Jim Cramer warned investors that stocks and politics are not created equal.
"Stock picking is the opposite of politics. If you change your mind in politics, you get eviscerated. But if you don't periodically change your mind in the stock market, your portfolio gets eviscerated," the "Mad Money" host said.
When the facts change, Cramer changes his mind. It's that simple.
For investors, unlike politicians, flip-flopping is a virtue, not a vice.Jim Cramer
For example, until Wednesday, American Express had produced several disappointing quarters. Thus, Cramer expected the usual excuse making for lack of operational growth from its management. Instead, the company delivered a solid quarter with excellent growth and re-acceleration of spending to attract customers.
"When I saw the number I realized, OK, I had overstayed my welcome on the negative side of the story and it was time to switch directions," Cramer said.
The facts changed for American Express, and now Cramer has changed his mind. He considers the stock a "buy," even after its big run on Thursday.
Even Netflix was at $99 a share just three days ago, and closed at $123 on Thursday. The story for this stock was turned on its head when it reported earnings earlier this week. Netflix trades on the amount of subscribers it receives, and those subscription numbers have been weak lately, though the company repeatedly told investors not to judge its growth on a quarterly basis and to think long-term.
Cramer even saw some of the biggest and smartest money managers bet against Netflix with the assumption that it would screw up when it next reported. Netflix proved them wrong when it delivered incredible subscription numbers, and produced three days of gains for the stock.
"For investors, unlike politicians, flip-flopping is a virtue, not a vice. When the facts about a stock change, you have to change your mind, too, otherwise you're likely to lose a lot of money and miss out on a ton of opportunities," Cramer said.
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