Cramer's 25 investment rules

[Thierry Martin]

Cramer's 25 investment rules

Are you following all of them?

1. Pigs Get Slaughtered
2. It's OK to Pay the Taxes
3. Don't Buy All at Once
4. Buy Damaged Stocks
5. Diversify to Control Risk
6. Do Your Homework
7. Don't Panic
8. Buy Best-of-Breed
9. Defend Some Stocks
10. Don't Bet on Bad Stocks
11. Own Fewer Names
12. Cash Is for Winners
13. No Regrets
14. Expect Corrections
15. Know Bonds
16. Don't Subsidize Losers
17. No Room for Hope
18. Be Flexible
19. Quit When Execs Do
20. Patience Is a Virtue
21. Be a TV Critic
22. When to Wait 30 Days
23. Beware the Hype
24. Explain Your Picks
25. Find the Bull Market

[Jay Framson]

I recently started watching Cramer's show and am thinking about putting some money into one of his stocks, when I find one that hasn't taken a leap the next day, maybe after coming back down. Anyway I'm wondering about the rule about not buying all at once, spreading the buy out over the course of a day or even two. With the kind of money I am playing with right now, it's just $1k in this stock or that stock. So for me, it seems like paying a $17 commission for each trade doesn't make sense -- seems like I just need to try to pick a time when it feels right to jump in on a buy when a stock has moved down or upticked just a little ... Does that make sense?

[deepinwonder]

I am a smaller invester, too, but even with my trading fees, I am still buying in increments. Several times I jumped into a stock, only to watch it dive to lower prices and then inch back up. It created a fear of pulling the trigger, because I am always wondering if it will go down lower than what I bid. I would sit on the sidelines waiting and get left out completely. This way, at least I'm in and if it just keeps going up, then I'm in with a winner and go find another deal. It's working for me, at any rate. Hopefully, we are going to make a lot more profit than our trading fees with the stocks we pick, so I try not to fret about that. Each person has their own style of investing, but this advice really helped mine a lot.

[deepinwonder]

I don't usually buy my additional lots in the next day or two, after the first purchase, unless it is an unusual circumstance.

[Hexum]

I agree with Deep. I try not to think about a comission. Hopefully you make a big enough gain to not worry about it. Even with a loss, its only a fraction of the percentage of money you originally invested.

[Jay Framson]

Thanks... One more question Deep -- you say that you buy and if the stock starts going up, you look for another deal -- does that mean you don't continue to buy in increments if the stock goes up - only if it goes down?

[helk]

I think for $1,000 or less in a position, you might as well just buy all at once. Remember, Cramer is buying tons of shares so the commission is really a non-issue for him, but when the commision is a 1-2 percent of the investment I think the money you may save by spreading out a purchase will probably be wasted in the commssions anyway. Jut don't buy into quick markups. Be patient and wait for the price to come back a bit then buy. If it doesn't come back move onto to something else. Chasing stocks usually isn't a good thing.

[deepinwonder]

I agree with helk. I do purchase $1000 worth of shares at one time, but if something has been going up a lot and keeps on going, I usually will look elsewhere for a deal, rather than load up a second time at the pricier amount. It's the bargain shopper in me and doesn't always make me the most money, but I feel comfortable with it. I don't lose a lot, either.

My husband, on the other hand, will continue to buy on a rise, if he really likes the stock, but he has more money to invest than I do. :)

[Jay Framson]

Thanks for the advice ... I figure that I am playing with $5,000 of savings that I can afford to lose, though I would love to have it make more money than the money I have in my savings account. The only way to learn is to do it -- I figure I'll never really learn until I start making a few trades and maybe make some mistakes.

Yesterday I was watching as Valero (VLO) and National Oil Well Varco (NOV) were both going down -- finally, after they had been going up all week. NOV was down more than 3 percent at one point. I wanted to buy one or the other and couldn't decide ... Finally I took the plunge into VLO for $1k when it was creeping back up, at 87.59. Meanwhile NOV crept back up to close down 1 percent at the end of the day, but I put another $1k into VLO just before the end of trading, I bought at 88.40, it closed at 88.32 and went down another few cents after hours. That brings me to $5500 in stocks, a little over the $5k limit I had set for myself. I'm having some second thoughts about the second trade -- I think maybe I should have put the second $1k into NOV. If NOV comes down on Monday I may trade that last $1k out of VLO back into NOV.

Otherwise .. I'm going to watch for a while and see how the few stocks I'm invested in perform. I know Jim said to expect some profit taking in the oil sector but the bull market will continue ... so I'm getting ready for a roller coaster.

Booya!

[deepinwonder]

Valero, boo yah!

Every time I try to diversify with stocks other than energy, they wipe out the profits I'm getting out of oil. This is getting ridiculous. I'm going to consider myself diversified if I have a good amount of cash on hand, to go along with my energy stocks, and save the one non-energy I bought for long term, Constellation Brands (STZ.)

I do have one other bright idea, but because it's not oil, I'm afraid to get it.