CNBC’s Jim Cramer reminded investors on Tuesday to pay close attention to the scope of an analyst’s calls.
“In the crazy world of Wall Street, it’s not enough to think about the company or the sector or the asset class or the macro, including the [Federal Reserve] – you also have to consider the reaction and even the reactors themselves,” he said.
He used recent calls from analysts on Advanced micro-systems to illustrate his point:
Barclays upgraded the equal-weight semiconductor maker to overweight on Monday, pushing the stock up 10%. A day later, Bernstein downgraded the company’s stock to market performance from outperformance, citing concerns about a deterioration in the PC market. AMD shares fell 2.39%.
Cramer said that in this case, no analyst is necessarily wrong, as their arguments are based on different timeframes.
“The bearish analyst [is] straight as rain because AMD’s business is terrible now and shows no signs of improving, but in the long run the bull analyst will be right because eventually the semiconductor downturn will end,” a- he declared.
Cramer added that while these trading periods can be confusing, they can also be advantageous for investors, as long as they don’t act recklessly.
“As we head into the heart of the earnings season, I need you to understand that the reaction is often good, depending on your timing. However, it can also be wrong,” he said. , adding: “Either way, if you have conviction, the reaction can often be a great opportunity to buy, buy, buy or sell.”
Disclaimer; Cramer’s Charitable Trust owns shares of AMD.