GO
Loading...

Cramer: Trust Your Thesis

Cramer has a new rule: Never turn an investment into a trade.

Just so you can differentiate between the two, let’s define the terms. A trade is a short-term buy specifically to profit from the bump that comes with a strong quarter, new product or something similar. An investment, though, is a stock you want to hold for much longer, usually about 18 months, Cramer said. Investments forego the quick gains for even bigger returns down the road.

A lot of times investors –even Cramer – will catch a jump in share price on a catalyst and then exit the stock. Even Cramer did it once when he bought Apple at $26 back in 2004 on the strength of the iPod. He caught five quick points and cashed out. After that, the stock soared toward $200, and he missed the whole trip.

Cramer’s suggestion: Don’t do that. Trust your thesis, and stick with your stock for the long term, especially when you’ve done your homework. Why settle for $5 when you could have $50?






Questions for Cramer? madmoney@cnbc.com

Questions, comments, suggestions for the Mad Money website? madcap@cnbc.com

Contact Mad Money

  • Showtimes

    U.S.
    Monday - Friday 6p ET
    Australia
    Saturday 8a, 1p, 7p SYD
    Sunday 12a, 1a, 8a, 7p SYD
    New Zealand
    Saturday 10a, 3p, 9p NZ
    Sunday 2a, 3a, 10a, 9p NZ
  • Jim Cramer is host of CNBC's "Mad Money" and co-anchor of the 9 a.m. ET hour of CNBC's "Squawk on the Street."

Mad Money Features

  • Grab the latest CNBC gear from the NBCUniversal Store!

  • Get a behind-the-scenes look at how Cramer formulates his investment advice. "Inside the Madness" is a column, which features e-mails and more with Cramer and his researcher Nicole Urken.

  • You’ve always wanted to hit the “Hallelujah!” button. Here’s your chance.

Mad Money Moments

Cramer's New Book