That conviction, he said, enticed a friend to give him $500,000 to invest. Cramer said he promptly lost $70,000 of that money while learning another tough lesson: You can never invest big sums of money all at once. Stick with the companies you know and know why you like them, he said. With conviction and discipline that big sum will slowly start to grow.
He also learned lessons while trading at Goldman Sachs (GS). Cramer said he learned how to build a portfolio from the ground up, how to properly manage capital for the long term and the value of diversification. He learned how to explain investments in plain English, and about humility when things don't go your way.
Cramer reminded viewers that individuals can, and do, beat the markets regularly. But that's only accomplished by having solid ideas on which to build.
Trades shouldn't be turned into investments if things go south, nor should investments become trades if you rack up quick gains. Only by knowing why you own a stock will you know when it's time to sell, cut your losses or let your gains ride.To sign up for Jim Cramer's free Booyah! newsletter with all of his latest articles and videos please click here. To watch replays of Cramer's video segments, visit the Mad Money page on CNBC. -- Written by Scott Rutt in Washington, D.C. To email Scott about this article, click here: Scott Rutt Follow Scott on Twitter @ScottRutt or get updates on Facebook, ScottRuttDC