Customer Reviews

Jim Cramer's Real Money: Sane Investing in an Insane World

5 star:		(183)
4 star:		(60)
3 star:		(22)
2 star:		(16)
1 star:		(25)

 

 

I loved the book! I hated the book! And I have recommended it to many and continue to do so, but with caveats and frustrations.

First, if you haven't watched Cramer's `Mad Money' program at least once on CNBC, you need to do so. One show will give you more insight into Cramer's emotional make up and give you more of what to expect from his writings than any review! He is, at once, informative, opinionated, contradictory and entertaining. Well, my wife would disagree about the latter!

Second, like him or not, he is one of those rare investment book writers whose track record is quite public. And he has practiced what he preaches to make (and lose and make again) millions in the market, mostly using other peoples money! To ignore someone with his success is not smart, but to take anyone's investment opinion as the `only truth' is equally risky.

So, let's get to why I stated that I loved this book. Because I do strongly recommend this book to people relatively new to managing their own investments. I especially appreciate his `buy and homework' mentality since many people try to manage their investments without accepting that there is indeed work to be done. He does a good job of explaining why fundamentals are important and how to utilize basic measurements. He does a very good job in explaining market cycles, especially the major ones that cause `big money' (pension funds, mutuals, etc.) to move in and out of various sectors. In general, this is an excellent first read for people new to investing and a reminder of some basics for the rest of us.

Okay, so why did I sometimes feel that I hated the book. Well, first let's acknowledge that there is no perfect investing book or system. There are too many variables, especially those that include each investor's personal status - time available to do the work, time horizon before retiring, money available, etc. Every writer brings their own background and bias into their writings and, in turn, tends to become dismissive of other thoughts. But if you read many differing investment books by successful traders, you will find that the methods that they use differ and are at odds with each other. While I generally like Cramer's honesty, I find that sometimes he dismisses some investing methods out of hand which, since this books and programs are targeted to the average investor, serves to bias people based on his own personal biases. Some examples:

a) Jim is a `fundamental' investor - he relies on more traditional analysis of a companies balance sheet and earnings to determine whether to invest in a stock. That is fine, but he goes on to essentially dismiss people who trade predominantly on technical analysis, with a portion of his book essentially saying "nobody has ever made any money trading that way." This is simply not true. Technical trading is simply a different type and method of trading and, indeed, many people have made significant money trading based upon technicals and combined fundamental + technical strategies. While Jim may not use technicals, his wife does, and quite successfully according to him. So dismissing anyone using or promoting technical analysis in the book does not serve the reader. It simply supports his bias.

b) While not in the book, you will find if you read more from him or watch his program that he dismisses alternative investments like options. Again, it is not that the average investor should jump into options without having clear knowledge and understanding of the risks, but to simply dismiss other investment area is to do a disservice to investors who wish to advance and learn more about various markets. (Options, for example, are as risky as stocks - no more so. Their risks, however are different and the knowledge needed is greater than for straight stocks, but given the investor's willingness to learn and understand options BEFORE beginning to trade them, options can actually REDUCE the risks of stock investing.)

Cramer strongly advises against simply following any advisors opinion to guide stock investments, yet sometimes his dismissals without substantiation serve the same purpose for those who may `believe' only Jim Cramer.

So, I highly recommend this book, especially for people who are relatively new to managing their own investments. Even people who only have a 401k can learn a great deal that can help them do a far better job managing the limited options most 401ks offer and improve their results. This is a great starting point for the average investor. But don't become so enamored with Cramer's forceful style that you stop thinking for yourself. Take his advice - learn from his experience - put it into practice = become comfortable that you can implement it and make money from it. And then, when ready, keep your mind open to the many other investment methods and markets that exist. Each requires study and work, but if your temperament, time and dedication allow you to, you may find it even more profitable to move beyond this first step.

