On a special edition of Wall St. Confidential, Jim Cramer sat down with author and
columnist James "Rev Shark" DePorre to discuss his new book and his winning strategy of how to make money in the current market.
"I've endorsed the book because it's perfect for any environment," Cramer said of DePorre's
Invest Like a Shark
. "But what's great is that we have a tough environment, and I think the book is extra special for that."
"The most important thing in this sort of market is not to be sucked into buying weakness too early," DePorre started off. "A lot of times I think the biggest mistake a lot of individual investors make is to average in too quickly and too fast."
DePorre said he knows Cramer's an advocate of doing that in the right circumstances, "but most individual investors don't adhere to a good scale," he said. "They do it too quickly."
Cramer & Shark: Invest Like the Best
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Further, although there are many people who say that any form of trading is wrong, DePorre said it has not been his experience to buy stocks and stick with them through thick and thin. Investors should not be afraid to sell bad stocks, he said. They should take their stocks and look to make up their losses someplace else.
"If you bought a stock like
back in the 1990s, you're under water," DePorre said, citing an example. "There are so many more like that. We could name hundreds of them.
"Traditional Wall Street is mainly about gathering assets," he went on. "What they want to do is keep your money in house, so if you buy and hold, they're going to hold on to your assets."
However, if people are active and move in and out of the market, there's a greater likelihood that they might move their cash to a different broker or fund, DePorre explained. "So there's a lot of motivation to tell you to stay the course or stay steady."
Lastly, DePorre said "it's very important ... to have a methodology where if your losses get to a certain point, you get out no matter what." If market players are going to start averaging in, they must have a methodology to exit, as well if they made the mistake of buying too quickly, he said.
Jim 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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