Tonight was a rebroadcast of the episode that originally aired Dec. 27, 2006, it is reposted below.
“A handful of extremely important rules are needed to beat the market and to be successful people need to unlearn some of the worst, most harmful myths they believe about stocks and investing,” Jim told us at the start of his show today. As a money manager he made every mistake in his new book. We were told that the single worst and most common mistake people make is buying and holding stocks. Buy and hold isn’t a strategy but an ideology which allows market players to be lazy, and it will lose you money. Doing homework after the buy not buying and holding will make you money. 30 or 40 years ago buy and hold was a winning option with high taxes and commission. It is important to know when to buy and sell, and doing homework is the only way to know when. A second mistake was pointed out when investors harbor regrets. It was called unproductive and bad to dwell on missed opportunities, yet people still do it. The time you waste worrying about these misses, is time you are not making money. Instead of dwelling on the past, think about the future. The next rule is “tips are for waiters.” People love “hot stock tips” but there is no such thing as a tip so never take them seriously. The only way a tipster could know for sure about a stock is if they were an insider and if they are an insider and tip you off they are breaking the law. An investigation from the SEC is pure hell even if you haven’t done wrong. Tips do not exist, and Jim says “if you get a tip, it is either illegal, incorrect or straight up manipulative.” In theory you want to be diversified but often when you pick stocks you do not think about being diversified because it is “boring, conservative and totally unsexy.” While no fun, diversification is “essential” for those serious about investing. Throwing money into one hot stock can ruin you. Lastly people want to be good investors, but they need to refrain from getting too arrogant. The rule here is “arrogance is a sin.” The most arrogant thing is to place your whole position in a stock at once, as this is something you should never do. Buy incrementally, and be patient for good entry points to build position.

Fast Money on Wednesday was a rebroadcast from July 4, 2007.
Word On The Street
Exchange Traded Funds (ETF) were the focus of todays show. They are a great way to get into the market without having to worry about individual names or sectors. Ratigan named two popular ETF’s in the S&P 500 Index “Spiders” ETF (SPY) because it moves in tandem with the S&P and PowerShares QQQ Trust ETF (QQQQ) as it moves in tandem with the NASDAQ. Macke told us that they can be used to bet against the market as well with the UltraShort QQQ ProShares (QID) being given as an example. Ratigan had the guys go through the ETF’s by sector.
Next For iShares?
The adoption of ETFs in large part has led Barclays to be the investing leader worldwide. Lee Kranefuss who is the Chief Executive of iShares funds at Barclays joined the show. He was asked which funds are getting most of the money. iShares MSCI EAFE Fund (EFA) which was called the S&P 500 of the international market was named. The traders that are critical of ETF’s were discussed for a bit. Bolling would love to see an Exchanges ETF but Kranefuss explained within the U.S. there were not enough exchanges to do this as diversification problems would arise.
Fast Money World
Asia/Australia
Bolling likes iShares FTSE/Xinhua China 25 Index (FXI) and PowerShares Intl. Dividend Achiev (PID). Adami recommended iShares MSCI Taiwan Index (EWT) due to it being a growing technology play. Macke gave us iShares MSCI Australia Index Fund (EWA) and iShares MSCI Japan Index (EWJ) with a long stay in EWJ being the play. Ratigan talked about Singapore and told us to play iShares MSCI Singapore Index Fund (EWS).
Europe
Najarian loves iShares MSCI German Index Fund (EWG) due in part to Daimler’s new diesel technologies.
Latin America
Bolling told us to play iShares MSCI Mexico Index (EWW) and iShares S&P Latin America 40 Index (ILF).
Next For Spiders?
Back in 1993 the ETF craze was started with the launch of the first ETF, the SPDR. In the last year the same company launched 12 new ETFs. Jim Ross who helped create the first exchange traded fund more than a decade ago joined the show. Ross talked about the exposure that the ETF’s give you. They could also bring upon the impending death of the mutual fund. Najarian talked about how ETF’s are weighted with some being hugely weighted to certain stocks. This space is growing at a 30% clip and should continue to grow as ETFs are all about convenience.
Final Trade
The best ETF trades were proposed. Macke likes the EWA, the Australian ETF as the long growth story remains in tact. Najarian went with refiners in PXE as the best play. Adami picked German EWG with it financial and utilities spin. Last Bolling went with DVY as a domestic play and PID for international exposure.