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Patience Over Pessimism

Thursday, 29 Jan 2009 | 3:59 PM ET

What's the best way to approach buying the stocks that we recommend on the show? This is a tough market, and we're not banking on quick gains like those we got from Wednesday's rally. The key here is patience.

Let's take Research in Motion as an example. Here's a stock that Jim has recommended repeatedly. He said it was a buy on Jan. 13, 14 and 15, when the share price ranged from $45.10 to $49.24. Then the stock moved up to the low $50s, trading between $52 and $53 for most of last week.

Let's say you missed that move and still wanted in. With a company like Research in Motion, where you're confident in your thesis about the business, you want to be patient and wait for something to ding the stock. RIMM generates a lot of headlines, and you can pretty much count on some of them being negative.

You got your chance on Monday, when The Wall Street Journal came out with a negative article on the new touch-screen Blackberry Storm, "Blackberry Storm is Off to a Bit of a Bumpy Start."

That knocked RIMM's stock down a quick $2 and gave you a great entry point. On Tuesday night's show Jim mentioned this article and the opportunity it gave you to buy RIMM as the market became too pessimistic and negative about the company.

The trick for you then, as a buyer, is to wait patiently and not be discouraged by the negative news. As long as you still believe the stock is a good buy, you have to use any negative press to back up the truck and purchase more shares. You have to be quick. Research In Motion bounced back the very next day when Verizon reported earnings and mentioned that it had sold more than 1 million Blackberry Storms, intended competitor to Apple's iPhone, since the launch on Nov. 21.

Discipline says don't chase a stock when it goes higher. Conviction is what let's you buy a good stock on those occasions where bad news takes it lower. You need both to buy something intelligently.








Cliff Mason is the Senior Writer of CNBC's Mad Money w/Jim Cramer, and has been that program's primary writer, in cooperation with and under the supervision of Jim Cramer, since he began at CNBC as an intern during the summer of 2005. Mason was the author of a column at TheStreet.com during 2007, which he describes as "hilarious, if short-lived." He graduated from Harvard College in 2007. It was at Harvard that Mason learned to multi-task, mastering the art of seeming to pay attention to professors while writing scripts for Mad Money. Mason has co-written two books with Jim Cramer: Jim Cramer's Mad Money: Watch TV, Get Richand Stay Mad For Life: Get Rich, Stay Rich (Make Your Kids Even Richer). He is 100% responsible for any parts of either book that you did not like.

Mason has also had a fruitful relationship with Jim Cramer as his nephew for the last 23 years and will hopefully continue to hold that position for many more as long as he doesn't do anything to get himself kicked out of the family.




Questions for Cramer? madmoney@cnbc.com

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

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