Cramer's 25 Rules & 10 Commandments for Investing

[deepinwonder]

I thought I'd post these on here, because it seems a lot of people watching the show, talking about it, and trading on Cramer's recs haven't read them. I have really found them helpful, at time. If you want further explanations, buy the book or follow this link:

http://www.thestreet.com/tsc/cramerbook

Cramer's 25 Rules for Investing

Rule No. 1: Bulls, Bears Make Money, Pigs Get Slaughtered
It's essential for all traders to know when to take some off the table. More

Rule No. 2: It's OK to Pay the Taxes
Stop fearing the tax man and start fearing the loss man because gains can be fleeting. More

Rule No. 3: Don't Buy All at Once
To maximize your profits, stage your buys, work your orders and try to get the best price over time. More

Rule No. 4: Buy Damaged Stocks, Not Damaged Companies
There are no refunds on Wall Street, so do your research and focus your trades on damaged stocks rather than companies. More

Rule No. 5: Diversify to Control Risk
If you control the downside and diversify your holdings, the upside will take care of itself. More

Rule No. 6: Do Your Stock Homework
Before you buy any stock, it's important to research all aspects of the company. More

Rule No. 7: No One Made a Dime by Panicking
There will always be a better time to leave the table, so it is best to avoid the fleeing masses. More

Rule No. 8: Buy Best-of-Breed Companies
Investing in the more expensive stock is invariably worth it because you get piece of mind. More

Rule No. 9: Defend Some Stocks, Not All
When trading gets tough, pick your favorite stocks and defend only those. More

Rule No. 10: Bad Buys Won't Become Takeovers
Bad companies never get bids, so it's the good fundamentals you need to focus on. More

Rule No. 11: Don't Own Too Many Names
It can be constraining, but it's better to have a few positions you know well and like. More

Rule No. 12: Cash Is for Winners
If you don't like the market or have anything compelling to buy, it's never wrong to go with cash. More

Rule No. 13: No Woulda, Shoulda, Couldas
This damaging emotion is destructive to the positive mindset needed to make investment decisions. More

Rule No. 14: Expect, Don't Fear Corrections
It is not always clear when a correction will strike, so expect and be prepared for one at all times. More

Rule No. 15: Don't Forget Bonds
It's important to watch more than stocks, and bonds are stocks' direct competition. More

Rule No. 16: Never Subsidize Losers With Winners
Any trader stuck in this position would do well to sell sinking stocks and wait a day. More

Rule No. 17: Check Hope at the Door
Hope is emotion, pure and simple, and trading is not a game of emotion. More

Rule No. 18: Be Flexible
Recognize and be open to the unexpected shifts in the market because business, by nature, is dynamic, not static. More

Rule No. 19: When the Chiefs Retreat, So Should You
High-level executives don't quit a company for personal reasons, so that is a sign something is wrong. More

Rule No. 20: Giving Up on Value Is a Sin
If you don't have patience, think about letting someone who does run your money. More

Rule No. 21: Be a TV Critic
Accept that what you hear on television is probably right, but no more than that. More

Rule No. 22: Wait 30 Days After Preannouncements
Pre announcements signal ongoing weakness, wait 30 days to see if anything has gotten better before you pull the trigger to buy. More

Rule No. 23: Beware of Wall Street Hype
Never underestimate the promotion machine because analysts get behind stocks and can keep them propelled in an up direction well beyond reason. More

Rule No. 24: Explain Your Picks
Buying stocks is a solitary event, too solitary in fact, so always make sure you can articulate your reasoning to someone else. More

Rule No. 25: There's Always a Bull Market
It's OK if you have to work hard to find it, just don't default to what's in bear mode because you are time-constrained or intellectually lazy. More

[deepinwonder]

Cramer's Ten Commandments of Trading

Commandment No. 1: Keep It a Trade
In this special look at Jim Cramer's latest book, he lays out a brutal, but effective, rule. More

Commandment No. 2: First Loss Is Best
Why you should leave a trade that doesn't work immediately. More

Commandment No. 3: Take Your Losses
Cramer clears up a common, and costly, trading misconception. More

Commandment No. 4: Trading Gains, Not Investment Losses
Cramer describes a slippery slope for traders and how to avoid it. More

Commandment No. 5: Tips Are for Waiters
Cramer points out why tips are best left on the table. More

