Get Rich Carefully
A Recommended Book by Jim Cramer for all investors Should Read
Why is this book recommended for investors?
Booyah there, Jim Cramer fans. Let's take a look at Jim Cramer's, "Get Rich Carefully." What is he telling you in his book? First off, there's a difference between trading and investing. Those who trade could be day traders. They're in and out of funds or in and out of stocks, and they're looking for short-term gains, whereas investing is a long-term game I think that's what his purpose by saying, "get rich carefully" is, as opposed to, "get rich quick," which would be trading. His purpose is to encourage you to invest long-term, and you should do your own research.
The lessons of "Get Rich Carefully" are the following: number one, conservative investors need not shy away from stocks. What Cramer says here in the book is that, as opposed to being reluctant ... Maybe you've inherited an IRA or a mutual fund from your family, so that's the extent of your investing knowledge. You know you've got some stock, but you're a bit shy about pulling the trigger and buying stock yourself. Well, the important thing is and I think one of the five lessons of this book is that whether you're a conservative or more of a loose trader, it doesn't matter. You still should not be afraid of stocks. There is research. There are things you can understand, like P/E, beta, priced earnings. There's charts that you can analyze and RSIs, etc., with terms that can be understood, even by the most average, conservative investor. That's one of the purposes of the book.
Second lessons learned is that what Cramer calls "bankable." CEOs are hugely important. By the way, this is something, a very important principle at Angel Kings. The number one reason that we invest or don't invest into a startup company or in one of our venture capital rounds is whether or not the people are awesome. Is there somebody, a person that's leading the company, who's a trailblazer, who's a leader, a visionary? A nice thing I liked about the book is that Cramer finds bankable CEOs and says those are the ones that you should find. Those are the people that you need to follow because they're going to lead the company, and obviously they're in there for self-interest. I mean, let's make that clear. Of course they're there to make a profit. But there are types of CEOs out there, the types of CEOs we invest in at Angel Kings, that will be there for you from start to finish as you invest. Look for people. People matter.
Is there a person that's leading the company, who's a trailblazer, who's a leader, a visionary?
The third things is macro-trends and policies can affect the immediate course and the velocity of a stock, how fast it can move, up or down. So let's say Janet Yellen, the Fed Reserve chair, decides to raise interest rates or lower interest rates, whichever. They change the basis points. That can affect, otherwise, what would be a solid stock. You shouldn't take any umbrage to that. You shouldn't take any offense. It does happen. Even awesome companies like Home Depot, FedEx, some traditional ones like Cisco and Intel. No matter what happens, if the interest rates rise or go down ... If the interest rates go up, that's less money in the marketplace to invest in stocks. It's more expensive to borrow. I think the purpose here is that if you've done research and you've gotten your great five, ten stocks that you love, and you've done your research on macro-trends can affect it. The important thing is don't run away. If you believe in a company, you stick with it.
You should not expect other people to put money into stocks for you.
The fourth thing is do your own research. Do your own research. He talks about this on Mad Money, too. You should not expect other people, your investment advisor to just put money into stocks for you. You need to understand the core essence of stocks: terms, what they mean, how stock could go up, what a stock is, period. It's just a percentage of a company that's publicly traded. You've got to understand and do your own research on a company. Understand catalysts, right? Not just macroeconomic catalysts like I mentioned in number three but catalysts of how the market can be affected. Okay, so if, for whatever reason, you don't know anything about Home Depot ... Well, I'll tell you what. The best way to figure out whether Home Depot is going to be around ten, twenty years from now is to drive over to your local Home Depot, see how many people are there on an average day. I can tell you that the only time I've ever invested in a company is if I've actually used the product. Okay? You've got to be an active consumer and an active investor who understands and does their own research.
The fifth things is this: he might seem crazy, maybe he is a little bit, but he does research. He admits his fault, and he keeps a long-term view on investing, not unlike Benjamin Graham, who has his own principles, as stated in one of the most popular books ever, "Intelligent Investor." Even though Cramer's yelling on the screen, the purpose is to help you as an individual investor. Oftentimes he's wrong. Not all his picks are great, but the point is this: if you want a book that will give you an appetite for investing, it's a great book to get started. I definitely recommend it as a worthy read.