Sneak Preview: Cramer's New Investing Rules

And you know what? I was miserable. Just miserable. My beloved stock market was marching on without me and I wanted to get back into the band!

I struggled mightily for a formula that wouldn't let me profit but that would let me show others how the game is played, and I came up with a charitable trust model. I would put money into a trust that would distribute the profits to charities of my choosing at year- end. None of the gains could accrue to me.

Very quickly, through mention on TheStreet.com and CNBC, people wanted to know what I was doing with the trust and whether they could follow along. So I created a website and an electronic newsletter, ActionAlertsPlus.com, which you have no doubt heard of if you watch Mad Money or read TheStreet.com's RealMoney.com section, where my blog appears. For a fee, I would show you how I would manage my personal stock portfolio. In order not to profit, lest the product become a big success -- which it has, the largest paid subscription e-newsletter anywhere -- I let you buy the stocks ahead of me and sell them ahead of me. Unfortunately that has skewed performance down for me, but it doesn't matter because it skews it up for those who subscribe to the newsletter.

The business of running money personally, not being in the hedge fund world, has been incredibly eye- opening for a number of reasons. First, I am, at last, able to think longer-term, which is incredibly liberating and refreshing for me. In fact, I'm forced to think longer-term because of a whole variety of restrictions on the charitable trust that prevent me from trading stocks in the short term. I love the idea of being able to buy something and let it work over time, which is good because that's all the charitable trust lets me do. I try to have a six- to eighteen- month time frame for all my buys, which gives them a chance to truly percolate and blossom. As you will soon see, when I don't let them do so, I don't make as much money at best and perform quite poorly at worst.

Second, I think I have become a much better investor. That's because when I was at my hedge fund, we were in a very different world, an unregulated world where the big boys -- including me -- could always outperform small investors. We were able to call managements any time up until one month before the quarter -- the so-called quiet period when they knew approximately the results of the quarter and weren't allowed to give them away -- and ask how things were going. That allowed us to have a better idea than anyone else whether a given company was going to beat the estimates, meaning it would report a better- than- expected quarter or a worse- than- expected quarter. Given that the biggest determinant of a company's stock, besides its sector, is whether or not it will beat the estimates, these calls were money in the bank.