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By
James J. Cramer
Duration
is the hobgoblin of little minds.
Last night I was cruising our boards and I came across this item: "Jim Cramer is a *&^$&* and a #&#$#&$ and a $*%^ who should &^$% and ^*&$&$." Oops, those weren't our boards. That was Yahoo! (Nasdaq:YHOO - news) /Silicon Investor TSCM (Nasdaq:TSCM - news) boards. Hoo-hah, my mistake!!
Anyway, one of the underlying themes of the Amazon (Nasdaq:AMZN - news) thread -- which, if you haven't been there, is the most intelligent discourse on a stock I have ever come across -- is how long will I stay long Amazon.
To which I say, long enough to make money or get out without a big loss.
When we think of quaint notions of the 20th century, one of them will be the notion of the buy-and-hold investor. Let me tell you why.
Let's use real-life examples.
Let's say I bought Philip Morris (NYSE:MO - news) at the beginning of the year. Hey, dog of the Dow, great company. (Let's for the moment forget that I will smack anybody in my family who uses its main product, and I haven't hit anyone since Adam Stagliano in 11th grade.)
I would now be down 36%. In the world of the quaint, 20th-century notions of "long-term investing," I would be labeled a patient, conservative investor. I would be "considered." I would be thoughtful. I would have done my homework, because the P/E is low, the yield is great and the management, well, what can you say, they've been killing people for decades and getting away with it by sponsoring the arts!
In my word, though, I'd be an idiot. I would be the fool who rode down Philip Morris. For nine months yet. I would be a travesty.
So let's stipulate, in one world, I am a thoughtful, considered, long-term investor. In the other world, I would be down 12 points on a $45 stock. The horror. (Can't get that Conrad out of my mind sometimes. He was monster good. Too bad they ruined him by making us read his worst, Lord Jim.)
Now, let's consider the fate of JDS Uniphase (Nasdaq:JDSU - news) . A couple of weeks ago, my associate, Matt Jacobs.com, went to see these guys in one of these forums that I wish TheStreet.com would cover more of. He called me from the meeting, midway through it, told me management was incredibly bullish. I told him I didn't like the tape. He told me he thought we could make 12 points.
I bought the stock. By the next day I made 12 points. And then I booked the trade. Total time elapsed: 18 hours.
Which is better? Losing 12 points over 9 months, or making 12 points over 18 hours?
In the logic that is "long-term" investing, the former certainly seems more sane, rational and considered. But that's completely ridiculous. The latter is the only thing that makes sense.
One is a loss, the other a win.
I don't care how long or short it takes me to make money. I want to make money. If you are telling me the lesson is that I want to be a partner with a company long term because that's what investing is all about, then fine.
I don't want to invest. I want to make money. I'll let the academics and the "professionals" invest.
It costs me too much. I'll run out of money doing it.
Random musings: My email is getting smaller! So many of the great insights that had only been shared with me are now being shared on the boards among many. It makes me ecstatic and is a great joy to my wife and kids. ... Hats off to The Miami Herald for putting the email addresses of reporters right under their names. That's a great first start. Fox News Channel show this weekend gives you insight to how Berko and I are playing October at our shop. We got miked and kicked the ideas around. Strange but true -- Berko and I are the same shirt size. That's my checkered shirt he is wearing. ... Re: show, I continue to put heat on cable operators who don't take our show. Warning Comcast CMCSA:(Nasdaq:We - news) will take this show to Philadelphia and do it live in f! ront of your offices. -- Philly Inquirer, are you listening? -- if you don't wake up to how much I care about this show being seen in my hometown. You guys are killing me!! You are more embarrassing than the Eagles, whom, by the way, I am taking with 9 against Berko for $20 this weekend.
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