Points
- Cramer's revealing his rules to help you become a stronger investor
- Cramer's rules of engagement: How to spot best of breed stocks
- Cramer: If you go hunting for cheap stocks of low-quality companies... It's more likely to lead to losses than to gains
- Cramer: Don't worry about paying a higher Price-to-Earnings Multiple for best of breed
- Cramer: High quality companies represent value and giving up on value is a SIN
- Cramer: PATIENCE is a virtue
- Bottom line: Don't be afraid to pay up for best of breed stocks
- Cramer's rules of engagement: Keep your eye on bonds
- Cramer: If you're trying to make sense of the macro picture, keep an eye on bonds
- Think the bond market doesn't matter to you? Think again!
- Cramer's rules of engagement: Watch out for unexplained resignations by key executives
- Cramer: When you see a CEO step down for no real reason, you should assume something is wrong.
- Bottom line: Keep an eye on the bond market & remember, unexplained exec. resignations equals sell
- Cramer's rules of engagement: Expect corrections
- Cramer: Sooner or later, we know we'll have a pullback... So best have some cash ready in case that time is now
- Cramer: The time to be worried about a correction is when nobody else is concerned
- Cramer: Avoiding losses on down days makes up for missing partial gains on big up days
- Cramer's rules of engagement: HOPE is not a strategy
- Cramer: HOPE is not part of the equation - In the stock business, HOPE is a mistake
- Bottom line: It pays to be realistic in this business... Prepare yourself for corrections and don't pick stocks on HOPE
- Cramer's Homework checklist
- Know how the company makes Money
- Be able to articulate a thesis for owning a stock
- Understand how the stock prices could increase or decrease
- Start off as a skeptic of any stock
- Don't buy into the hype machine
- Bottom line: Always be able to explain your stock picks, & Don't take anything on faith
- Cramer's rules of engagement: Never subsidize losers with winners
- Cramer: If you keep selling winners, you get a vicious spiral as the bad stocks stay bad
- Cramer's market rule: Never speculate on takeovers of companies with bad fundamentals
- Bottom line: Never sell your winners to subsidize your losers... and don't speculate on takeovers in companies with deteriorating fundamentals
