| |
[Beginning of
Cramer's
verbatim
comments for
this segment...]
Jim:
Tonight’s show
is all about
helping you
better
understand the
new stock market
environment… and
teaching you how
to analyze
stocks so you
know when they
are telling the
truth… and when
you know that
you are being
mislead… how can
stocks,
inanimate pieces
of paper be
honest or
misleading… they
can’t… but the
companies behind
them can… which
brings us to the
subject of my
next rule… I do
not want you to
take your cue
from an inferior
company when a
worst of breed
player says that
things are bad
for the whole
industry… do not
just take it on
faith.
In every business
there are strong and
weak players… every
sector has them… and
the weak players
will almost always
seek to pin the
blame for their
failings on the
entire industry…
believe them at your
own peril… this
happens endlessly…
and people are
fooled daily… for
instance, when Dell
say things are bad…
and Motorola says
things are bad… you
should not
necessarily sell the
computer hardware or
semi conductor
stocks based on
that… because their
competitors and
suppliers… now let
me tell you
something, just on
this one particular
point… every time
Motorola has said
that things are bad,
and Dell has said
that things are bad…
every single one of
the players in that
area… every single
supplier sells off…
religiously… Apple,
Apple sells off
every single time…
do you know that
Apple has very
little to do with
Dell and Motorola…
other than the fact
that it is
considered tech… I
mean this is typical
worst of breed
behavior and you
can’t generalize
from it… let’s be
honest, you will
never hear a company
say you know what,
on a conference
call, we are doing
poorly because our
competitors have
better execution…
they are grabbing
our market share and
generally eating our
lunch… no CEO in his
right mind is going
to come out on the
quarterly conference
call with a
Shakespearean, the
fault to your
shareholders is not
in our stars but in
ourselves… you are
never going to get
that style of
revelation… the guy
would simply get
fired in an instant…
because shareholders
do not always
respond well to that
level of honesty.
You need to be able
to recognize an
excuse when you see
it… when a Motorola,
or a Dell, or any
company has gotten
into the habit of
serial, multiple
year
underperformance…
tells you that their
shoddy results were
caused by an equally
shoddy environment…
the odds are good
that you will not
hear the same story
from their stronger
competitors… bad new
for Motorola is only
bad news for
Motorola… if they
tell you that it is
raining, the odds
are pretty good that
when you hear from
Apple… Apple will
tell you that it
must only be raining
on Motorola’s side
of the street…
because business
sure is fine where
they are standing…
and remember,
Motorola, tech…
Apple tech… that is
it… that is about as
close as they come
together is that
broad group… you
cannot just assume
that all companies
in the same industry
are equivalent…
sometimes there just
isn’t any pin
action… meaning you
can’t extrapolate
from one company’s
results to the rest
of the industry… I
do not want you to
ever extrapolate
from Motorola to
Hewlett Packard..
never, never
extrapolate from
Dell to IBM… never…
and that is most
frequently the case
whenever one of
those companies is a
loser.
This happens in
every industry… not
just in tech…
companies hide
behind others in a
sector when they
drop the ball… by
the way, we saw this
with General Mills,
the cereal company…
it had just gotten
beaten viciously by
Kellogg… well, it
said that the whole
industry was slowing
down… oh wow, we
also saw it with
Proctor & Gamble…
which claimed that
the world was
rebelling from high
price products… what
was the truth…
Colgate was running
circles around it in
almost every market
around the globe…
where the two
competed against
each other… do you
know that we even
saw this phenomena
play out in fast
food… where Burger
King lamented that
the consumer could
not afford a
hamburger today, but
apparently it could
tomorrow…. the same
day that McDonald’s
told us that they
were selling them by
the billions…
supermarkets… Safe
Way kept complaining
that the consumer
was morbid… but
Whole Foods was
kicking butt and
taking names…
Wal-Mart stole food
shoppers away from
traditional food
markets.
The bottom line…
▼ ▼
▼ ▼
▼
 The Bottom Line!:
Whatever the
industry, when a
company with a bad
track record blames
its poor performance
on a tough
environment… it is
probably just making
excuses, it is a cry
baby…not telling you
something that
applies to its
stronger
competitors… which
are likely running
circles around it.
[verbatim recap]
[end of segment]
Read Jim's next Segment
here
|
|
