‘I screwed up’: Jim Cramer once cried on air over trusting Mark Zuckerberg, choked up admitting he was 'ill-advised' — and then META stock tripled. How to keep emotions out of your investing

The Mad Money host was not pleased with the outcome. During a candid segment on CNBC in October that year, Cramer admitted, “I screwed up.”

“I made a mistake here. I was wrong. I trusted this management team. That was ill-advised. The hubris here is extraordinary and I apologize,” he said.

When co-host David Faber asked him what he got wrong, Cramer became emotional, visibly choking up before pointing to Meta’s massive spending on its metaverse endeavors.

“I had thought there’d be an understanding that you just can’t spend and spend right through your free cash flow, that there had to be some level of discipline,” he said.

“I trusted them, not myself. For that I regret. I've been in this business for 40 years, and I did a bad job. I'm not proud.”

While Cramer believed he made a mistake recommending the company, Meta’s downtrend was only temporary. At the time of Cramer's heartfelt apology, Meta shares were trading at around $100. A year after Cramer's recommendation, the stock had nearly tripled to around $286.

The rollercoaster journey of Meta stock serves as a stark reminder of the ups and downs inherent in investing. With volatility being a natural part of the market, emotional reactions to these swings can cloud investors' judgment.

Here are three strategies to help you make investment decisions without letting emotions get in the way.

Know why you bought the stock

An overly emotional response by an investor could lead to hasty decisions, such as prematurely selling off stocks after an unexpected move.

According to investing legend Peter Lynch, selling a promising company too early can result in missing out on substantial gains.

“Your great mistakes are selling a good company, and then it doubles, it triples, it quadruples,” Lynch said during a CNBC interview in 2002.

When the host Louis Rukeyser asked him when an investor should sell, Lynch replied, “You ought to find out why you bought the stock.”

In essence, he stressed the importance of revisiting the initial reasons for investing in a company and staying attuned to its narrative. Lynch illustrated this concept using the example of Walmart.

“Ten years after [Walmart] went public, you could have bought the stock and made 500 times your money,” he remarked. “So you have to say to yourself: ‘In this stock, I have a 10-year story? A 20-year story?’ I’ll be able to write that down and follow that. That’s what I do.”

Adopt a long-term perspective

To manage the emotional rollercoaster of daily market gyrations, a straightforward approach is to adopt a long-term perspective.

Warren Buffett, widely regarded the greatest investor of our time, once said, “The stock market is designed to transfer money from the active to the patient.” He encourages investors to buy and hold quality companies with durable competitive advantages, regardless of short-term market movements.

In fact, even Buffett, known as the Oracle of Omaha, has admitted the impossibility of predicting market movements.

During his company Berkshire Hathaway’s annual shareholders meeting in 2022, Buffett firmly rejected the idea of market timing.

“We haven't the faintest idea what the stock market is going to do when it opens on Monday — we never have,” he said.

“I don't think we've ever made a decision where either one of us has either said or been thinking: 'We should buy or sell based on what the market is going to do.’”