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Cramer's 'Mad Money' Recap: Investing for the Long Term

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This program last aired on Aug. 7.

NEW YORK (TheStreet) -- If you're willing to put in the time and effort, anyone can make money in the stock market, Jim Cramer told his "Mad Money" TV show viewers as he dedicated the entire show to his principles of long-term investing.

Cramer said that much of the conventional wisdom about long-term investing is totally bogus, but that doesn't mean investors can't make money -- it just means they must do it the right way.

For many investors, the notion of "long-term investing" is an excuse for not paying attention and poor performance. Everyone must endure short-term pain in order to achieve long-term gain, right?

Well, Cramer said short-term losses don't magically turn into long-term gains just by waiting a little longer, which is why long-term investing has nothing to do with excuses and everything to do with making boatloads of money for years and decades and even lifetimes.

Long-term investing is not about owning stocks for a long time, Cramer continued, which is why he once again sounded off against the conventional notion of "buy and hold." Sometimes companies fall into secular decline and sometimes they screw up, he said, and in those cases, investors can't sit around and wait for a turnaround. Just ask the shareholders of BlackBerry (BBRY) and Radio Shack (RSH) how the "buy and hold" strategy is working.

Saying that you're a long-term investor is not a license to be lazy. There are disciplines and rules that must be followed. Investors can't escape doing the homework and following the rules if they have any hopes of being successful.

Get the Right Price

Cramer's first lesson to investors: If you want to make money from stocks it's absolutely crucial that you buy them at the right price.

Cramer said this notion is true whether you're a long-term or a short-term investor. If you pay too much for a stock, it's vastly more difficult to make money. Even the greatest of investment ideas will turn bad if you pay too much for the stock.

So how will investors know when it's the right time to "pull the trigger" and buy? Cramer said there's never a perfect price for stocks, and those who claim to know when a stock has hit bottom are fooling themselve -- which is why he's always been an advocate of buying a stock in increments.

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