Jim Cramer has some thoughts on how new investors can approach the market.
He broke it down on Mad Money last night and TheStreet's Scott Rutt summarized Cramer's seven tenets.
Tenet No. 1: Invest in stocks that deserve to be higher. If you're a new investor, you can't afford to be trading in and out of stocks on a daily basis. Stick with the winners that have a long-term secular trend.
Tenet No. 2: Don't try and wipe out others. The goal is to make money, not to make money at the expense of others. Focus on your own goals.
Tenet No. 3: Capitalize on emotional moves. Stocks like Chipotle Mexican Grill fell 1.5% on a great quarter. Use that emotional selling to bolster your position.
Tenet No. 4: The Treasury Secretary is focused on the economy, not on stocks. The government is working in your favor, you don't need to obsess over their every move.
Tenet No. 5: Never borrow money to buy stocks. Buying stocks on margin has been the kiss of death for many investors. Only invest with money you can afford to lose.
Tenet No. 6: Keep calm and do the work. Investing can be emotional sometimes. But don't blindly follow others. Do your own homework and make your own decisions.
Tenet No. 7: Find companies that do good and are doing well. It's no secret that the best corporate citizens often have the best earnings. Stick with companies that have both.
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