Many of Jim Cramer's recommendations are nothing new -- diversify; know companies before you buy; keep up with your holdings; know when to get out. What's new is in his temperament. His take on evaluating risk, when to make a quick trade or a longer-term investments, what constitutes diversity. How to know when a company is over or undervalued. The "before buying" and "when to sell" checklists are really useful -- a reminder not to skip any steps. The anecdotes are illustrative and amusing. Especially the one where he sets himself up in a short squeeze. A lot of this seems logical, and I can see how it can help me avoid errors I have made in the past.

Something is missing though -- HOW to do homework. How to calculate growth. How much growth is enough? Enough for what? How much growth is needed to justify that PE? And how long would that kind of growth have to continue? Why? (a couple of spreadsheets would help here). Using price appreciation + dividends when figuring how your portfolio is doing. How about some discussion of the different ways different types of businesses are run, and how this is reflected in their financial statements? For each of the "diversification" sectors he recommends, what can we expect the financial statements to look like? What are the important features? How does the banking business work? And what REALLY goes on when you place a buy or sell order?

This must all be second nature to Mr. Cramer, but those buying his book generally lack his education, apprenticeship, and/or career experience. We didn't start learning the stock market in high school. We need the nuts and bolts. This knowledge can be pulled from a variety of sources, but a companion "how to" volume would be a great help.

Mr. Cramer is full of emotion. He is on TV and radio. He has much to say about the stock market. His information is helpful, but it is only the beginning in one's learning to be successful in stock market investing. You will have to read many more books including books on technical analysis in order to gain the knowledge needed to be successful.

Cramer's 25 rules for investing are explained in this book. The rules are sound and very helpful for the investor to review. They are:

1. Bulls, bears make money, pigs get slaughtered.
2. It's OK to pay the taxes.
3. Don't buy all at once.
4. Buy damaged stocks, not damaged companies.
5. Diversify to control risk
6. Do your stock homework.
7. No one made a dime by panicking.
8. Buy best-of-breed companies.
9. Defend some stocks, not all.
10. Bad buys won't become takeovers.
11. Don't own too many names.
12. Cash is for winners.
13. No woulda, shoulda couldas.
14. Expect, don't fear corrections.
15. Don't forget bonds.
16. Never subsidize losers with winners.
17. Check hope at the door.
18. Be flexible.
19. When the chiefs retreat, so should you.
20. Giving up on value is a sin.
21. Be a TV critic.
22. Wait 30 days after preannouncements
23. Beware of Wall Street hype.
24. Explain your picks.
25. There's always a bull market.

A perfect complement to his popular CNBC show "Mad Money", Real Money gives Cramer fans an in-depth look at what drives his stock market sageness. Many viewers of his show may be mystified as to what Cramer looks at when analyzing a company, but this book explains it all! He describes the Cramer ideas on utilizing P/E ratios, decisions from Fed, and even tips on how to judge a company's top management. This book is extremely practical because Cramer uses his saavy from 30+ years of investing experience and the lessons learned from working as a mighty hedge fund manager.

A portion of this book deals much with investment discipline - deciding how much of a portfolio should be dedicated to speculation, how to properly diversify, etc. Another focus is about reading the market and predicting which sectors will be the performers based on the overall conditions of the market. Cramer also throws in signs to look for in individual stocks by presenting many examples of good CEOs (Commerce Bank) vs. wish-washy management (Sunbeam). Cramer gives reasons why "buy and hold" no longer works and why at least a small portion of everyone's portfolio should be devoted to short-term speculation.

Real Money is a great read for anyone with money in the market. It's written for investing professionals as well as home gamers (individual investors). The investment advice is practical and definitely this is the best investment guide I ever read.

I was given a copy and unless you want to day trade, there is no true way for you to make money through this book. Stick with the basics (which he does cover) but please stay away from his "speculation" tactics.

