Sneak Preview: Cramer's New Investing Rules

Editor's note: This is a special sneak preview of Jim Cramer's just-released book, Jim Cramer's Stay Mad for Life: Get Rich, Stay Rich (Make Your Kids Even Richer). Look for more sneak previews every day, and get your free copy with your annual subscription to Action Alerts Plus; click here for details. Catch Cramer in person at his last book signing event: Saturday, Jan. 12, at 1 p.m. in Westbury, Long Island's Costco.

Missed the first sneak previews? Read the book intro and the rules of getting and staying rich: Rule 1, Rule 2, Rule 3, Rule 4 and Rule 5. Know what pros do right and amateurs do wrong: Part 1, Part 2, Part 3, Part 4 and Part 5. Learn the five mini-bull markets that will stampede for years, starting with aerospace and defense, agriculture, oil and oil service, minerals and mining and infrastructure.

Twenty New Rules for Investing

For twenty years, I managed money professionally, taking the funds of rich people and trying to make them richer. I was in a performance business; I got to keep 20 percent of the gains, even if they were only on paper. There are two kinds of gains in the business: realized and unrealized. When you sell a stock for profit, that profit is a realized gain. When you own a stock that's up from where you bought it, that's an unrealized gain. At the fund I took 20 percent of both realized and unrealized gains. I also received 1 percent of the assets as a management fee. I initially reported to my investors once a quarter, but increasingly they asked for monthly, then weekly, and ultimately daily performance figures. As my assets grew and my performance fluctuated by the hour -- I needed to make $430,000 a day just to continue my yearly returns -- some clients asked for my numbers hourly. ...