Mad Money

The Problem With Market Pessimism


When you abandon all hope, Cramer told viewers on Tuesday, you're abandoning all opportunity. And that kind of hyper-negativity can cost you money.

Expectations are so low right now that even the worst hit companies are surprising Wall Street. Just look at this week's better-than-expected earnings reports from Nucor, U.S. Steel , Freeport-McMoRan and Peabody Energy . Now all those stocks are up big. Even some bad press for Research in Motion turned out to be wrong, sending RIMM shares higher.

U.S. Steel jumped 7% today, Nucor climbed 6%, Peabody added 12% and Freeport's up 12% since its Monday report. Why? Because Wall Street feared the worst. And when these companies returned more positive numbers, investors piled in. Nobody expected a coal stock like Peabody to hold up given that President Obama is so focused on emissions. But there are 30 new plants under construction that will require 70 million tons of coal annually. Who knew?

RIMM was the victim of Wall Street Journal article titled "BlackBerry Storm Is Off to a Bit of a Bumpy Start," which claimed the product launch was botched. The Journal compared the Storm to Apple's 3G iPhone, which sold 2.4 million units in its first quarter. The difference here, though, is that the Storm wasn't RIMM's only release that quarter. And just today Verizon , the sole distributor of the Storm in the U.S., said that 1 million units have sold through January since the phone's Nov. 21 release. As a result, the stock popped 6% during Tuesday trading.

The bottom line: If you're too pessimistic, you'll miss opportunities to profit. You'll miss moves like those we saw in U.S. Steel, Nucor, Freeport-McMoRan, Peabody Energy and Research in Motion.

Cramer's charitable trust owns Freeport-McMoRan.

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