Investing isn’t always about finding a company with longer-term prospects, buying the stock and watching the fundamentals take it higher. You don’t always need such a solid thesis. In fact, sometimes cheap is just as good.
It’s true that you’ll often find stocks worth consideration, but the price just isn’t low enough. In those cases, discipline is key. But if your choice is Bank of America under $4, as it was in early March 2009, or Sprint Nextel below $2, its price at the beginning of the year, you might want to snatch those up.
Why? Because Cramer doubted BofA was doomed to nationalization at the time – especially after Fed Chairman Ben Bernanke’s 60 Minutes declaration that no major bank would be allowed to fail. And Sprint, despite hemorrhaging customers, had delivered a bad but better-than-expected quarter and announced it had the money needed to cover its debts. So at those low prices, these stocks were too good to ignore. And the trade paid off: BAC tripled in two months, and S returned 69% in three months.