Skip navigation
MOST POPULAR RELATED TAGS
  • TOPICS
  • SECTORS
  • COMPANIES

MAD MONEY FEATURES

Podcasts PODCASTS
Watch the Lightning Round whenever and wherever you want.




Widget OFFICIAL MAD MONEY WIDGET
Grab this all-in-one application and get recaps of the show sent right to your desktop or blog.




Soundboard CRAMERS SOUNDBOARD
Admit it: You've always wanted to hit the "They
know nothing!" button. Here’s your chance.




Mad Money PhotosCHECK OUT OUR PHOTOS
Check out Cramer on set, back to school, behind the scenes and more.




ShopSHOP FOR MAD MERCHANDISE
Buy Cramer books, bobbleheads and other Mad Money merchandise.




Ringtones RING TONES
Pick up the phone! It's Cramer! New Mad Money sounds for your cell phone.




Mobile AlertTEXT MESSAGE ALERT
Mad Money's mobile. Get show highlights sent to your phone.







Text Size
Apr.28
6:18 PM ET
Tuesday, 28 Apr 2009
Why Wall Street Looks Forward, Not Back

Wall Street doesn’t care about a company’s earnings last quarter, Cramer said Tuesday. The only thing that matters is the performance going forward. That’s why a consistent, stable firm like Bristol-Myers Squibb [BMY  Loading...      ()   ] can lose 4.3% in a single trading session, despite reporting solid numbers today. At the same time, Fortune Brands [FO  Loading...      ()   ] cut its dividend, but that stock finished the day higher by 3.9%.

What’s going on here? Wall Street sees signs of an economic recovery, so it is abandoning so-called safety stocks like Bristol-Myers for early-cycle plays like Fortune Brands. The focus is shifting from defense to growth because money managers expect a much better business environment six to nine months from now. That is what’s driving this market, and it’s the reason a seemingly undeserving stock like FO is rewarded with buying.

Cramer emphasized how important it is that viewers understand this trend. If investors wait for Fortune Brands to increase its dividend again or beat its earnings estimates, then they will pay $58 for the stock rather than $38. Sure, you could sit on BMY’s 6% dividend yield, but there’s no real capital appreciation to be had with that strategy.

The bottom line, Cramer said, is that come fall FO could be in much better shape, while Bristol-Myers will be about the same as it is now. That means Wall Street, addicted as it is to growth, is going all in on stocks like Fortune. Smart investors should do the same.

Questions for Cramer?

Questions, comments, suggestions for the Mad Money website?

© 2009 CNBC, Inc. All Rights Reserved

Tools:
PrintEmailAdd This share icon
Next Post
  • digg share
ADD COMMENTS
Remaining characters


Current DateTime: 07:13:39 15 Nov 2009
LinksList Documentid: 29778428

Current DateTime: 07:13:45 15 Nov 2009
LinksList Documentid: 29779196

Current DateTime: 07:13:45 15 Nov 2009
LinksList Documentid: 29779199

Current DateTime: 07:13:47 15 Nov 2009
LinksList Documentid: 29779198
  Data is a real-time snapshot  *Data is delayed at least 15 minutes
Global Business and Financial News, Stock Quotes, and Market Data and Analysis

© 2009 CNBC, Inc.  All Rights Reserved.
A Division of NBC Universal
Thomson ReutersThomson Reuters