For the past two decades, the exuberant former hedge fund manager Jim Cramer has celebrated the highs and pondered upon the lows of the stock market.
The host of CNBC’s Mad Money With Jim Cramer show analyzes economic trends, trading robots like Immediate Momentum, provides investment advice to viewers, gives tips on how to pick the latest stock, and interviews CEOs.
The Jim Cramer Strategies
One of the key advice he gives to his followers is that investors need to know best which stocks match their needs before they are interested in buying them.
He tells viewers to ask themselves what their tolerance is and how much risk they are willing to take out of a given stock. Cramer warns that digital brokers do not offer any real protection and may place investors in the dark as they may not know what they are getting themselves into.
His revelation comes from personal experience while working at Goldman Sachs, where he would often leave messages on his answering machine naming his top stock picks for the week.
However, once a senior executive heard Cramer’s message and called him back, explaining to him that before recommending a stock to someone, he has to understand that individual’s needs and level of risk tolerance.
He now asks buyers to be more aware of what they might be committing their hard-earned dollars to when purchasing a stock.
During Thursday’s broadcast of Mad Money With Jim Cramer, he interviewed a caller named Kyle who was also a CNBC investment club member. His question to Cramer was how often the talk show host looks at RSI data when buying or selling a stock.
In response, Cramer says that he looks at the chart all the time and makes sure not to buy stocks when they are performing badly.
The 66-year-old stock market expert says that it is important to look at the RSI data because “others do it” and anything that other market players do is important to him.
Meanwhile, another caller from Florida, named Nick, asked Cramer what was the best way to go about investing for their children. Cramer responded by giving examples of his own children, whom he asked to invest half of their earnings into index funds and stocks.
He says that it does not matter what children do with their hard-earned money, but what matters is the investments they make in their early days, which will pay their dividends later in life.
A third caller to the show hoarding from New York asked Cramer how investors should play their IRA investments, to which he replied that the investor should continue running the stock until it turns sour, in which case, Cramer says to take the loss but get out with whatever money they have left.
He advised the caller that since they had been investing with a long-term strategy into the IRA, they should probably continue to do so, even if that means taking a loss in the short term.
However, he emphasized the need for investors to continue maintaining a long-term stock investing strategy which is ideal for returning profits in the future.