Category: Money tips Release Date: 2006-10-26
�(U.S.) James J · Cramer
Do not buy a one-time, arrogance is a sin. I think my be called the greatest of this era, one of the market timer. I was able to accumulate wealth as fast as I worked out a lot of the time the stock market turmoil, I can correctly enter the market, to market. However, when it comes their way is to buy stocks, I never choose a one-time buy. I always put the time to buy value-added, carefully controlling the pace of buying in order to avoid emotional. Likewise, I never at the same time putting in a lot of capital, capital investment has also been brought under control, I rhythmically. Here I will cite some examples to illustrate this problem. Every month, I will be 12% of the proceeds of my retirement accounts into 401 (k) account, but if I seize the opportunity for a stock market decline, such as the decline of 10%, I would have invested in the stock market is more and more money. If I seize a decline up to 15% chance, I would have a quarter of the next cast into the pension. In the past 10 years, twice fell to a 20% chance, I will do the rest of my money invested. In this way, I made effective use of the stock market fell to incredibly low price of buying the stock. The reason I did so because I know I might make mistakes. I own behavior and how to wisely judge also has a clear understanding. I know that if I vote all the money into the case, once the big stock market decline, I am there will be angry and depressed, and thus that the market is a lie, is not tame, or too much difficulty. Every day I receive in the radio show many such complaints, so I know that in order to overcome such a feeling, you must humble, must be recognized that the market is often unpredictable quagmire, but long-term view, it is also possible to use common sense judgments.
Similarly, when I want to Jiancang, I will never buy a one-off. I am aware that at the time of buying I have an unavoidable fallibility. The market may be dropped. A few minutes later there is likely to become very ridiculous to buy the negative events. Therefore, there must be intervals between the two to buy. This is my usual practice, although it always makes my agent people furious. Decline rapidly in the circumstances, I do not have a harsh and one-time buy 5 million shares of the stock market, but every one hour to buy 5,000 shares. Or the first to buy 5,000 shares, then such shares fell 25 cents, later buying 5000 shares, which they hate endless. They want my next single, but I would like to correct a single underground. You are a customer, you have the right to control your money, do not let anyone press you, you do not want any man-made one-time investment. How do you know that tomorrow will the stock market crashes? How do you know all you put money into the future, tomorrow your favorite stock will not again fall? People's judgments may be wrong always, accept this reality, it is what you use it. My method uses the worst result since what is it? Is very simple: before the advent of a major fluctuations in the stock you do not buy enough, your income is not expected, but I think this is a higher level of issues!
To buy and do homework, instead of buying and hold. Just started at the "Jim Cramer's financial management", I encountered numerous break away from the hands of no less than they are falling technology stocks or biotechnology stocks people. I always tell them: "Yes, you can continue to stake on condition that you can use English to answer the following question: This company is doing what? Of its price-earnings ratio multiple of how many? Who are its competitors? "No one can answer them. They simply say that they learned in the past is to buy and hold shares of all the other methods are speculative. After a long period of hard thinking, I finally determine the cause of this misunderstanding is that they should adopt a strategy to buy and when to do their homework, we all used to buy and hold strategy. The so-called homework is the right web pages, telephone conference, review articles, research reports and other have said in my previous paper, the content analysis. If an investor does not do the buying, after the above work, or spend an hour a week to do homework, I think he is a little rash, but I also expressed my this view. I tell people that they do not have to personally manage their own portfolios. They must be delivered to this task a certain index funds, or managers who can make their own checks on a regular basis. Although the period from 2000 to 2003, people still adhere to a buy and hold the view, but that has experienced tragedy, people to insist on such views appear ridiculous.
If there is an arbitrator if there is a body or entity who has the power to prescribe the listing, and for their access to the amount of earnings and balance sheet of standard-setting, you can buy and hold. But in the last five years, I have learned one thing that anyone can operate market, anything can be listed, so we must not allow listing of low-threshold harm ourselves in this situation. Remember, there is no asset class will depend on long-term holders of (long-term holders of the concept is generally 20 years) over the blue chip stocks pay dividends. However, unless you persevere and do your homework, otherwise how do you know your hand is good enough to pay for the stock dividend blue chip stocks then? You may feel very confused, it is highly likely to be a long-term stock returns temptation. I've lost count of how many times I have experienced such a situation, buying stocks, the company's operations in good condition, but then plummeted. The role of homework at this time been exposed to, and when a company could not stand up when doing homework is to find ways to get rid of the time. Most important function of homework is not for you find a blue-chip stocks, but to ensure that you will not be a junk bond portfolio, all bets are Er Shi.
Do not use the winner to subsidize the losers. Lower level of portfolio managers and individual investors are always worse on the best selling shares to supplement the worst of the stock, so that many people were. You can always see this in the market, investment patterns. You might see someone in the investment portfolio and found it was a lot of junk stocks, you might ask its owners: "You blue-chip stocks have gone?" They might say: "Do not sell blue chips, how can I make up the money had been falling into these stocks? "The problem is that everyone must face. I have been plunged into such trouble for numerous hedge fund advisers did, so I know they sell is the first blue-chip stocks, because "only they have people to buy." Is always someone to buy blue chip stocks. But when both of your hands a few blue chip stocks have a few underperformance shares, you will not be because of underperformance shares "declined so much" and throw them, nor because they are a small quantity shares but will their "low throw." Readers of the work for utility companies to do so is still justifiable, but the individual investor, please do not use the winner to subsidize losers. If you are in the hands of the stock distribution company is the company's fundamentals are getting worse - and stock prices are just the opposite variation of the good company, be sure to deterioration of operating conditions of the company's stock shot, accept the loss of funds will be recovered used in good stocks, the continuing investment.
Author: James J · Cramer, the famous market experts and investors, the financial channel CNBC host of gold medals, the United States popular radio show host realmoney. He also "New York Times" has its own "bottom line" column.
