What Can You Say - BRILLIANT & ENTERTAINING TOO!!!!, January 21, 2007
Forget all the craziness, and loud shrieking voice coming at you. This man is the real thing. He was a hedge fund manager for years, and made BIG MONEY doing it. He simply prefers to cultivate a national image by being in the media. This in no way negates the wealth of fabulous information that he imparts to people on a daily basis. Cramer is a TEACHER too, and that's what you need to know.
If you listen to him, and then take the time to study what he is saying, it is the same as pursuing an MBA in stock picking. The difference is that in this case, the professor is giving it away for FREE. As you know, very few people ever appreciate that which is given away. If you charge for it, people's ears will perk up. They will strain to hear what you are saying, but give it away for free, and what happens? They just sit back, and say ENTERTAIN ME.
Cramer is loud, and frankly has gone Hollywood. He probably feels compelled to act in this manner in order to draw a big crowd to his television show. By doing this however, he may be taken less seriously. It probably also ensures however that he will gather a larger and larger audience, although there will be a lot of people watching that can not appreciate the contribution this man is making to improving the stock picking abilities of hundreds of thousands of people.
The truth of the matter is that anyone who is a real stock investor should be paying money to sit in a room with this man, and listen to what he has to say. If you listen to any great thinker for a long enough period of time, something becomes quite evident. People always have to reveal themselves, and reveal the truth in the process. A person can only put on a false front for so long. The façade has to come off, given enough time.
This is why Jim Cramer is so worthwhile, with a great show, and a fabulous book. Cramer is the REAL THING, and don't you ever doubt it. I run an enormous amount of money, both as the Founder , and the Senior Managing Partner of Rockefeller Capital Partners, LLC. I talk to some of the smartest people in the world. If necessary, I write checks in order to be able to consult with them. I have probably absorbed the contents of over 1000 different books on finance, investments, and money. Cramer's book is the work of a man who has paid the price in money, stress, and brainpower to learn what he has to teach. I know because I have been there.
When all is said and done, I find Cramer to be an absolute joy to listen to. This book Mad Money is even better than listening to him. In this book whether Cramer intended to or not, you have some pearls of investing wisdom that are individually worth a 100 times the price of this book. Here are several of them:
· A stock is only worth what the big institutions are willing to pay for it (p3).
· You can't be sure about research from this or that brokerage house. They've all been tarnished... for colluding with their clients (p3).
· Tips are for waiters (p23).
· Learn in very precise terms how a company makes its money (p25).
· Nothing is more important than the sector a stock lives in...half of what a stock does is totally dependent on the its sector (p27).
· The actual stock price means nothing without context (p32).
· You can't make money until you sell (p55)
· If the stock is growing faster than its competitors but has a lower P/E, then it's a slam-dunk. I'd give it a triple buy - we're done, next caller. (p69)
· I don't like inside information, both because it's illegal, and because it makes you sloppy (p75)
· Almost all analysts have been trained exactly the same way, so they think in lockstep (p75).
· We don't love stocks -they're just pieces of paper (p81).
· Whenever a CFO is cautious, I'm cautious. If a CFO is negative, I'm negative. You can take that as gospel (p114).
· It's these institutions that set prices, because they do most of the buying and selling (p121).
· Resisting the business cycle is futile.... if you buy a secular growth stock when we're in a cyclical upturn, or a supposedly cyclical stock when we're in an economic slowdown, you will lose (p121)
· You can't trust companies that are coming out of a leveraged buyout. The investment banks favor the LBO firms because they do a lot more business with them than with the average investor (p127).
· Latin America is always a trade. If you hold onto Latin American stocks for long enough, your gains will evaporate (p130).
· Not everything is worth betting on. Don't be afraid to say it's too hard (p133).
· When a stock is cheap, it's usually cheap for a reason (p137).
· Past performance is not an indicator of future success.... it's like black jack; the cards have no memory, especially when shuffled. (p139).
· Never invest on borrowed convictions. Make your own mistakes. You never want to lose money because you borrowed someone else's convictions (p143).
· Usually people have decent reasons for buying and selling stocks, and you should understand those reasons thoroughly before you try to game the supposed "stupidity" of your fellow investors (p150).
You need to read this book because the biggest problem an investor encounters today in the BATTLE for PROFITS is TOO MUCH NOISE. We have too much information coming at us, and we have to be able to sift through that which is pertinent, and that which is extraneous. It can take a lifetime to develop the ability to do this - many never do, and they pay a dear price for it.
You also have to realize that you will never, ever have all the information you want, prior to making the investment decision to buy or to sell. You will always be dealing with an imperfect decision. What you need to know is, that's OKAY. If you have 80% of what you need to know, you are going to more than probably be calling it right.
If you are using Cramer's approach than more than likely, you are a MOMENTUM player. You can make big money very quickly with this approach, and lose it just as quickly. You have to be ahead of the crowd both on the buy side, and sell side to handle this technique correctly. The best I have seen at this approach is Michael Steinberg who founded, and ran Steinberg Partners, the hedge fund for years.
At the time, Steinberg once mentioned to me that he was giving away $50 million a year in commissions to Wall Street. This meant that he was getting everyone's best idea, and his results showed it. Steinberg was the ultimate momentum player, and he always looked 10 or 15 years older than his age whenever I would run into him. In this business the stress ages you.
As an individual investor, you can do very well in the market. I believe you can blow away professional manager results if you are up to it. It takes time. It takes intensity. It probably takes what Sigmund Freud had in abundance. That was the ability to be BRUTALLY HONEST with yourself as to your strong points, and your weaknesses. Very few are capable of such honesty. Only in Wall Street do so many talk a good game, show poor performance and then make millions for themselves in the process.
Those who have been successful like Cramer are the rare individuals that LOVE THIS BUSINESS. They wake up in the morning, and think about stocks. They go to bed at night, and think about stocks. Whenever they are in conversation, fairly quickly, you can bet that the conversation is going to turn towards stocks. They never stop talking about them. They never grow tired of the subject. That's what it takes to make a fortune in Wall Street, and I respectfully suggest to you that Jim Cramer is showing you how to do it. Good Luck.