Mad Money

Sell Block

Fans of Mad Money know that IBM’s Sam Palmisano is on Cramer’s Wall of Shame. He can’t stand the idea of a CEO getting paid as much as Palmisano and not delivering good results. But Cramer had to reconsider after IBM raised its dividend to 33% this week. Skeedaddy says that dividend raises are more trustworthy than a buyback because while buybacks can be suspended, no company would ever dare to cut its dividend. The stock would take too much of a beating. So for the time being, IBM is out of the Sell Block. is also getting out of the Sell Block. Cramer admits he’d been wooed by the bears into not believing in AMZN, but right now the company is spending to build its business, buying back stock and bringing in cash all at the same time.

Another admitted mistake is Riverbed Technology. Cramer wanted to wait for the quarter to come in before he recommended the stock, but he disguised his hyper-negativity as prudence and paid the price. RVBD blew away the quarter and the guidance. Remember this lesson, Home Gamers: Being too recklessly cautious can cost you money.

But Cramer did pick a few winners, not the least of which was Portfolio Recovery Associates. The stock is up over 39% since he recommended it March 5. American Ecology is up 24% since he gave it the thumbs up on Jan. 9. He recommends taking profits in both.

Bottom Line: The big lesson in today’s Sell Block – Don’t give in to the negativity just because it’s easy. That’s what Cramer did with IBM, with Sam Palmisano, and he was wrong, dead wrong. Any stodgy, old-line company that raises its dividend like IBM just did gets an immediate “Get Out of Sell Block Free” card, and a triple-buy recommendation.  

Questions? Comments?