He admits on his show that you should only use his investment ideas with your "Mad Money", and it's for a good reason. His following (just like lotto ticket buyers) is strong enough to power swings in the market, but if you're not ready to trade daily, you stand a 50/50 chance of losing. I have tracked him for months along with the guys from the Motley Fool. Cramer will get in and out several times on speculation while the Fool sticks in for the long term. My point once again is that his advice is meant for day traders, hedge fund owners and short sellers. The guys at the Fool have beaten Cramer hands down. Yes I'm a Fool, but I do my own due diligence and don't blindly follow anyone. I will retire early thanks to long term strategies, dividend reinvesting (DRIPs)and buying without a circus clown telling me what's hot. I respect Cramer for what he has done, but certainly not for how he's done it.

Check out his relationship with his partner at The Street.Com. There is suspicion of naked short selling on several equities
http://www.nfi-info.net/index.html(call his show and ask Cramer about Novastar Financial (NFI) sometime!) and it never fails that Cramer routinely "mentions" competing equities with a possible hidden agenda. He's right when he says he's not out to make friends!

The main reason I don't like this book is more that Cramer tries to endear himself to you as a common man on your side. Personally I don't believe anything could be further from the truth. While his basics of the market are sound and it's well written (by a ghost writer), I believe his intent is to help promote his show, support moves by his hedge fund buddies and endear himself to improve his following so the market swings he can create become more profitable for the big money people. If you are reading this, then you probably can't afford to trade in blocks of 10k or better and you aren't privy to when Cramer's true friends are going to close their positions. If you can get a copy of his daily script and invest thousands into the equity BEFORE it airs, then follow the man to the ends of the world. Otherwise be prepared to buy and run or you'll be a Cramer pork sandwich special.

Buy this book only if you:
1. already understand the basics of trading/investing
2. promise yourself you will never trade with your retirement money based upon his recommendations. Even Cramer himself tells you that in his disclaimer.
3. don't want to know anything about trading options
4. want a fun read but don't need to know about funds
5. can't wait for it to show up at your local library

Just be careful, borrow the book and spend the $15 on some good coffee to drink while you do your own research!

In some ways, this is a pretty basic book. He spends quite a bit of time explaining why stock price, by itself, doesn't reflect how expensive or cheap a stock is. What matters is the price/earnings ratio.

Lots of personal anecdotes here. Entertaining, but a bit fluffy that way.

He's good on analyzing the macro-economic situation because it has a huge impact on stock price movements. Pay attention to inflation and the Fed rates, he notes correctly. Good analysis of how to play different sectors during economic cycles.

He doesn't believe in technical analysis and chart reading. Big plus for Cramer, IMO.

He's honest about the possibility of losing money. He doesn't make absurd promises about how if you follow his method you're guaranteed to double your money every 3 years.

He believes in making speculative bets with up to 20% of your portfolio. If you want to make "real money," you have to take on some "real" risk.

Cramer likes to trade fairly often. He doesn't advocate a "buy and hold" policy. But he ignores the pitfalls of trading too much such as selling too soon, trading costs, tax costs, and the difficulties of timing the market.

Not much on fundamental analysis. He insists that you should do your homework, but doesn't say exactly what to look for. He seems to be a pretty intuitive type investor, plays hunches and looks for breaking news, looking for bottoms, bargains. Basically, Cramer looks for promising growth stories. Valuation does not appear to be his primary concern.

He makes a good point that you have to be ready to sell a stock when things change. Many a great company have fallen.

Final chapter has a very clear explanation of the basics of options. Nice.

Cramer doesn't really offer a coherent method of picking stocks. He offers inspiration and needed warnings.

I just spent a lazy Sunday reading this book, and I enjoyed it!

Cramer does a good job of giving people the very rudimentary basics of understanding important concepts about the market. The book is a good book to hunker down with if you want to start learning about investments and/or trading stocks.

But if you are laboring under the impression that "If I just read what is in Cramer's head, I'll get rich, too!" you might want to reanalyze your position.

This book is a STARTING POINT. Not the solution to your quandary about "How can I make a killing in the stock market?" He gives very basic information about earnings per share calculations, earnings multiples, the need for diversification with suggestions on how to build a small, diversified portfolio, paying attention to economic indicators, the actions of the Federal Reserve Bank, reading the headlines, and some tips on how to spot the bottoms and tops of the market.

