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Rule 18: Be Flexible

The most important rule of all is: Be flexible.

You have to be flexible because business, by nature, is dynamic, not static.

Things change.
Markets change.
Competitors start new price wars to win share.
Companies execute poorly.
Customers cancel orders.
Events happen that make buying decisions more difficult or postpone them.

Of course, our buy-and-hold brainwashing totally precludes many of us from ever thinking like this.

We have made up our minds that things are great for Coca-Cola or General Mills or Kellogg
and we don't want the facts to get in the way of the story even as times and tastes do change.

Our "love" for stocks is so misplaced in this rough-and-tumble world of business.

You must be willing to recognize that companies do take a turn for the worse.

Managements make mistake.
There are bad strategic and tactical errors being committed by managers every day.

You just have to own up to recognizing them -- stop hoping and start selling.

I mention this because the unwillingness to recognize a turn for the worse -- as bad as it might be -- almost always seems to lead to much larger losses than I already had accrued in the stock.


This is what happens if you are inflexible

Or if you believe too much and don't shift when it's clear that management doesn't care.

Stay flexible and recognize the vicissitudes of the market and of individual businesses.

Or, own bonds.

Your call, as always.

Action Alerts Plus portfolio manager and TheStreet's founder Jim Cramer has learned a lot over his 30+ years of investing. So he created a list of 25 Rules for Investing that can help you avoid the novice pitfalls that even he fell into on occasion.

Like forgetting that things change.

"Markets change...

Competitors start new price wars to win share...

Companies execute poorly...

Customers cancel orders...

Events happen that make buying decisions more difficult or postpone them."

Rule 18: Be Flexible

"The most important rule of all is: Be flexible," says Cramer. 

"You have to be flexible because business, by nature, is dynamic, not static."

So listen to Cramer talk about why "our buy-and-hold brainwashing totally precludes many of us" from flexible.

Watch Rule #18 now! 

 

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