On days like Thursday when there is a nice bounce in the averages, Jim Cramer reminded investors that sometimes it simply doesn’t pay to get too negative.
“In fact, there are times when being excessively skeptical can really hurt you,” the “Mad Money” host said.
An example of this was Burlington Stores, the off-price retailer with 540 stores predominantly known as Burlington Coat Factory; it pulled off an amazing feat last week.
While the rest of the apparel group has been in pain due to an unseasonably warm winter, Burlington pre-announced its fourth- quarter results and reported the low end of what analysts were expecting.
Yet, instead of the stock getting crushed, it surged 14 percent in a single session!
The stock hasn’t looked back since, and it was even upgraded byGoldman Sachs on Thursday.
How on earth was it possible that Burlington pre-announced weaker than expected numbers and the stock skyrocketed?
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“This is what happens when Wall Street gets too negative — you had so many people anticipating even worse numbers in the expectation that a company that sells winter coats would get obliterated after the heat wave lasted through Christmas,” Cramer said.
Cramer thinks many money managers were shorting the stock. But when there was too much negativity surrounding a stock, it does not need much good news to send it higher.
Ultimately, when investors become complacent in negativity, Cramer said that is the time when it could take off.
“I bet this company is starting to do very well here, although I think you should wait for a pullback before you do any buying, giving that the stock just roared today on that big upgrade from Goldman,” Cramer said.
[“source -pcworld”]
