There are seven deadly sins when it comes to stock-picking, said Jim Cramer, and the fourth is "arrogance."
Arrogance is the belief "in your stock-picking to a fault because you think there's nothing that can defeat your picks," Cramer told members of his Action Alerts PLUS club for investors during an exclusive video-conference call.
Cramer noted he has been following Schlumberger with "great intensity" since meeting company reps in 1982 at MIT.
"I was incredibly impressed with the science and vigor," he recounted to AAP club members.
But while the company "never lost that ability to get the best and brightest," the market changed and "oil and gas service went out of fashion."
"It's been a brutal comeuppance and I have studied it endlessly and can only conclude that my own arrogance - a belief in Schlumberger no matter what - has suffused too much of my thinking," Cramer said.
Still, while the decision to stick with Schlumberger proved to be a mistake, shares spiked during the Iranian troubles in the Gulf and "we were able to sell some and take the loss," Cramer noted.
"In reality stocks go down for a multitude of reasons that can easily defeat your ability to pick the right stock," Cramer said, citing potential factors ranging from inside trading to a "tsunami of market selling that hits you in particular."
"If you believe in yourself too much, you could mistakenly refuse to sell something that should be sold," Cramer said.
Check Out All of Jim's Video-Conference Call
Cramer's video-conference call was only available to Action Alerts PLUS members, but you can sign up for a free 14-day trial and watch a full replay.
Joining Action Alerts PLUS gives you access to all of Cramer's monthly private video-conference calls and provides you with a host of other benefits, including:
- A complete rundown of all of stocks that the expert holds in his charitable trust;
- E-mail alerts that give you a chance to buy or sell any stock before Cramer makes a trade for the trust;
- Custom research throughout the trading day from Cramer and his team of stock-market analysts. You get to see some of the same research that Cramer and his team sees every market day as they make investment decisions.
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