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In a special episode of his "Mad Money" TV show, Jim Cramer showed investors how to avoid losing money by noting the most common mistakes investors make.
He stressed the importance of investing with discipline, using rules to better recognize opportunities and avoid losing money.
Cramer said his first rule for investors is to not dig in your heels when you're wrong. Quoting the great economist John Maynard Keynes, Cramer said "when the facts change, I change my mind."
Digging in your heels and refusing to acknowledge that your investment thesis is wrong is a sure fire way to lose money, said Cramer. It's natural to be angry, but when the market's turned against you, investors need to adapt.
Cramer said he's been repeatedly been chastised by critics and the media for changing his mind. In March 2009, Cramer called a bottom in the market at Dow 6,500 and came under intense scrutiny for his bullish call. But he said the facts were that unless most of the stocks in the Dow went to zero, the average just couldn't go much lower.
The facts changed, he said, and so did his outlook. A month later, the Dow was 1,500 points higher.
Cramer said investors must swallow their pride, admit when they're wrong, and move on if they ever expect to be successful.