Commandment No. 6: No Sale? No Profit
Cramer lays out why you have to take gains, especially now. More

Commandment No. 7: Control Your Losses
Cramer shows an easy way to improve your returns. More

Commandment No. 8: Don't Fear That You'll Miss Anything
Cramer points out a reason to control this impulse. More

Commandment No. 9: Don't Trade Off Only the Headlines
Cramer points out the reason to resist the knee-jerk reaction. More

Commandment No. 10: Don't Trade Flow
Cramer warns that the tape reveals sucker plays, not good trades. More

[the_menace]

The 10 commandments is just a teaser for me because it doesn't explain much. I have the book but I still have to wait until I finish the one I'm reading right now. Very informative though. I can't wait.

[aj14]

:lol:
I started to write down the number of each of the "rules" which Cramer doesn't follow, and then i realized it was most of them!
Great entertainer; smart guy; good trader? Doubtful.

[the_menace]

:lol:
I started to write down the number of each of the "rules" which Cramer doesn't follow, and then i realized it was most of them!
Great entertainer; smart guy; good trader? Doubtful.

The man made tons and is still making money, so I wouldn't doubt his trading ability. He wouldn't be where he is today without his skills of being able to analyze the market.

[aj14]

:lol:
I started to write down the number of each of the "rules" which Cramer doesn't follow, and then i realized it was most of them!
Great entertainer; smart guy; good trader? Doubtful.

The man made tons and is still making money, so I wouldn't doubt his trading ability. He wouldn't be where he is today without his skills of being able to analyze the market.

Was there anyone in the market in the 90's who didn't make tons of money? We were all genius' back then. In Cramers case, he had to have his wife bail him out he was so bad at it!

More recently, he has done no better than having a monkey throw darts.

Entertaining? Absolutely. A brilliant mind? No doubt. Able to make money in the market? No special skills...check his record...and not from where the stocks closed the previous day, like he does, but from where you can first buy them the following morning when the full market opens. That is the correct benchmark. Doesn't look so astute, does he?

[Luc1Grunt]

wrong forum isn't it?

[William Rennick]

aj is right, plus he's a copy cat, he's copying Emerill, the bam man.

[church mouse]

Thank you for taking the time to post them, Deep. That was very thoughtful.
Beth Ann

[BuyOnDips]

The problem with Cramer's picks on TV is he really doesn't do his homework on all these stocks. No one can. Nobody has the time. One person might be able to closely follow 20 stocks and give you a reasonable opinion on where those stocks might go. Cramer is just giving you a snapshot judgement on the stocks that people call in during the lightning round. He doesn't do his homework on all of these stocks. So he's wrong with a lot of his picks. Even if you do your homework, you will still be wrong on stock picks.

A perfect example was when someone asked Cramer about Digital River(DRIV). He said DRIV just had a terrible QTR and that person should sell the stock and wait for 2 more QTRs before you can look at the stock again. He was dead wrong. DRIV just had a great QTR, but they did lower their growth forecast. The stock went from $23 to $29 after he said to sell. http://www.fool.com/News/mft/2005/mft05102730.htm

So when Cramer mentions a stock pick(or anyone else), you really need to do your own thorough research before making any investing decisions.

[deepinwonder]

He's not always right and sometimes he does break his own rules, but the 10 Commandments have been really helpful to me. I no longer hang around with a loser hoping it will go back up, for instance, I just get rid of it and find one that is. If nothing else, it saves on nerves!! Saved me some money, too. :o

Before we started watching Cramer, we would just pick good companies and hold onto the stocks forever. Funny thing is, right around the time we turned him on, ours weren't doing as well as they had a few months previously and it gave us the courage to get out and still have nice profits to enjoy. Some people get a lot out of the show. I don't watch it for his stock picks, anyway, I have my own. But his strategies have helped me enormously.

[BuyOnDips]

Selling losers fairly quickly and letting your winners run is always a good strategy. Most investors usually do the opposite. I guess most people don't like to admit being wrong and tend to keep their losers hoping they'll turnaround and comeback to at least break even.

[optimus25]

Thanks for the post Deep. Very helpful to the newbies coming into investing.

[palflax]

Anyone who can;

1) Make Million upon Millions of dollars by investing
2) Be loved by thousands of people
3) Have his own show about what he does
4) Still be interested in what he does

IS probably an incredibly good investor