Jim Cramer’s Real Money

Sane Investing in an Insane World

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Jim Cramer

Notes

Buy and Homework…You must spend time doing your homework. Trading is not a part-time hobby.

Only bet on situations where you have total conviction.

Watch Debt – It is the only way to truly know what a stock is worth (Assets – Liabilities)

Fast growth = look to sales
Young company’s = should have fast growth

A disciplined value investor looks to pay a slightly higher multiple number than the growth %.

Check the debt vs. the operating income

Undiscovered and undervalued

10 Commandments of Trading

  1. Never turn a trade into an investment
  2. The First Loss is your best loss
  3. Its okay to take a loss, once you have it.
  4. Never turn a trading gain into an investment loss.
  5. Tips are for waiters.
  6. You dont have a profit until you sell.
  7. Control Losses, winners take care of themselves.
  8. Dont fear missing anything.
  9. Dont trade headlines
  10. Dont trade flow.

25 Investment Rules

  1. Bulls make money, Bears make money, Pigs get slaughtered
  2. Its okay to pay taxes
  3. Don’t buy all at once; arrogance is sin
  4. Look for broken stocks, not broken companies
  5. Diversification is the only free lunch
  6. Buy and homework. No buy and hold
  7. No one made a dime by panicking
  8. Own best of breed; it’s worth it
  9. He who defends everything defends nothing
  10. Fundamentals must be good for takeovers
  11. Dont own too many stocks
  12. Cash is a good alternative
  13. No woulda, coulda, shoulda
  14. Expect corrections and don’t be afraid of them
  15. Dont forget bonds
  16. Never subsidize losers with winners
  17. Hope is not a part of the equation
  18. Be flexible
  19. When high-level people leave, something is wrong
  20. Patience is a virtue
  21. Don’t listen to analysts
  22. Always wait 30 days after warning pre-announcement before you buy.
  23. Never underestimate the Wall Street promotion machine.
  24. Be able to explain stock prices to someone else.
    • What will make stock go up?
    • Why will it go up when you think it will?
    • Is this really the best time to buy?
    • Have we missed a lot of the move?
    • Shouldn’t we wait until it comes down more?
    • What do you know about this stock that others don’t?
    • Whats your edge?
    • Do you like this stock more than others you own and why?
  25. There is always a bull market

Your stock portfolio

  1. A company in your neighborhood or that you can relate to
  2. Energy stock
  3. Brand Name
  4. Financial Stock
  5. Speculative stock

Picking Winners – book by Andy Beyer