Jim Cramer's Investing Rule 4: Buy Damaged Stocks, Not Damaged Companies
Action Alerts Plus portfolio manager and TheStreet's founder Jim Cramer insists investors to do their homework because Rule #4 of his 25 Investing Rules is to buy damaged stocks, not damaged companies. Watch now for more on how he made that mistake in the past!
Action Alerts Plus portfolio manager and TheStreet's founder Jim Cramer has learned a lot over his 30+ years of investing. So he created a list of 25 Rules for Investing that can help you avoid the novice pitfalls that even he fell into on occasion.
In the video above, he harkens back to the some of the mistakes he made.
"I got snookered in 2004 thinking that Nortel's accounting problems were a simple sell-off of a damaged stock," he laments. (Those issues were a part of a much larger issue with the company and the stock eventually was delisted in December, 2008)
He even got burned as recently as 2016, with Marathon Oil (MRO) , thinking the tanking stock would quickly recover and it did not.
Rule 4: Buy Damaged Stocks, Not Damaged Companies
But how do you know if there is something endemic wrong with the company and not just the stock?
Despite the president's promise of no stimulus until after Nov. 3, there are no signs yet that this is the sort of correlated selling that leads to a deep correction.
Breaking down an approach to the long side of this biotech stock.
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