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The 'Cramer Effect' and This Market

Thanks to a late-day decline that pulled the rug out from good and bad stocks alike on Monday, you've now got a fantastic opportunity to pick up Alberto-Culver, a stock we recommended on Friday as a recession-proof play on lower oil prices, similar to another hyphenated company we like, Kimberly-Clark, for a song. Alberto-Culver reported a good quarter yesterday, with better-than-expected sales, and went as high as $23.55.

But thanks to the riptide of late-day selling, Alberto-Culver got dragged back down to $21.80, just 13 cents above its Friday close, the price where we recommended it. Now the stock is back up in after-hours trading, and I don't know if you'll be able to get that price again Tuesday, but this is a great example of something we talked about last week: Huge, irrational late-day moves, caused largely hedge funds, that create either buying or selling opportunities, depending on whether we're up or down.

The standing rule is that you should wait five days before buying a stock we recommend on the show. Although in a market this ugly, I don't think the so-called "Cramer effect" is as pronounced. If you can buy a stock at about where we recommended it or less, then pull the trigger. You got a gift Monday afternoon in Alberto-Culver.

The lesson: Be patient. You didn't even have to wait a full trading day to get this one at a good price. It may have gone up again in after-hours trading, but this is a market that loves to punish stocks, whether they deserve it or not. Alberto-Culver will probably be punished again, so wait for it.




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.




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