Cramer: "Invest in Google, Don't Trade It"
Enviado: 27/5/2005 15:02"Invest in Google, Don't Trade It"
By James J. Cramer
RealMoney.com Columnist
5/27/2005 9:36 AM EDT
"Trading $260 stocks may just be too hard in this environment. If you want to own Google (GOOG:Nasdaq - commentary - research), you have to own it, not trade it. If you want to take some off the table because it has had a big run, that's great, but don't expect to be able to get back in that easily.
That's my takeaway from the brutal rally and selloff in Google around the Goldman Sachs Internet conference held Wednesday and Thursday this week. The Google beast is too difficult for all but the most proficient to trade. Better just to own the darned thing.
Still, it is instructive to look at what happened at the Goldman conference and whether you could be more right in theory, but wrong in execution, than I tried to be on my television show, "Mad Money," the other night.
Let's review what went on. After liking Google for 100 points -- not a bad call, I might add -- and going nuts to have everyone and his brother in the stock for that call, I predicted that the stock would sell off after the company spoke at Goldman Sachs. I said that CEO Eric Schmidt would say nothing new and that the traders who bid it up in anticipation of the speech would be disappointed and kick it out.
Now, what happened? Google ran up into the speech and then traded down the next day, where I said you would get a better entry point.
Hey, genius?
No, idiot!
Here's how the Haters of Cramer frame the debate. "You said sell Google and it then ran up 6 points and now you take credit for getting it right?"
Or, "You said to sell Google at the close and I did and then it went up big and I lost lots of money."
Or, "You did this for your hedge fund pals, and how much are they paying you?"
In truth, Schmidt spoke until 5 p.m. EDT Wednesday. The stock traded up to $265 during his talk. That was indeed the top tick, and if you sold it right at the end of his talk, you got the best price. It then hung there at the start of trading the next day and then went down.
If you couldn't trade after hours, you couldn't get the $265 tick. You would be stuck with the $260 closing price before the speech began. If that's the case, I could see how you would say that this trading idea cost you money because you would have sold at $260 and then bought at $264 the next day where it opened.
Now, let's put aside the notion that it is worth despising me for that; I simply was trying to point out what the hedge funds would do out at the conference and how you could beat them at their own game. You can't beat them at their own game if you trade from 9:30 a.m. ET to 4 p.m. ET; it just won't work.
I dutifully answered my emailers by pointing out that the stock did indeed sell off after the speech, that was the intent and it was what happened. I also point out that I have no money in hedge funds, that the only money I have in the market is in Action Alerts PLUS, that I own Yahoo! (YHOO:Nasdaq - commentary - research) in that account and that if I have a gain, it goes to charity, not me. Doesn't make me Mother Theresa, but doesn't make me Ivan Boesky either.
I have thick skin, but can we at least stipulate that in the end, I liked Google for a hundo and said it would sell off after the speech because Schmidt wouldn't say anything of consequence? "
(in www.realmoney.com)
By James J. Cramer
RealMoney.com Columnist
5/27/2005 9:36 AM EDT
"Trading $260 stocks may just be too hard in this environment. If you want to own Google (GOOG:Nasdaq - commentary - research), you have to own it, not trade it. If you want to take some off the table because it has had a big run, that's great, but don't expect to be able to get back in that easily.
That's my takeaway from the brutal rally and selloff in Google around the Goldman Sachs Internet conference held Wednesday and Thursday this week. The Google beast is too difficult for all but the most proficient to trade. Better just to own the darned thing.
Still, it is instructive to look at what happened at the Goldman conference and whether you could be more right in theory, but wrong in execution, than I tried to be on my television show, "Mad Money," the other night.
Let's review what went on. After liking Google for 100 points -- not a bad call, I might add -- and going nuts to have everyone and his brother in the stock for that call, I predicted that the stock would sell off after the company spoke at Goldman Sachs. I said that CEO Eric Schmidt would say nothing new and that the traders who bid it up in anticipation of the speech would be disappointed and kick it out.
Now, what happened? Google ran up into the speech and then traded down the next day, where I said you would get a better entry point.
Hey, genius?
No, idiot!
Here's how the Haters of Cramer frame the debate. "You said sell Google and it then ran up 6 points and now you take credit for getting it right?"
Or, "You said to sell Google at the close and I did and then it went up big and I lost lots of money."
Or, "You did this for your hedge fund pals, and how much are they paying you?"
In truth, Schmidt spoke until 5 p.m. EDT Wednesday. The stock traded up to $265 during his talk. That was indeed the top tick, and if you sold it right at the end of his talk, you got the best price. It then hung there at the start of trading the next day and then went down.
If you couldn't trade after hours, you couldn't get the $265 tick. You would be stuck with the $260 closing price before the speech began. If that's the case, I could see how you would say that this trading idea cost you money because you would have sold at $260 and then bought at $264 the next day where it opened.
Now, let's put aside the notion that it is worth despising me for that; I simply was trying to point out what the hedge funds would do out at the conference and how you could beat them at their own game. You can't beat them at their own game if you trade from 9:30 a.m. ET to 4 p.m. ET; it just won't work.
I dutifully answered my emailers by pointing out that the stock did indeed sell off after the speech, that was the intent and it was what happened. I also point out that I have no money in hedge funds, that the only money I have in the market is in Action Alerts PLUS, that I own Yahoo! (YHOO:Nasdaq - commentary - research) in that account and that if I have a gain, it goes to charity, not me. Doesn't make me Mother Theresa, but doesn't make me Ivan Boesky either.
I have thick skin, but can we at least stipulate that in the end, I liked Google for a hundo and said it would sell off after the speech because Schmidt wouldn't say anything of consequence? "
(in www.realmoney.com)