Jim Cramer's idea

[cah]

I have been watching Jim Cramer's Mad Money CNBC TV show since 2003.
He's a very interesting character and is very sharp and talent.

We cut the cable last year due to the increasing charges and I haven't watched his program for a while.

After I got the iPhone in February, I started using more of iTunes and I was able to get some free PosCast and his show is one of the PodCast subscriptions I subscribe on iTunes.

I have borrowed his "Getting back to even" last week.
I will try to post his investing styles here on the BBS gradually to share with others.

From his Mad Money show, he emphasizes not to invest with margin. Also, he asks investors to buy and sell in increments, not as a whole. In case the market doesn't go the way investors wish, there are still opportunities to make some corrections. Sell some of the best performing stocks in portfolio when stock market rallies; buy some good stocks when stock market declines and spread down like pyramid meaning buying more when the prices drop. For example, Buy 10 shares of stocks when the price drops 25%; buy another 20 shares when the price drops another 25%; buy 40 shares when it drops another 25% and so on but the precondition is the company must be a good company and has bright future.

I will share more with all in the future.

[cah]

I was reading chapter 3 last night and here are the key points I got:

• Diversification (at least 5 sectors)
• Invest in gold (ETF: GLD)
• Own 5 ~ 10 stocks
• No more than 20% in any sector
• Fundamentals do not influence stock prices directly, big investors (hedge funds, pension funds, ... and so on) do
• When buyers > sellers, stock prices go up
• When buyers < sellers, stock prices go down
• Invest based on probabilities and patterns rather than prediction of future

[cah]

• Gold - ETF (GLD)
• Speculative stocks (stock prices under $10)
• Growth stocks (growth rate * 2 < P/E)
• High yield (reinvest dividends to the high yield stocks)
• Foreign exposure (as long as it is not in USA)

[cah]

This is a suggested Cyclical Investing and Trading Chart from James J. Crammer