It's back-to-school again, this time to learn about how to take a loss like a man.

Have you ever ridden a stock to zero? When I say zero I am not talking about goose eggs. That would be too painful for brokerage houses to inflict upon their clients.

Instead, you've probably ridden it down to asterisk. Or ridden it down to "unpriced security" or "cannot be found," brokerage euphemisms for worthless as plain as passing is for dead.

It doesn't feel good. Even when you mention it to your accountant, it doesn't feel good.

What would you have done to be able to salvage some portion of that investment? To be able to get out when the getting out was still moderately good, or at least not terribly bad?

Well, you have come to the right place, because I am about to give you Dr. Cramer's handy five-point pathology guide to spotting "unpriced securities" before they end up in the stock morgue.

The first sign that you may have merchandise on your sheets that is not coming back to life would be when the broker who suggested it to you doesn't mention it when you call in for a rundown. Or when the analyst at the brokerage house who recommended it dropped coverage. Brokerage houses rarely fumble balls like this, unless the ball is meant to be dropped, and take that as an early warning sign that your stock is ailing. Brokerage firms, by the way, do not proclaim the dropping of coverage. Unlike the "Salomon upgrades Kansas Fire" headline, the dropping of coverage is done deftly and quietly.

Second, any time you read that your stock is in violation of loan covenants, don't even read any further, because every firm will also say that it is confident that the violations will be cured. Every one of my disappearing securities was highly confident that the balance sheet could be rectified before we were blown to kingdom come. Only a handful made it, and they never compensated for the losers. Most of the time my getting no money back was a key feature of the ability of the entity to stay alive.

Third, any time the company announces a restructuring that will cram the common or issue a dramatically new measure of common, you should wake up and smell the cadaver. This stuff amounts to the company losing its own destiny. They probably aren't even making the decision to create the stock. Someone more important, who is pulling the strings, most likely the senior lender, is ordering the dilution, and management isn't in a position to fight for you.

Fourth, when you see an OTC stock suddenly dip from five to say three without any volume, take that as a sign that the dumbest smart money left is pulling out and do not average down. I have averaged down on probably close to four or five dozen of these over the course of the last 20 years and I never did anything but pay the last high price that was ever paid. (I distinguish OTC here because periodically a listed stock I know did come back, but I have to go back to


six years ago to find anything that eventually paid off for me. And that was a pretty negligible payoff usually reserved for when the heavy favorite crosses the finish line first.)

Finally, you know that history awaits you when you see insider selling of a stock in the $3 or $4 range, after it has traded much higher. Think about it. If the company is really about to turn, don't you think the insiders would see it and snap it up? Don't you think that they would be buying and not selling, if only to keep the creditors, not to mention the shark-skinned lawyers, at bay?

Of course, none of this gets you out of a $25 stock that may end up going to the great unmentionable, but let's save that primer for the daily battles I chronicle from the Main Line of Resistance.

James J. Cramer is manager of a hedge fund and co-chairman of

. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Mr. Cramer's writings provide insights into the dynamics of money management and are not a solicitation for transactions. While he cannot provide investment advice or recommendations, he welcomes your feedback, emailed to