A Wall Street sign in front of the New York Stock Exchange (NYSE) in New York, US.
- CNBC's Jim Cramer on Tuesday suggested that investors can sometimes lose the markets' big picture, and that it's important to go back to the basic principle behind good investing.
- The Dow's nine-day rough patch, the promise in oversold markets and stocks that are so beaten up investors don't see their potential are all parts of the big picture, Cramer said.
CNBC's Jim Cramer on Tuesday suggested that investors can sometimes lose the markets' big picture, and that it's important to go back to the basic principle behind good investing.
"Sometimes we forget what we are trying to do around here," he said. "We're looking to find good stocks at good prices and buy them. We want to sell bad stocks at any price and kick them out of our portfolio."
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Investors can sometimes think to only own stocks of companies that are the winners for the day and brush off everything else, Cramer said. When this happens, he argued that investors are putting mental shackles on themselves. While day trading in the past was meant to scalp pennies from the flow, now investors need to be focused on dollars from the big picture, he continued.
Part of the big picture today is that the Dow Jones Industrial Average is on a nine-day losing streak, he said. The last time that the Dow went on that long of a losing streak was in February 1978, during which Cramer said there was double-digit inflation and a lack of serious leadership. The Dow's rough streak today, however, comes as the Federal Reserve continues its rate-cutting cycle and it doesn't matter that Wall Street is unsure how long it will last, he continued.
Another part of the big picture is that the markets are heavily oversold, according to Cramer. He suggested that it might be a good time to buy instead of listen to the prevailing negativity, and used Nvidia as an example, which is 22 points down from its high but still up 163% for the year. He said he believes it's just taking a hit on a massive run and is a good spot for some gains, so hold on. The last part of the big picture includes stocks that have taken such massive hits that investors miss the positives, Cramer said. He argued that those stocks can be great ways to follow through on what makes good investing.
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"Now the goal is to build a position that starts somewhere well below where it was, simply because it has gone out of style in the current version of the Wall Street fashion show and is being hit with heavy end of the year tax selling," he said. "You know why you do this? Because of the overarching principal behind good investing, buying low so that one day you can sell high, or maybe not sell at all."
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