Editor's note: Jim Cramer's new book,
Real Money: Sane Investing in an Insane World
, is available in selected bookstores now. As a special bonus to
readers, we will be running Cramer's "Ten Commandments of Trading." For more about the new book and to order it, click here. To learn his "Twenty-Five Rules of Investing," click here. Today, we present Cramer's eighth commandment. Read more about his trading commandments:
Keep It a Trade
First Loss Is Best
Take Your Losses
Trading Gains, Not Investment Losses
Tips Are for Waiters
No Sale? No Profit
Control Your Losses
We always fear that we will miss the next move. We fear that unless we act
, something is going to happen that is going to injure our finances permanently if we don't make a trade.
Those fears are wrong, and they're the reason for my eighth commandment of trading:
Don't fear missing anything.
Sure, there are moments where the train genuinely feels like it is leaving the station without you. But you know what? I have been trading for 25 years, and believe me, there is
a train behind that last one.
Two weeks ago, for example, it was impossible to stand on the sidelines and watch the oils go up without you. But the oils had been moving up for 18 months; what you were witnessing was more of a buying panic than anything logical. Now these stocks are down huge and nobody wants them. If you feared missing the next move in oil, you might have bought then and no doubt are selling now.
That's the reason this impulse must be controlled.
We have seen it happen endlessly in tech over the last few years. One company would report a good number, say,
, and the market would take up all other Net stocks without thinking, including those of companies that Yahoo! was killing!
That was the fear instinct at work again. Invariably, people who acted on it lost money.
What I like to tell myself is, "OK, I missed that Yahoo!. I should have bought it yesterday. Now, rather than play catchup, I will just work harder to find the next Yahoo."
Control your instincts. There is always another train. Never forget it.
At the time of publication, Cramer was long Yahoo!.
James J. Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. Outside contributing columnists for TheStreet.com and RealMoney.com, including Cramer, may, from time to time, write about stocks in which they have a position. In such cases, appropriate disclosure is made. To see his personal portfolio and find out what trades Cramer will make before he makes them, sign up for
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email@example.com. Listen to Cramer's RealMoney Radio show on your computer; just click
here. Watch Cramer on "Mad Money" at 6 p.m. ET weeknights on CNBC. Click
here to order Cramer's latest book, "Real Money: Sane Investing in an Insane World," click
here to get his second book, "You Got Screwed!" and click
here to order Cramer's autobiography, "Confessions of a Street Addict."