Thierry Martin
08-10-2005, 09:13 PM
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Cramer's Mad Money Daily Recap 8/10/05
(This show was pre-recorded, and did not include a lightning round.)
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Speculate In Depth
Jim Cramer gave tips on where and how to find the best opportunities to make money on speculation, based on what he did every day himself for 20 years.
Cramer said he wanted viewers to "speculate like you mean it."
Cramer said he receives emails from investors with questions about penny stocks, companies with zero earnings or stocks trading on the Pink Sheets, a loosely regulated trading system that handles small companies.
Avoid those, along with the names traded on the over-the-counter Bulletin Board.
The Sweet Spot - $2 to $10
"There's a sweet spot in the speculation business - the $2 to $10 spot," he said. "This is where you'll make all the money."
As for the names under $2, "the company is probably managed by incompetents," he said. "Don't waste your time with anything under $2."
Cramer cautioned that most stocks on which one speculates will eventually become worthless.
Speculation must be done only with discretionary money that won't be missed if it's lost and never money for a retirement account.
A caller asked what opportunities there are in foreign-exchange speculation.
"Have you ever seen a sheep before and after? Before and after they fleece it? That's what happens when you speculate in currencies," Cramer warned.
Investors must keep an eye on what he called the life cycle of the company, since these companies often grow quickly, but then die just as fast.
A example was Taser (TASR), where "you could have made a fortune speculating" if timed correctly, before the company started getting contracts.
After that, investors following the news drove up the price.
Investors should speculate only on companies with solid fundamentals. The essentials are a sound balance sheet, a good product and a small float. A small float is important because that means the stock is subject to huge moves if even one large institutional investor starts buying.
The key to knowing when to sell is to watch volume. When the volume is hitting new highs, cash out, Cramer insisted.
Bad speculators have bad habits, like selling too soon, holding a position that keeps going down, believing the hype, buying the worst company in a good sector and speculation on takeovers.
___________________________________
Cramer's Mad Money Daily Recap 8/10/05
(This show was pre-recorded, and did not include a lightning round.)
ÂÂ*
Speculate In Depth
Jim Cramer gave tips on where and how to find the best opportunities to make money on speculation, based on what he did every day himself for 20 years.
Cramer said he wanted viewers to "speculate like you mean it."
Cramer said he receives emails from investors with questions about penny stocks, companies with zero earnings or stocks trading on the Pink Sheets, a loosely regulated trading system that handles small companies.
Avoid those, along with the names traded on the over-the-counter Bulletin Board.
The Sweet Spot - $2 to $10
"There's a sweet spot in the speculation business - the $2 to $10 spot," he said. "This is where you'll make all the money."
As for the names under $2, "the company is probably managed by incompetents," he said. "Don't waste your time with anything under $2."
Cramer cautioned that most stocks on which one speculates will eventually become worthless.
Speculation must be done only with discretionary money that won't be missed if it's lost and never money for a retirement account.
A caller asked what opportunities there are in foreign-exchange speculation.
"Have you ever seen a sheep before and after? Before and after they fleece it? That's what happens when you speculate in currencies," Cramer warned.
Investors must keep an eye on what he called the life cycle of the company, since these companies often grow quickly, but then die just as fast.
A example was Taser (TASR), where "you could have made a fortune speculating" if timed correctly, before the company started getting contracts.
After that, investors following the news drove up the price.
Investors should speculate only on companies with solid fundamentals. The essentials are a sound balance sheet, a good product and a small float. A small float is important because that means the stock is subject to huge moves if even one large institutional investor starts buying.
The key to knowing when to sell is to watch volume. When the volume is hitting new highs, cash out, Cramer insisted.
Bad speculators have bad habits, like selling too soon, holding a position that keeps going down, believing the hype, buying the worst company in a good sector and speculation on takeovers.