Rule No. 19: When the Chiefs Retreat, So Should You
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Lots of guys had lots of reasons to sell Enron. I only needed one of them: The CEO quit for personal reasons.
CEOs don't quit for personal reasons. CFOs don't quit for personal reasons. These are fabulous jobs. You get them after giving up much of what people enjoy about life, such as family, friends and nights out. Competition is so fierce for these positions that when you finally land one, you don't up and leave. You leave because something's wrong at the company. Hence, my rule:
When high-level people quit a company, something is wrong."Aha!" you say, "I know a CEO who quit because he had an epiphany about climbing K2." Or, "I know a CFO who left because she wanted to spend more time with her family." Fine. There are exceptions. This is a game about the rule, not the exception. There will always be some situation in which it is a mistake to sell when a high-level person leaves. I don't care. As you can tell, if you have read
|1.||Pigs Get Slaughtered||2.||It's OK to Pay the Taxes|
|3.||Don't Buy All at Once||4.||Buy Damaged Stocks|
|5.||Diversify to Control Risk||6.||Do Your Homework|
|7.||Don't Panic||8.||Buy Best-of-Breed|
|9.||Defend Some Stocks||10.||Don't Bet on Bad Stocks|
|11.||Own Fewer Names||12.||Cash Is for Winners|
|13.||No Regrets||14.||Expect Corrections|
|15.||Know Bonds||16.||Don't Subsidize Losers|
|17.||No Room for Hope||18.||Be Flexible|
|19.||Quit When Execs Do|
|Check back for more of Cramer's Rules|
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