Today was about teaching the viewer to invest like a pro. There are a lot of money losing mistakes that can be avoided. Amateurs who invest in their spare time can make more than the professionals according to Jim. There were five mistakes that amateurs make that pros do not that were pointed out. First amateurs are always fully invested with no cash left on the side. Money managers always have cash in their portfolios. If you do not have cash in your portfolio you need to sell something, if you do not have cash available you are in the wrong. This capital can be used to profit from declines in the market. It should be used to take advantage of selloffs. 10% of the portfolio should be cash and once at 5% the only circumstance where you should use that money is to buy stocks. The second mistake is when an amateur looks at a stock and thinks about the upside. Cramer told us that pros do not do this. A pro thinks about the downside. Market players expect stocks to go lower and consider the downside and what protections are in place. Companies with a big buyback leave a cushion to limit downside. Dividends are also important not as income but because they attract investors. If you have interest in a stock you know the bull case for it but you need to look beyond this. The third lesson was that you “have to know your own limitations.” In investing terms this means that pros try not to invest in things they do not know or understand. If you do not know or can not explain what a company does, how it makes money, do not invest in it. He told us “that if you listen to the conference call and come away more confused than enlightened, how will you know if it is a good call or not?” There are plenty of stocks out there that you do understand and those should be bought. Fourth on the list was, “amateurs worry they are not making enough money, while pros worry they are making too much.” By taking on too much risk you can make a ton of money and this is a major problem. Making too much money is a sign that your portfolio is out of whack and you are taking on too much risk. Last “amateurs try to game quarterly earnings reports to catch a quick gain.” Professionals on the other hand “learn to start living and stop worrying about quarterly reports.” Never buy anticipating the quarter, instead actively avoid buying right before the quarter or during earnings season. This was all meant so that you do not make snap decisions about stocks. You should make well considered decisions that take a lot longer according to Cramer.
NO QUARTER VIDEO
NEGATIVE CHARGE VIDEO
PRO VISIONS VIDEO
BLISS VIDEO