Thursday, March 26, 2009
(Cont'd from above)...

Now there is a stock that I like historically… I want to take it apart… cause it is the closest thing to buy and hold that you will ever get on Mad Money… I just want to show you how vulnerable the theory is…

It is Johnson & Johnson (JNJ*)…

Johnson & Johnson is a great long term play… but it will never be buy and hold… it will always be buy and homework… what is exactly is wrong with finding a high quality stock like J&J and holding it thru thick and thin… if you are actively managing your money… doesn’t that make you a traitor… a word that is practically an expletive in certain crowds… now isn’t this joker, smoker, midnight toker Cramer… this Bozo the clown… yet another euphonious traitor who encourages people to get in and out of stocks… the horror… rather someone who encourages good old fashioned wholesome stupid investing… no.

Paying attention to your investments, keeping track of them, doing your homework… how is that sinful… as I so often say if you have 1 hour per stock per week that is great… how about selling something when you have a huge profit… how is that stupid… someone tell me… or how about when the juice runs out of stock, getting out of it, how is that bad… that is what I try to teach you on this show smart investing that will make you money rather than owning stocks for the sake of owning stocks as so many others preach… buy and hold isn’t responsible… it just isn’t… it is the lazy mans investing strategy… a lot of mutual fund managers who want you all in all of the time, that is how they generate the big fees… they will tell you to buy and hold with them… I am not making any money off of your investing decisions… not fees, not commissions… so what is my stake here… it is just trying to help you… trying to make you look good… and I am telling you just because some pros endorse it and it is easy doesn’t make buy and hold right or smart… if you want to understand this… how about this… when you buy a coat, it holds up, keep wearing it… but when holes develop… stop wearing it… stocks are merchandise just like coats, nothing more nothing less.

The people who want to keep you in your stock chains simply dismiss every common sense analogy that I come up with on this show… I cannot do that… I am not from their bizarro world… I like them pretty, not ugly… I am from the world of common sense and so are you.

Now, I think that JNJ is one of the best drug companies out there… I have liked it for 4 years on this show… I liked it at my hedge fund… I liked it when I was a broker at Goldman Sachs… I still like it… it is a terrific healthcare company… nice yield, has the ability to raise its dividend… best sign in this market that a company has real sustainable growth… it is therefore worth owning.. for the long term, well after all 40% of the historical return from the stocks come from their dividends… if you are looking for a great long term place to put your money… you want higher yielder that keeps raising their dividends along with their share price… in fact, I like JNJ so much that my charitable trust, ActionAlertsPlus.com, owns it… but I have got to tell you… the moment that I think that the fundamentals have changed for the worse and it is no longer good, I will sell it… that is right, I will sacrifice this stock of these great brands of which everybody knows of unbelievable JNJ baby shampoo, and of band-aids, and of baby powder… I will sacrifice this on the altar of changed fundamentals.

I am an investor for ActionAlertsPlus.com, my charitable trust portfolio, you can follow along with every move and you will see from my open hand that a good investor knows that every company could falter… so I would not hesitate to bang the register on JNJ for a minute if I felt like the fundamentals had peaked… this may sound like ancient history to some of you, particularly those who read CONFESSIONS OF A STREET ADDICT, but in 1987 going into the stock market crash… the greatest crash in history… I was in cash… I had sold everything… kind of like I told you to get out on the Today Show on October 6th, 2008... told you to sell everything you could if you needed money for 5 years… remember, we started getting back in at 6500... how many people can say they totally side stepped the humongous crash of ’87... probably not the endless ranks of folks who critique this show on their blogs every minute… or pay for keywords in Google that comes up Cramer and has images or likenesses of me… or how about the in Cramer we don’t trust mob…

Anyway, going into the crash that Friday I had sold everything… every single stock… but I did not want to part with my favorite, that is right it was JNJ… it was not until 3:30 in the afternoon on that Friday, which was one of the worst days ever… ahead of that Monday which was the worst day ever… JNJ was the only stock that I had left… then, well, at the last minute I sold it… then the crash happened… I bought it back immediately… immediately following the crash on Tuesday… half the price that I sold it for Friday… does that make me a traitor… who knows nothing about real investing for real people… or maybe someone who should coach you, help you become a better investor… JNJ has been knocked down from $72 to $52... I think that this is a good place to buy… it yields 3.5%… although I am always happy to buy more on the way down… JNJ is a big winner from the weaker dollar, which is getting weaker by the day… 40% of its sales are from outside the US… it was one of the biggest victims of the strong dollar… it knocked off 4% points of its growth last quarter… the company has got a strong balance sheet… smart management… took advantage of huge declines to make two cheap shot gun marriages… MIA style, and you know what that it is… Mentor and Amrex it bought.

It is true that JNJ is losing patent protection, I always like to give you the downside, on two drugs this year… but I think that is in the stock, that is why it is at $52 and not $72... JNJ has got seven drugs all of which could be very big going thru the FDA process right now… how about the dividend… a sign to us that this could be a great stock for the long term… JNJ has increased its dividend for 48 consecutive years… which is why I am focusing on it tonight… it boosted it by 11% in early 2008... the company has more than enough cash to boost it again.

Here is the bottom line…

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