I fell upon this page earlier today and loved it. I have been watching mad Jim for many years (from CNBC mainly) and got always irritated by his usual arrogance, but I guess that's his own choice to reflect that funny image. He has been singing in a lower tone-ladder though, last year, when he sat as a guest opposite Jon Stewart in the Daily Show. Jon took the poor bastard to the cleaners. Big time! Poor Jim. I felt sorry for him. Looked like the entire blame for the Wall Street obscenities fell upon his shoulders that night. Jon made a scapegoat of him, for many days that followed. It was all over the blog-sphere! It's hard to be an analyst these days. Anyways, Cramer is a smart cookie and was able to survive the tsunami. Regarding what he usually says in his analysis of the market and its players, you don't really have to believe him, but it sounds pretty smart nonetheless... quite often so. As I read his 25 rules this morning, I often smiled for I remembered my own (re)actions in similar situations where I failed them rules miserably (quite an understatement). See my comments hereunder in each one of them rules to see what I mean.
Rule 1: Bulls, Bears Make Money, Pigs Get Slaughtered.
First time I heard this was from John, my colleague CFO between 1997 and 2000. How true. I remember him stating that rule and having some heavy laughs the way he only could. Yep, pigs get slaughtered! These are the idiots who jump into the market to make an extra buck without knowing the difference between a balance sheet and a toilet-paper sheet.
Rule 2: It's OK to Pay the Taxes
Says who? Well, ok, in the US you can use your losses to cover your profits from taxation. Here though, what you lose is your problem and capital gains don't get taxed. Rule for the Yanks alone...not here!
Rule 3: Don't Buy All at Once
No Comment. It's pretty obvious, innit? Having said that, I often done this mistake. Took positions right away, instead of spreading. See, you're always afraid you're gonna miss the opportunity and buy more expensive if you wait too long.
Rule 4: Buy Damaged Stocks, Not Damaged Companies
That's a good one! That's why I stuck to AAPL even when they were trading below 100 bucks from a high of 190+ just months earlier. I knew they'd come back. I was an ass though not to sell at their highs... John does better than me on that. Far better!
Rule 5: Diversify to Control Risk
Yep, I tried that and always got screwed. I mean, you need to diversify to avoid going down the drain when all your stocks are heading south, but what with? Bonds and gold? Gimme a break! I'm like stocks and cash. The rest will only make them banks 'commission fee & transaction charges' rich.
Rule 6: Do Your Stock Homework
Provided you understand that shit! Like fundamentals and technicals and MAs and stuff! I often listened to bankers, but these poor bastards quite often know half the story too. Some will even ask you to pass your opinions and info to them instead... I'm that good, you know... (not really). If they knew it all they wouldn't spend their days helping us amateur day-traders! They'd be rich themselves, right? And sunbath their ass down in Saint-Tropez, right? So, don't always buy shit they're telling you. Go by the Big V! Verify. Like one of my ex-IBM bosses used to say. Don't expect... inspect!
Rule 7: No One Made a Dime by Panicking
Correct. My problem was more like, don't panic, it'll come back, don't sell yet... not yet... and by the time I realized I had to move my ass, it was gone too far south for me to sell and so I kept the bears and swallowed big losses. Eh, well. It's only money... like John the Wise sez! Thank Moses, losses mostly came back, sort of... eventually. Dream on...
Rule 8: Buy Best-of-Breed Companies
I love Techs. The big boys. Like MSFT and IBM and INTC and AAPL. I worked for a semi company in the 90ies, so I still hold TXNs and thank God I got out of freaking MOT almost on time (having lost big before that). I mean, this rule 8 is easier said than done, ok?
Rule 9: Defend Some Stocks, Not All
Jim is right on that one too. I should have dropped TXN and INTC long ago and CSCO too. But I am the loyal type of guy. In marriage and in stocks. What can I say?
Rule 10: Bad Buys Won't Become Takeovers
Always stayed out of those... Some people buy bad names in deepshit trouble hoping some sod out there with deep pockets will show up and buy the losers. Not me though. This is too speculative for my taste. We had a company in this country in the hype times that went down the pissoir big time. Lernout en Hauspie. Remember those frigtards? Plenty of 'pigs' in West Flanders took a second mortgage on their house to borrow money and give it to those losers. Jo Lernout and his mate Hauspie, founders of the mess, should have been canonized following the miracles some believed in, those days. The age of stupidity! Your beloved cash, you just said? Kissie kissie bye bye! Rule 1 of the Cramer list! What do pigs get?