You should definitely read this book if you have no idea what I just talked about.

But if you are a novice, you may need to read it several times (which is not necessarily a bad thing). Cramer claims on his TV show that his job is to "educate" his viewers on how to make money. A noble mission, for sure, and kudos to him for trying. But a novice learner may have a problem "learning" from him because he has a tendency to talk in Wall Street jargon throughout the book. And in some places he fails to explain the terms. A novice could easily get lost in some sections.

Additionally, there are few visuals or graphics or charts to explain some of his concepts--and these would be helpful to readers who learn visually. Perhaps in another edition, Jim?

What this book might do for you, if you are highly motivated to learn this subject, is inspire you to learn as much as you can about the jargon he uses, and to make it your mission to learn as much as you can about the nuances of his concepts.

For example:
He says you should stay away from companies that have a lot of debt on their balance sheet. Makes sense. But how much debt is too much debt for a certain company in a particular industry? He gives one very obvious example where the interest payments alone on debt a company must pay exceed its entire anticipated earnings. Well, duh! But what if they don't? What if they are 5% or 10% or 50% of earnings? How do you, the novice, learn to distinguish where the fine line is between an "OK" debt load and a "These-guys-are-up-the-turbulent-creek-without-a-freakin'-paddle!" debt load?

He goes into a discussion about earnings per share calculations, but do you know what components of income are included in "earnings?" And do you know which components that exist on today's income statement might be gone on the next one--thereby affecting EPS calculations, and subsequently share price, more than a little? And do you know how companies can fudge their financials to make things look better than they are, all the while meeting auditor's and AICPA reporting standards?

You need to read other books to master, or at least become much more fluent, with financial statement analysis and read other books on financial analyses for particular industries.

He says you should do a lot of "research" on any stocks you might want to acquire. He lists some generic sources of info--articles, company Web sites, financial statements, etc., that you should read religiously. (And Jim, darling, where do I go on the Internet to hear these company conference calls?) You should do research, no doubt. But you need to read many more books on business, on economics, on finance, on the market, etc., to understand exactly how to sift through all that research information and pull out the gold nuggets. You have to know what you are looking for and how to triangulate discordant bits of info. (I think this ability is a huge part of Cramer's genius).

Cramer is a very bright guy. He's a global thinker and learner with a very impressive mind, and he has the benefit of years of experience. To be fair to him, his subject matter is expansive, and to use his own metaphor, the canvas of his book is just too small to hold all the dots and dashes of his expansive and creative knowledge.

You should read this book if you think you might like learning about the stock market and want to dip your toe in the pool to see how the water is. But if you think the water's fine, then be prepared to dive in and submerge yourself in knowledge beyond these 281 pages. Watch, listen and enjoy Cramer's antics on TV and radio and listen to his tips, (if you can handle loud, obnoxious, and brash Yankees. I love him. My husband cringes at the mention of his name!). But make learning about this subject an obsession first, just like Cramer did. Maybe then you'll make some Real Money.

I enjoy watching his energy on TV and I think he's a pretty good guy but over the past few years I have studied his recommendations and his reasoning and they are conflicting. He'll recommend a stock now...then recommend it a month or so later...etc...but then all of a sudden he doesn't recommend it even though the stock is below a price that he recommended months back. This would make sense if there was a catalyst for it or some news but I've tracked his recommendations and most of the time you can see that it's his followers that bought the stock when he said buy...are dumping the stock after a day...two days..a week.

One of his parts in his introduction in the book talks about investing in quality companies. High quality companies that can pay good dividends outperform everything else...BUT then he says most people buy low quality companies that will never pay good dividends..or they hold onto high-quality dividend payers that become low-quality disasters without dividends. He hates big pharma but almost all of them pay 3% or more dividend yield and even with litigation, they are making billions a year for their shareholders.

