Dampening the Sirius XM Euphoria (and Why That's Probably a Good Thing)

| About: Sirius XM (SIRI)
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Over at the Street.com, Jim Cramer gave Sirius XM (NASDAQ:SIRI) its due, noting that the stock has "become less of a lottery ticket" and that he "would not tell people to avoid it." Calling it a speculative play, Cramer did focus on the negative, particularly Sirius XM's dependence on the auto industry and the clumsy integration of Sirius and XM. And, sure to raise the ire of SIRI loyalists, Cramer noted:

It's owned by really bad hands. It's owned by people who are flippers and traders and penny stock guys and I don't like them as my colleagues when I own a stock.

I like Cramer. I appreciate his ability to entertain, while maintaining his credibility and providing value to his audience. Like Howard Stern, he gets a bad rap because people tend not to look past the shock value, theatrics and bravado. That said, while I don't agree with everything he said in the above-referenced piece, I think he served SIRI longs well by throwing some water on the fire.

Humans tend to get caught up in euphoria. I am as guilty as the next person. We want to take a story that has the potential to serve us well and run with it. While I still believe the impact of Sirius XM's inclusion in the Nasdaq 100 will be considerable, I think some of us might have lost sight of the big picture. We expected the stock to run to new heights and stay there in less than a day.

Here's my perspective on things as I take a step back from the somewhat fizzled anticipation and assess where things stand at about 1:00 p.m. Eastern Time on Monday with SIRI trading at $2.23, down from its intraday high of $2.30.

First, this market - and this stock, in particular - moves fast. By the time I am done writing this, the share price might be somewhere meaningfully north or south of $2.23. It's just that type of short-term phenomenon I think investors need to ignore. I broke my own rule by not ignoring it over the weekend on the Nasdaq 100 news.

This is an ideal time to remember why you are long SIRI and/or why you got long heading into the company's August 3rd earnings report (according to Briefing.com). Unless you had a crystal ball or inside information, you are not long because of the Nasdaq 100 news. It should be viewed as nothing but icing on the cake. The reality that the news did not propel SIRI to $2.40 or $2.50 or $3.00 or $4.00 should not provide a reason for panic or even disappointment.

You are in the trade for the reasons I and other SIRI bulls have discussed in recent weeks. Maybe it's about the technical way the stock moves ahead of earnings. Maybe it's about the earnings call itself and the notion that SatRad 2.0 will not only change the way people listen to radio, but truly serve as the next step in Sirius XM's evolution as a company. Maybe it's about the possibility of a share buyback or dividend getting announced. Maybe it's about all of those things and more.

Don't take the emotion-laden intellectual misstep that because SIRI did not skyrocket (on a rough day for the market) on the Nasdaq 100 news, somehow this impacts the long-term story. It has nothing to do with it. The long-term story remains intact.

Here's what I am doing with my SIRI shares: Holding them. Here's what I am doing with my SIRI September $2.50 calls: Holding them. I will not rule out the possibility of buying more if the bid pulls back two cents or more to my cost basis of $0.11 or less. If you would have anyway in the absence of the Nasdaq 100 story, take this opportunity to accumulate. There's no reason to confound a surprise news announcement with the long-term story that made you go long in the first place.

While some SIRI longs and loyalists might be prompted to trash Cramer for his comments, I find it ill-advised. Cramer did what he does best this morning - provided some perspective to a very emotional situation.

Disclosure: I am long SIRI.