Rule 11: Don't Own Too Many Names
I don't. I used to and eventually I lost on most of those that I didn't quite know well enough. You just can't be there and watch them screw up all the time, can you? Once I was convinced by the silly banker to buy in that miserable sports company from Germany, of the two brothers who kept hating each other to their grave (Adidas and Puma). Another time I had to take positions (following 'expert' advice again) in Healthcare, Renewable Energy, and Emerging Markets in SA (Brazil and such). Even got me into "structured products" with Lehman Brothers just months before they collapsed. Yep. My banker was a genius. I hope he reads this blog. Tough shit! Don't ask. I don't even take the dude's calls anymore. I learned to stick to the industries I know and understand. High Tech! Computer stuff! Hard and software. AAPL and iPhones! And semi's. Despite TXN and INTC!
Rule 12: Cash Is for Winners
You betsa. Problem is, it never heads south, fine, but it doesn't go north either. It's no fun. Cash suckz! Buy some property instead. Not on an island though that risks to end up under water in ten years time from ice melting in the poles.
Rule 13: No Woulda, Shoulda, Couldas
Cramer is so right on this. The times I felt like he says... if I had a penny each time I said 'I shoulda' I'd be rich by now. Everyone among us seems to be an expert in predicting the future after the facts (well into the future, I mean). It takes guts to make the right decision in advance of the future though. Wanna know more about it? Trade in Puts and Calls then. You'll see what I mean real quick.
Rule 14: Expect, Don't Fear Corrections
Yeah, right. Problem is, how do you know it's a correction? If it happens to all, same time, ok, maybe. They'll come back eventually. What about a correction that never comes back? Like MOT? Yep, I'm hearing you... that wasn't a correction, you sez, it was simply a sort of management insanity that took the company to garbage status. Like most of the banks last year. Ayways. Corrections? Fine. I don't bother much about them as I am in the game for the long term.
Rule 15: Don't Forget Bonds
Sure do. I don't have that much money to waste on bonds! I mean, why lock your money into something that pays just a couple percent points above cash? So freakin' boring! Too much risk for what it is! When the shit hits the fan they go down like rocks too. Better buy gold, or a trip to Hawaii in a yacht packed with 20 year old blondes!
Rule 16: Never Subsidize Losers With Winners
I did that mistake over and over! Still do it. Don't wanna talk about it! Bleeds my heart. Shoulda woulda coulda!
Rule 17: Check Hope at the Door
I love this one. The market is run by calculated sneaky bastards who play with yours and my money all day long, so that 'hope' and 'lighting candles to Mary and Jozef' 's got nothing to do with it! Heard that, pigs? You better do or you'll end up in a kebab spit.
Rule 18: Be Flexible
I'd like to. But in this miserable continent of ours they charge you a fortune for each transaction, buy or sell. Unless you trade in options, you normally stick to your securities for the long run. One dot something percent charge, no ceiling, per transaction. That's why bankers get so stinkin' rich. They do nothing, take no risk at all and still get money out of your misery, whether you buy or sell... regardless.
Rule 19: When the Chiefs Retreat, So Should You
He may be right on this one... I am not too sure though. Who knows why chiefs abandon ship most of the time? Some even get sacked. Good captains don't go away. If they do, they might have been lousy in their job when in charge. I couldn't say. This is kinda tough call.
Rule 20: Giving Up on Value Is a Sin
Not applicable to me. After burning my underpants multiple times, I ended up trusting myself (and my good pal John, God bless him) far more than I trust them banking experts!
Rule 21: Be a TV Critic
I am. Those freaking Financial analysts (with a few exceptions counted in the fingers of one hand) are all the same. Each day of the week they get the same stupid reasons to explain the market or individual stocks moving either in one or another direction. I'd like to know who starts the wave every single day. Ridiculous. Same reason we hear them say was behind a market crash one day moves the whole lot sky-high the following day. These folks are so full of it! Agree?
Rule 22: Wait 30 Days After Preannouncements
I sort of developed some gut feel for the stocks I know well. I don't listen to preannouncements anyway. That's for short term opportunists and those who're chicken scared they might lose a penny or two. There are some who put their cash in a myriad notes inside banksafes built under lakes. Not my kind of people...
Rule 23: Beware of Wall Street Hype
To think that he's one of them... well done Jim. I salute you! Yep, everybody knows that those fancy Wall Street boys are the scam of the Earth. With some big sharks on top of the pile. Easy money is written in their forehead. Nowadays they do it with HFT tricks and leave their computers do their dirty laundry.
Rule 24: Explain Your Picks
I do... most of the times. Except when I followed the advice of 'wise' bankers as I often did in the past. Not anymore. I do hear what they have to say, but then try to verify the info and get convinced by what I read next in 25 different 'trustworthy' net blogs and other newsreels. Maybe 30.
Rule 25: There's Always a Bull Market
I know. That's why I still stick around with them stocks. I might have put everything I got in a cheap safe instead, right? Above the ground though. Lakes might leak!