New Ideas about the Best Ways to Invest
The S&P rose 11.83% in 2014, making its third straight year of gains. 2014 may be drawing to a close, but Cramer’s preparing you for what lies ahead. Don’t miss his rules for succeeding in this market. The Dow’s six year rally has the longest since the ninth straight years of gains that ended in 1999. The rules have changed. Cramer has some new ideas about the best ways to invest. Stocks can help and stocks can hurt. Cramer’s making sure you stay on the right side of the equation. Jim has rethought his view on Wall Street. Things have changed in the market but many of my fundamental rules still apply. Jim is sharing the important insights he’s gained in his decades of investing experience. Jim is rewriting the rules of investing. The most important rules for investing often run counter to your normal instincts. It’s time to update some critical rules I have used to live by when I was managing money. Bulls and bears make money pigs get slaughtered. If you have a good gain there’s nothing wrong with taking some profit. You probably won’t kick yourself for making money but you will definitely kick yourself if you are losing it. Riding a winning stock higher is a crime in Cramer’s book. I’m not saying you need to sell out of a winning position but why not take some profit off the table? It’s possible to lose even after winning this is a counter intuitive topic. I like buying a stock as it trades lower because I see it as high quality merchandise going on sale. Stocks can rally for irrational reasons and when they do you need to be ready to take profits.
The Investing Rules Cramer Lives By
Use your common sense. Sometimes things get too expensive to buy. The same is true for stocks. You have to do your research and know the prices you are willing to pay for a certain stock. Avoid market meltdowns. There will always be compelling reasons to ignore your rules, but you must stay disciplined. What is the best way to minimize risk when it comes to selling put options? Once you make back your initial investment in a stock, what could be the best strategy for how to handle your profits? Should investors be concerned about the impact of after hours trading? A stop loss order allows an investor to sell a stock once it reaches a certain price, helping to limit risk. Taxes should not be your main concern when taking profits. It’s OK to pay taxes. Don’t go into battle without a plan. Don’t fear taxes more than losing profits. You have to preserve capital. A simple strategy of taking gains paying taxes and then coming back into the market at a better time is simply the right way to go. Never hold onto stocks when risk to the whole market system and staring you in the face. Taxes do not trump the fundamentals; you simply can’t base your investment decisions on the tax man. Don’t buy all at once, arrogance is a sin. Impulsiveness is a very common quality in all of us. It’s one we have to guard against when it comes to investing in stocks. The key is to buy in increments on down ticks and spaced out to avoid emotion. Space out your purchases and do not commit a ton of capital. Part of becoming a successful investor is recognizing one’s imperfection and separating emotions from decisions. The market may seem confusing and overwhelming sometimes, but history shows that over the long term it is full of common sense. When taking a longer view it has provided reliable and robust returns. Slow and steady can be the key to making money in this market. Keep your options open. Build your positions slowly and strategically. You’ll never know when a broad market pullback could provide you a better entry point. Stick to a buying strategy. The best way to buy? Know how and when to pull the trigger on your favorite stocks. The arrogance of being to be in a position is almost as dangerous to your financial health as buying all at once. The impulse to buy more stock on a move higher vs. trimming your position must be fought, don’t get caught playing momentum.
A broken stock is not the same as a broken company. In order to be a successful investor, you need to be able to separate a stock from a company.