Twenty-five Rules of Investing: 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 | 13 | 14 | 15 | 16 | 17 | 18 | 19 | 20 | 21 | 22 | 23 | 24 | 25
Editor's note: As a special bonus to TheStreet.com readers, we have compiled an updated version of Jim Cramer's "Twenty-Five Rules of Investing," from his book, Real Money: Sane Investing in an Insane World.
No Woulda, Shoulda, Couldas
Rule 13
Your head matters in this game. You need to have it on right every day if you are going to
see opportunities and act on them. Yet so many of us have heads clouded with thoughts that genuinely throw
us off target and make us do the wrong thing.
The most damaging recurring thought you can have is this: "If only I ..." — you can fill in the rest. As in, "If only I had acted sooner on Electronic Arts (ERTS - news - Cramer's Take)." Or, "I should have pulled the trigger on Nvidia (NVDA - news - Cramer's Take) ahead of that quarter." Or, "I could have made a fortune if I had stayed short that Sun Microsystems (SUNW - news - Cramer's Take)."
Don't get hung up on the woulda, shoulda, couldas.
This is wasted, damaging emotion. It is destructive to the positive psychology you need when you are making investment decisions. For a long time, I took it to an extreme. I would sit and be mesmerized by a couple of big misses, by things that I got wrong. I would be obsessed, hitting up the big miss over and over again.
Not anymore. With the help of my wife, the Trading Goddess, I was able to see just how destructive such a pattern of thinking is. In fact, I have had to build in methods of tricking my mind into not playing this game.
A while ago, I absorbed a terrible loss in Charter (CHTR - news - Cramer's Take) at the $2 level. I knew that to keep myself from thinking "I could have sold the stock at $4 and change for a nice gain," I had to take Charter off my screen. I do that with all stocks that go up huge after I leave them or that have gone down huge and I had to take the loss for fear that they then will rally and further shatter my confidence.
If you are like me, and you need help curbing this kind of destructive thinking, go to that extreme; take the stocks off your monitor or your portfolio watch. You will be surprised how much better you perform when you stop the woulda, shoulda, couldas.
At the time of publication, Cramer had no positions in the stocks mentioned.
Jim Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. Outside contributing columnists for TheStreet.com and RealMoney.com, including Cramer, may, from time to time, write about stocks in which they have a position. In such cases, appropriate disclosure is made. To see his personal portfolio and find out what trades Cramer will make before he makes them, sign up for Action Alerts PLUS. Watch Cramer on Mad Money at 6 p.m. & 11p.m. ET weeknights on CNBC. Click here to order any of Jim Cramer’s books including his latest endeavor Stay Mad For Life: Get Rich, Stay Rich (Make Your Kids Even Richer). While he cannot provide personalized investment advice or recommendations, he invites you to send comments on his column by clicking here.
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