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  2. / Video

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!
By TRACY BYRNES Jul 04, 2018 | 10:13 AM EDT
Stocks quotes in this article: MRO

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?  

Watch the video to find out!

Sign up and watch Jim Cramer's 25 Rules For Investing here!

Watch More of Jim's Rules for Investing:

  • Jim Cramer's Rule 1: Bulls Make Money, Bears Make Money, Pigs Get Slaughtered
  • Jim Cramer's Investing Rule #2: It's OK to Pay Taxes
  • Jim Cramer's Investing Rule #3: Don't Buy Stocks All at Once
  • Jim Cramer's Investing Rule #5: Diversify to Control Risk

 

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

TAGS: Investing | Investing basics | Jim Cramer | Video

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