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Cramer says investors need to buy stock before its big move, not after

Scott Mlyn | CNBC
  • CNBC's Jim Cramer on Wednesday explained why he thinks investors should never buy stock immediately after a big move.
  • "Here's the way this market works: Something will be happening for weeks or even months on end, but most investors pay no attention whatsoever," Cramer said. "By the time it dawns on them that something big is going on and they finally take action, it's either really late or it's already over."

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CNBC's Jim Cramer on Wednesday reminded investors they need to buy into companies before their stock sees a big move, not after. According to Cramer, it's better to accept that you've missed the mark instead of buying stock after it has already surged.

"Here's the way this market works: Something will be happening for weeks or even months on end, but most investors pay no attention whatsoever," Cramer said. "By the time it dawns on them that something big is going on and they finally take action, it's either really late or it's already over."

Cramer used drug maker Eli Lilly as an example, saying he's anticipated the company's success for ages amd that stories about favorable outcomes for Eli Lilly's diabetes and expected weight loss drug Mounjaro had been circulating for weeks. He recommended that investors closely follow news about companies they believe will be successful, like he did with Eli Lilly, in order to predict big stock moves. But Cramer stressed that even though the company is currently seeing success, and he thinks it will continue to do so, it would be wrong to buy it now after the big surge.

"Remember, I'm always trying to teach you how to identify great companies and then buy their stocks at the right price," Cramer said. "You don't buy the stock of Lilly here – the stock jumped nearly 15% yesterday, for heaven's sake."

Celsius is another company Cramer's been eyeing for a while that he thinks has potential. The energy drink maker's stock soared over 20% on Wednesday, but Cramer doesn't think it's time to buy yet— instead, he said he'd wait because he thinks it's likely the stock will trade down before it goes up again, and to Cramer, that would be the better time to buy.

"My goal is to get you to stop chasing stocks that've had huge runs," Cramer said. "Because when they inevitably get hit, there's a very good chance you'll feel like the whole game is rigged, and you'll give up on the entire asset class of stocks, and that is the worst mistake you can make."

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Disclaimer The CNBC Investing Club Charitable Trust holds shares of Eli Lilly.

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