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In a special episode of his "Mad Money" TV show, Jim Cramer celebrated his 1000th show in front of a live studio audience.
He told viewers he knows where they go wrong with their investing and vowed to help them fix their mistakes. He then rattled off 10 plagues that afflict retail investors.
Plague No. 1: digging in your heels when the facts change. Cramer said investors must always be flexible and move on.
No. 2: believing you should always be fully invested. He said it's OK to have some cash and encouraged investors to always have at least some cash on sidelines.
No. 3: believing it's impossible to beat the market. He said beating the market can be done and he's living proof.
No. 4: letting despair blind you to opportunity. He said there's always opportunity somewhere.
No. 5: not being prepared for losses. Cramer said losses are inevitable and are not a reason to give up.
No. 6: letting your gains ride. Don't be greedy by not taking profits, he said.
No. 7:selling at the exact top and buying at the exact bottom. Don't be arrogant, said Cramer, adding no one is good enough to call exact tops or bottoms. Buy in increments.
No. 8: allowing yourself to believe stocks can be cheap. Stocks do not get to $10 or less because things are going well, Cramer told viewers. The downside always 100%.
No. 9: taking everything to hear at face value. "Do your own homework," said Cramer, and don't believe everything you hear on TV.
No. 10 - Buy and hold. Cramer said buy and hold doesn't work, but buy and homework does.
Cramer said investing is not a lazy man's game. It takes effort and it takes rigor. But if you want to profit, he said, you must avoid these ten plagues.
Safe to Buy
"Investing isn't always about common sense," Cramer told viewers. Case in point,
, a smokestack industrial company that should be getting killed during a recession, yet barely moved the needle even after bearish news.
Cramer said Emerson released one of the worst quarterly outlook's possible. The company slashed its yearly forecast from $2.70 to $2.95 a share to $2.40 to $2.60 a share. Emerson took a $1.1 billion hit due to currency conversion and said its business is in freefall. Emerson's CEO also stated that he doesn't see a turnaround in 2010 as expected, and doesn't see business picking up until possibly 2011.
Yet despite all of this horrific news, shares of Emerson trades essentially flat yesterday. "That's capitulation, that's a bottom," said Cramer. That's when investors know that the selling is done, and that it's safe to buy.
Cramer said this is the pattern investors need to look for in the stocks they buy. Emerson, he said, is a stock where all of the bad news is out, and the company pays you with its big 6% yield, to wait for it to go higher.
CEO Duncan Niederauer to the show to discuss that company's fall from over $100 a share to $19, as well as how to protect the markets for retail investors.
Neiderauer said in evaluating NYSE Euronext's stock, the cash market is not the only metric that matters. He said other metrics, like trading volumes, options volumes, volumes at Euronext and the derivative markets, all play a factor. He said the company's dividend is intact, adding that there are no plans to change it.
Turning to market regulations, Niederauer said some form of price test needs to be put back into the market to protect stocks against short selling. He said that while the uptick rule is the easiest, the exchange is looking into even stricter rules to prevent price manipulation.
Niederauer said he favors any plan that helps instill market confidence and helps them run more efficiently, even if that means a short term hit to the company's bottom line. "The markets need to be fair for everyone," he said.
Cramer said Niederauer was a great CEO, and he's still backing the company.
Cramer was bullish on
Shire Pharmaceuticals Group
He was bearish on
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At the time of publication, Cramer was was not long on any stock.
Jim Cramer, host of the CNBC television program "Mad Money," is a Markets Commentator for TheStreet.com, Inc., and CNBC, and a director and co-founder of TheStreet.com. All opinions expressed by Mr. Cramer on "Mad Money" are his own and do not reflect the opinions of TheStreet.com or its affiliates, or CNBC, NBC UNIVERSAL or their parent company or affiliates. Mr. Cramer's opinions are based upon information he considers to be reliable, but neither TheStreet.com, nor CNBC, nor either of their affiliates and/or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. Mr. Cramer's statements are based on his opinions at the time statements are made, and are subject to change without notice. No part of Mr. Cramer's compensation from CNBC or TheStreet.com is related to the specific opinions expressed by him on "Mad Money."
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