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Action Alerts PLUS portfolio manager Jim Cramer sees a fundamental shift in investment cash flows happening as investors rotate toward stocks with lower price-to-earnings multiples and away from stocks with higher ones.

The timing of this rotation makes sense, as the day-to-day ruminations over the trade war with China and the potential of a Elizabeth Warren presidency weigh on investment decisions, Cramer says.

"I am focused on earnings because it is earnings season, and when you have earnings season you have the biggest moves and the largest changes in capital flows," Cramer told AAP call members in his monthly address.

As Cramer always says, good stock picking is all about avoiding mistakes, and the mistakes investors tend to make can be boiled down into Jim Cramer's 7 Deadly Sins. Those sins are:

  • Relying on the macro
  • Too much reliance on Wall Street research
  • Not enough emphasis on fundamentals
  • Arrogance
  • Too much diversification and portfolio management
  • Thinking of dividends as protection
  • Ignoring millennial money managers

Avoiding these seven sins won't turn you into Jim Cramer immediately, but it's a good start. Follow TheStreet for more insider coverage of Jim Cramer's Action Alerts PLUS charitable trust

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