Jim Cramer’s tips for mastering the stock market

Jim Cramer
Jim Cramer’s book “Get Rich Carefully” is out now.
Credit: Brad Tent

As the CNBC host of “Mad Money with Jim Cramer” and someone who has successfully figured out the stock market, Jim Cramer knows investing. Now, he’s spilling his insider secrets in his new book, “Get Rich Carefully,” packed with tips on conquering the stock market and diversifying your portfolio. We called Cramer to get a few more tips out of him.

What does “get rich carefully” mean?

You need to be thinking about stocks that have real staying power. Chasing daily performance coupled with lack of understanding about why a stock goes up or down has driven people away from investing in a world where investing can be really lucrative, especially for those who start early.

Mutual funds are often thought of as the more reliable, safer bet, while individual stocks are more of a risk. Should people stick with mutual funds or invest in individual stocks?

I’m very much in favor of mutual funds. I think the first $10,000 that you’re able to accumulate, which is what I did, should be a mutual fund because you can’t be diversified the way you’d like to and diversification is really the key for long-term wealth. But once you put away $10,000 and you have about $200 a month to invest, I would put $100 of it in a mutual fund and $100 in an individual stock.

What should people keep in mind when choosing individual stocks? 

There are companies that are ready to break themselves up to bring up value, and then I marry that with some of the CEOs that I think are really successful who are investing in individual CEOs and looking for investing themes. That’s been the hallmark of what I’ve been doing for the last five years, and I think that’s quite different from what people think I’m doing.

Besides investing, what does “getting rich carefully” mean on a daily basis?

I lived in my car for a long time and I was still able to put away a little bit of money, and the reason is because money compounds when you’re younger. What that means is that if you keep investing money, there’s a good chance that you will make money. The longer you compound money, the more you will make. When I say “get rich carefully,” first, I want you to stay out of the poorhouse. Second, I want you to do better than just your paycheck. My book is about trying to deal with the current environment and why you don’t have to just keep doing mutual funds, if you don’t want to.

 

Jim Cramer will be in New York City next month to discuss new ways to invest and the 21 CEOs he thinks are bankable.

Feb. 5, 7:30 p.m.
Barnes & Noble, Union Square
33 E. 17th St., 212-253-0810
www.barnesandnoble.com/upstairs-at-the-square

Follow Emily on Twitter: @EmLaurence



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