CNBC’s Jim Cramer reminded investors Tuesday to pay attention to the scope of an analyst call.
“In the crazy world of Wall Street, it’s not enough to think about a company or sector or asset class or macro, including [Federal Reserve] – You also need to consider the reaction and the reactors themselves,” he said.
They recently used analyst calls Advanced Micro Devices To explain my point:
Barclays upgraded the semiconductor maker to overweight from equal weight on Monday, sending the stock up 10%. A day later, Bernstein downgraded the company’s stock from Outperform to Market Perform, citing concerns over the deteriorating PC market. AMD shares fell 2.39%.
Cramer said that in this case, neither analyst is necessarily wrong, as their arguments depend on different time frames.
“Recession Analyst” [is] True as rain because AMD’s business is terrible now and showing no signs of improvement, but over the long haul, the bullish analyst is going to be right, because eventually the semiconductor recession will end,” he said.
Cramer said that while trading periods can be confusing, they can also be beneficial for investors, as long as they don’t act rashly.
“As we go in heart of earnings season, I want you to understand that feedback is often correct depending on your time frame. However, it can also go wrong,” he added. “Either way, if you have strong conviction, a reaction can often be a great opportunity to buy, buy, buy, or sell.”
disclaimer; Cramer’s charitable trust owns shares of AMD.
