Jim Cramer Blog

On Friday Cramer returned from his trip to Georgia Tech to teach his viewers how to invest like the pros. He discussed five different mistakes that amateur investors make that professional investors don't. The first thing Cramer recommend amateur investors to do is have cash on hand to buy stocks when the market goes down and good stocks go on sale. Cramer recommended having 10% in cash in your portfolio. The second thing he said to do was to consider the downside of risk and not only the potential rewards. Thirdly, Cramer said that pros try not to invest in things that they don't know or understand. Fourth, Cramer said you can make too much money, because it probably means you overexposed to one sector or stock. The example Cramer gave on the show was the dot-com era where everyone was investing in tech stocks. Finally, Cramer said that amateurs try to game quarterly earnings reports to catch a quick gain, whereas professionals learn to start living and stop worrying about the quarterly report. Cramer said that if you make these decisions that take longer, than you should be able to make some "mad money."

Labels: Jim Cramer, Mad Money, Mad MOney Recap