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Investor, Know Thyself

Thursday, 21 Aug 2008 | 11:30 PM ET

You’d be hard-pressed to find an investor who wouldn’t want a 287% return. But it’s important to remember that profits like that come at a price.

HNZ vs. CSX
Assessing the merits of Heinz and CSX Corp., with Mad Money host Jim Cramer.

Cramer started Thursday’s show by contemplating a common investor conundrum: Do I play it safe and go for measured, steady returns? Or is it better to buy a more volatile stock with the potential to bring in the big bucks?

Compare Heinz and railroad operator CSX. Heinz reported a great quarter today thanks to its strong brands and growth overseas. Still, the stock climbed only 28 cents. That’s just how HNZ trades. And it’s this kind of dependent and consistent slow growth that attracts certain types of investors.

CSX, on the other hand, without any obvious catalyst, jumped $1.57, or 2.6% Thursday. Now this could have been because of a rise in commodity prices, which CSX transports, or a weaker U.S. dollar, beneficial to CSX because the company ships overseas. But we never really know with stocks like these, and similar shifts in the market could just as easily have produced declines rather gains.

“So before you buy a stock,” Cramer said, “you need to ask yourself, what can you handle.”

Do you want slow and steady, like Heinz’s 60% return over the past five years? Or would you rather the wild ride that comes with CSX but returns that 287%?

Either way, the onus is on you in these kinds of situations. Only you know what’s best for your portfolio.

So, as Cramer said, “You make the call.”




Questions for Cramer? madmoney@cnbc.com

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CSGN
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HNZ
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