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Thread: Stay Mad For Life- Jim Cramer

  1. #1

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    Thumbs up Stay Mad For Life- Jim Cramer

    Cramer tries to combine the role of financial planner and hedge fund manager in this book by covering everything from getting out of debt to family budgeting to saving for retirement. Most of the focus here is on saving for retirement and staying the course even though he does touch on the importance of budgeting. All in all, it was a decent book. However, if you've read any other book related to personal finance, most of this book may just be a reiteration of the basics.

    Here are some of his main points delivered in a non biased manner.

    1. The biggest downfall of a 401K plan is lack of fund selection. Cramer believes that the best option is an Index Fund with a focus on stocks until one hits about 40 years old. At the earliest, 40 years is time one should allocate a minimum amount of retirement portfolio to bonds. The reason he doesn't like target date funds is because they tend to go too heavy on bonds. Your target date is not necessarily the date you intend to retire.
    2. In a market downturn, double down on your 401K contributions. This one can be done, but you have to make sure to get the match all year round. Accumulate shares in an Index Fund at an early age.
    3. Don't use credit cards. Cramer is pretty much anti credit cards. If you can't afford to buy something, you might be living above your means.
    4. Develop a family budget and teach your kids to save. You should know each month where money will be going and how much you should expect to save. You should contribute 1/12th of your yearly salary each month towards retirement. Live the American Dream, but don't extend yourself on a mortgage.
    5. Don't invest like a hedge fund. Cramer states numerous times that for the long term, quarterly statements don't matter. Leave the short side of things to hedge funds and use downturns as a chance to buy more for less. Add to cyclical stocks that you may own in an IRA (long term account) in market downturns. Invest for the long term, don't trade for the short term.
    6. Invest in what you know. Very similar to Peter Lynch's teachings. Don't invest in a stock unless you can identify with it. Pay attention to local newspapers and things in your neighborhood for investing ideas. Wall Street is so worried about quarterly gains and earnings that they miss what's going on in the real world. Be very skeptical of market hot spots.
    7. Don't rely on technical analysis for entry/exit points. Stock picking is an art, not a science. Keep in mind that any research you may obtain for free is free for a reason.
    8. You shouldn't max out your 401K plan. If you're maxing out your 401K, you're not investing enough money elsewhere. Cramer recommends using other avenues such as a Roth IRA especially if you are restricted to company stock or a small selection of mutual funds. Use Index Funds whenever possible and you'll probaby do better than you would managing your own money.
    9. Pros and amateurs differ when it comes to investing. Basically, the pros look at how much they can lose while the individual looks at how much can they gain. Always have cash on hand, you never know when a market downturn will bring on a buying opportunity. There's no need to be fully invested.
    10. If you choose a mutual fund, invest in the manager, not the fund. In essence, you're betting on the jockey not the horse. He provides 11 or so mutual fund managers and the funds they currently run as examples to consider.
    11. Five bull markets and 20 stocks for the long run. Probably the part that most people will skip forward to when they read this one. Here's the part where he gives 'the crown jewels' on where to invest for the long run. No China or emerging markets on this list.
    12. It's up to you to do your own homework.


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  3. #2

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    Default Re: Stay Mad For Life- Jim Cramer

    Quote Originally Posted by Bullitt View Post

    Here are some of his main points delivered in a non biased manner.

    1. The biggest downfall of a 401K plan is lack of fund selection. Cramer believes that the best option is an Index Fund with a focus on stocks until one hits about 40 years old. At the earliest, 40 years is time one should allocate a minimum amount of retirement portfolio to bonds. The reason he doesn't like target date funds is because they tend to go too heavy on bonds. Your target date is not necessarily the date you intend to retire.
    2. In a market downturn, double down on your 401K contributions. This one can be done, but you have to make sure to get the match all year round. Accumulate shares in an Index Fund at an early age.
    3. Don't use credit cards. Cramer is pretty much anti credit cards. If you can't afford to buy something, you might be living above your means.
    4. Develop a family budget and teach your kids to save. You should know each month where money will be going and how much you should expect to save. You should contribute 1/12th of your yearly salary each month towards retirement. Live the American Dream, but don't extend yourself on a mortgage.
    5. Don't invest like a hedge fund. Cramer states numerous times that for the long term, quarterly statements don't matter. Leave the short side of things to hedge funds and use downturns as a chance to buy more for less. Add to cyclical stocks that you may own in an IRA (long term account) in market downturns. Invest for the long term, don't trade for the short term.
    6. Invest in what you know. Very similar to Peter Lynch's teachings. Don't invest in a stock unless you can identify with it. Pay attention to local newspapers and things in your neighborhood for investing ideas. Wall Street is so worried about quarterly gains and earnings that they miss what's going on in the real world. Be very skeptical of market hot spots.
    7. Don't rely on technical analysis for entry/exit points. Stock picking is an art, not a science. Keep in mind that any research you may obtain for free is free for a reason.
    8. You shouldn't max out your 401K plan. If you're maxing out your 401K, you're not investing enough money elsewhere. Cramer recommends using other avenues such as a Roth IRA especially if you are restricted to company stock or a small selection of mutual funds. Use Index Funds whenever possible and you'll probaby do better than you would managing your own money.
    9. Pros and amateurs differ when it comes to investing. Basically, the pros look at how much they can lose while the individual looks at how much can they gain. Always have cash on hand, you never know when a market downturn will bring on a buying opportunity. There's no need to be fully invested.
    10. If you choose a mutual fund, invest in the manager, not the fund. In essence, you're betting on the jockey not the horse. He provides 11 or so mutual fund managers and the funds they currently run as examples to consider.
    11. Five bull markets and 20 stocks for the long run. Probably the part that most people will skip forward to when they read this one. Here's the part where he gives 'the crown jewels' on where to invest for the long run. No China or emerging markets on this list.
    12. It's up to you to do your own homework.
    Great Advice!!
    Maintain a positive attitude, focus on what you want and show gratitude for what you have…

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  5. #3

    Join Date
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    Default Re: Stay Mad For Life- Jim Cramer

    He's right on about the credit cards. I do not ever carry a balance. I use my card do to the convienence and frequent flyer miles. If I can not pay off in full, I don't buy it. And now I just got two round trip tickets to Hawaii for a $20 fee. Also my credit score is very high since I never have a late payment. Credit cards will kill your financial future.

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