Cramer's Lesson on the 'Art' of Investing
I did at my dad’s hardware store! At the beginning of spring, I remember my dad setting out the Weber grills at the front entrance of the store—all different colors (green, red, blue)—and it was just as important to sell those by the end of the warm-weather season as it was to get rid of the shovels piled up during winter time. Shovels were always hard to predict, because you never knew just how much snow would hit. Not having enough inventory could be just as tough—After a couple of rain floods, the whole town would be searching for water pumps to clean up their basements. They would pay anything for them. But it was hard to track down the inventory last minute. All about the flow.
Now, our aired Mad Money piece focused on the second of Jim’s second piece of market wisdom—the “art” of investing—with a focus on understanding the more cerebral HD management vision. What does this mean? The essential advantage of HD lies in the restructuring program rolled out in 2008 just before the downturn by CEO Frank Blake. His foresight and execution has continued to make HD a winner warranting higher valuation. In contrast, LOW’s more recent restructuring plan suffered from “too little, too late” syndrome. However, ultimately even this more cerebral HD management vision and restructuring plan links back to the basics of managing inventory appropriately—that was the main crux of Blake’s restructuring program, after all.
While investing is, in fact, an art and not a science, it ultimately does come back to the basics. It’s just that sometimes learning basics are rooted in areas you would least expect: say, gift wrap and Weber grills. And, don’t forget, buy Home Depot over Lowe’s—If the company can execute in this uncertain environment, just watch what will happen when we actually see some real uptick demand and stabilization in the housing market. And it pays you while we wait—a nice 3% yield ain’t too shabby. I personally plan to stick with investing over handywork.
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