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

by James J. Cramer (Author) "For years, investors have tried to slog through how-to books about investing and trading, hoping to glean some wisdom that can make them wealthy..." (more)
Key Phrases: crescendo bottom, discretionary portfolio, cyclical stocks, Wall Street, Rite Aid, Spotting Stock Moves Before They Happen (more...)

Editorial Reviews

From Publishers Weekly
After telling the story of his own trading days in Confessions of a Street Addict, Cramer appeases fans hoping for advice on how to duplicate his success with their own investment portfolios. But not without some strong caveats: his approach requires devoting at least an hour a week to educating yourself about each stock you own. But since most pros are "rank amateurs themselves," anyone willing to do the work should consider getting in. Cramer breaks down the fundamentals of his investment approach, built on the twin principles of diversification and speculation: while most of your portfolio should contain reliables like oil, financials and blue-chip companies, 20% percent of your money should go toward a slightly riskier bet on a company's future ("owning a stock is a bet on the future, not the past"). He also explains techniques for figuring out when to buy rock bottom stocks and sell the ones that have hit their peaks. Cramer drills his main points over and over, which can get repetitive on the anecdotal level but reinforces the simplicity of his message: investing is for anybody willing to put the time into learning how to do it right. His enthusiasm should prove inspiring, and even investors on the wrong side of Wall Street's recent shakeups may find the courage to get back in the game. Either way, Cramer's radio, TV and print platforms are sure to make this one another hit. Agent, Suzanne Gluck at William Morris. (Apr. 5)
Copyright © Reed Business Information, a division of Reed Elsevier Inc. All rights reserved.

From Booklist
Cramer, cofounder of TheStreet.com, the daily financial news Web site, and cohost of CNBC's Kudlow & Cramer, is a successful trader and former hedge-fund manager. His autobiography, Confessions of a Street Addict (2002), was an honest portrayal of his sometimes-brutal rise to the top; it was not a trading manual. Here Cramer reveals how he made his money and distills his methods so that the average reader can understand them. Rather than catering to the Wall Street party line of "buy and hold" investing, he is an advocate of "buy and homework." He recommends starting with just four stocks in safe, diverse sectors and devoting a minimum of one hour per week of study to each company. Although others condemn speculation as pure gambling, Cramer insists that the fifth part of your portfolio should be devoted to a purely speculative play to take advantage of potential "home runs"; although much of his advice is for serious students of the market, there is a special trial offer for ActionAlertsPLUS.com, a Web site where Cramer openly reveals all of his trades before he makes them, giving his subscribers the opportunity to get in before he does. David Siegfried
Copyright © American Library Association. All rights reserved

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Product Details

• Hardcover: 320 pages
• Publisher: Simon & Schuster (March 29, 2005)
• Language: English
• ISBN-10: 0743224892
• ISBN-13: 978-0743224895
• Product Dimensions: 9.3 x 6.2 x 1.2 inches
• Shipping Weight: 1.2 pounds (View shipping rates and policies)
• Average Customer Review: 4.2 out of 5 stars See all reviews (283 customer reviews)
• Amazon.com Sales Rank: #4,975 in Books (See Bestsellers in Books)

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Customer Reviews

Most Helpful Customer Reviews

65 of 67 people found the following review helpful:

3.0 out of 5 stars A great starting point, but not the endgame, September 5, 2005

By	Michael A. Shoemaker (Houston, TX) - See all my reviews (REAL NAME)

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.

362 of 408 people found the following review helpful:

4.0 out of 5 stars A Lively Read - Some Good Information - Only The Beginning, May 1, 2005

By	G. Reid (Roseland, NJ) - See all my reviews (TOP 1000 REVIEWER)    (REAL NAME)

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.

31 of 31 people found the following review helpful:

4.0 out of 5 stars Needs a homework companion!, April 6, 2006

By	Renee "Renee" (West Chester, PA USA) - See all my reviews

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.