I love cooking pulled pork and bbq ribs for family picnics/get-togethers and the only way to make sure the meat is moist and tender (and done the right way) is cooking low and slow - just the way INVESTING should be. Too many people are taking his recommendations and putting ALL their money into them. Some are working, others are not. Do yourself a favor and just buy household companies and companies that you buy products from. Those are the true time tested companies that will be there tomorrow - with the exception to airlines, electric companies and automakers - just because of their industries. I've been tempted to take Cramer's recommendations but my low and slow way of investing in companies like Procter and Gamble, Johnson and Johnson, GE, Bank of America, Walmart, Pfizer, Microsoft, Aqua America...etc. have not only gone up in value but are all dividend payers that have increased their dividends every year!! Ask me how I am doing on a "Buy and Hold" (although I continuously add to my position on these stocks when they dip some) strategy in 20 years...getting a couple $1,000 in dividends a year without selling my stock! I wish Cramer would mention or at least acknowledge that the buy and hold strategy does work as long as you are picking good sound stocks...not speculating like he does!

This is a terrific book for anyone who wants to make real money in the stock market.

I have been trading for over 30 years and I can tell you that this is one of the best books I have read on the market in many, many years.. It has many very good tips and insights that reminded me of my past mistakes and triumphs. It was a great read!

He proposes a simple, straightforward strategy for developing a small portfolio of stocks, tells you how to manage this portfolio - and make real money! He addresses timing, when to buy, when to sell, tops and bottoms - everything you need to know. But he keeps it simple and straightforward so that it is an action plan you can actually use and follow.

I only wish the American people would get out of this Mutual Fund Mania and set up a nice little portfolio of individual stocks like this instead. They would make so much more money and the country would prosper like never before!

Like anything in life you need to experience years of trial and error in order to come to an intelligent strategy that will work for the future. Kramer has this experience and he is sharing it with you in this book. You don't have to take his advice, but you would be a fool not to listen. He's telling you - don't do this, I tried it in the past and I lost money. Do this instead - I learned by experience that this strategy works and will make real money. What more could you want? Believe me when I tell you that if you are just starting out buying individual stocks - you will make many, many errors and you will have losses.

Kramer's writing style could use a little more severe editing - he is too rambling and anecdotal for me. I hit page 75 before I found the nuts and bolts of what I was looking for - but from then on the nuggets flowed and flowed - it was terrific.

The dilemma is that the people who really need this book will have a tough time realizing that this book is of any use to them! It's like trying to tell a 19 year-old college student what to do with their life - when you have a world of experience behind you and they are just starting out. The same thing applies to this book and some who will approach it. They'll say it wasn't useful, it didn't give them the information they were looking for, or that Cramer doesn't know what he's talking about. But after having traded for 30 years and having lost hundreds of thousands of dollars as well as having earned many hundreds of thousands of dollars - I can tell you that this man is speaking from experience in the real world and his advice should not be taken lightly.

[...]

I'm sorry to say however that I can't stand Cramer's television show -- his speaking style is anathema to me. So what I do is I subscribe to theStreet.com and read the columns and articles in the evening at my leisure - and I replay his audio programs on specific issues. I find them very helpful. And I can't tell you what a pleasure it is to be able to read this book and not have to listen to his voice in my ear! Kramer's web site theStreet.com is an excellent source of information.

[...]

If you're new to investing in equities, this book would be a good starter. Jim puts alot of emphasis on stock selection, and not enough on money managment. In my opinion, I value money mangment over stock selection overall. I like the book overall but when you jump from texts on how to quantify market & credit risk and advanced texts on options, it didn't stand out as a "golden text", like some have made it out to be. Another thing is that you can't go more than 3 pages at a time without reading how Wall St has an IQ of 45 or how good he was at his hedge fund, Come on Jim, give us a break!

Overall I'd say it's a good read, you should buy it, it's a good take from someone who after all, ran a profitable hedge fund for a decade or so. But again if you're new to equities, I'd STRONGLY recommend Marcel Link's "High Probability Trading", it's the best text ever for any level in terms of overall content.