Jim Cramer wants investors to learn from his mistakes. And more than a year later this blunder still irks him no end.
The Mad Money host took a loss and sold out of a position in Bed Bath & Beyond, held by his charitable trust, even though his gut told him otherwise. "I had done a lot of homework on the stock and I really believed in the company, but I lost my resolve because that stock went lower," Cramer explained.
Here's what happened.
Adam Jeffery | CNBC
"We decided to buy Bed Bath back in the fall of 2012. It's a chain I adore. I love to go shopping there, and more important, I love the company's terrific regional to national expansion story," Cramer said.
As he's done so many times in the past, Cramer determined an attractive point of entry and then, during a sell-off, he pulled the trigger.
"Sure enough, in 2012 the trust used weakness to start a position, buying several thousand shares," Cramer said.
In part the sell-off was triggered by fearing that stores were becoming something of a showroom for Amazon. That is, the Street worried that shoppers were visiting Bed Bath & Beyond but buying products over the Internet from Amazon. "Personally, I thought that was ridiculous," said Cramer. "Bed Bath & Beyond doesn't sell the kinds of things you typically buy from Amazon."
As fear sent the stock lower and lower Cramer's charitable trust bought more and more. All the while, the Mad Money host was doing homework and remained confident in the company, its management and the business strategy. "It soon became one of our largest positions," Cramer admitted.
"Next thing you know it's November Bed Bath was weighing on us, trading at $55, well below our cost basis. Finally, we got some lift for a couple of days, with the stock trading about halfway back up to where we'd first bought it."
There's where Cramer sold the whole position.
"Next thing you know, Bed Bath & Beyond is roaring, passing the price where we sold it, passing the price where we first bought it, vaulting up to the mid $60s and then the $70s as one analyst after another who'd downgraded it changed their minds. Suddenly, everyone was going out of their way to say that Amazon wasn't a threat at all."
"If the charitable trust had stuck with Bed Bath & Beyond, it would have been one of our best gains of the year. But no, we got impatient, we got scared, we lost our nerve, and we ended up cutting and running just a few points above the bottom."
Cramer hates that this happened. And he doesn't want you to stumble the way he did.
Read More from Mad Money with Jim Cramer
Odd situation creating 'tremendous opportunity'
Cramer: Desperate, companies to 'hire with a vengeance
Cramer sifts through 5 S&P laggards
"You should never sell a stock just because it's going lower and you can't take the pain. If you've done the homework, and you keep checking, and you have conviction, and the story isn't wildly off the rails, then don't give up. Stick with your convictions. There's a good chance the Street has gotten it wrong and you've gotten it right."
* The preceding insights are discussed in far greater detail in Jim Cramer's new book Get Rich Carefully.
Call Cramer: 1-800-743-CNBC
Questions for Cramer? email@example.com
Questions, comments, suggestions for the "Mad Money" website? firstname.lastname@example.org