocks through a dip
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Bull case for staying in stocks through a dip

Days like Wednesday, with President Donald Trump and former FBI Director James Comey dominating headlines, make Jim Cramer think of investors who sell stocks on worry.

"Now, granted, I always say that bulls make money, bears make money, and hogs get slaughtered. But that doesn't mean you need to throw away a stock entirely because you can't take the pain on days like today or you're worried about the implications of this seemingly endless Trump scandal – as if [the] business of Amazon has anything to do with Flynn or Comey or the rest of the grist from the White House mill," the "Mad Money" host said.

As an example, Cramer turned to the stock of Starbucks, which he owns for his charitable trust and actually got a boost on Wednesday despite the market-wide dip.

At first, Cramer thought its rise presented a good opportunity for investors to take profits. But at a closer glance, he realized that a stock that went up amid frantic selling of S&P 500 futures could mean that there are motivated buyers behind Starbucks' rise.

Watch the full segment here:

Cramer: The bull case for staying in stocks through a market dip
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Cramer: The bull case for staying in stocks through a market dip

"What did Starbucks do wrong that I wanted to sell it other than the action in the overall market made me nervous?" Cramer wondered.

Starbucks' earnings last quarter did miss Wall Street's expectations, but listening to Executive Chairman and former CEO Howard Schultz and his successor Kevin Johnson on "Squawk on the Street" the day after, Cramer heard that business was improving and Starbucks was tackling some of its customer traffic and mobile pay issues head-on.

"Panera Bread had the same problem, and when it was fixed, the stock zoomed. Now, ultimately, Panera got a takeover bid. That's not going to happen at Starbucks. But the stock's resistance to falling does tell me that you can't give it away here," Cramer said. "If anything, you want to be a buyer into the weakness."

The "Mad Money" honed in on this problem because despite Starbucks' strong performance, it seems investors have trouble staying in the stock.

He acknowledged that, like Amazon, Starbucks has had problems that caused some weakness, like its market capitalization being topped by McDonald's, now $119 billion versus Starbucks' $86 billion.

"But what matters to me is that I don't want to be shaken out by this period of underperformance any more than I wanted to be shaken out of Apple during its swan dive at this exact time last year," Cramer said.

So while staying in stocks on days like Wednesday could test investors' skills, patience, and, frankly, blood pressure, Cramer came back to one of his central mottoes to prove his point.

"I don't want to look back at Starbucks like so many look back at Amazon and say, 'Yeah, let's see, I sold that, what was it? It was something having to do with Trump? Comey?'" he said. "I don't want [that] to happen to my charitable trust, because that's not how you invest. It is how you panic, though, and there you go: no one ever made a dime panicking."

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