Jim Cramer Case

Overall, I can see that this book is a smashing success, because of Cramer's enthusiasm and passion for the stock market. Every word in this book shows that Cramer's life circles around the stock market and investments. His raw enthusiasm for selecting stocks comes through clear in this book, and I believe it is enough to make anyone interested in individual stock investing. Each and every chapter in this book contains massive worthwhile information that one could carry through stages of life. Although it will feel a little dense and dry to read at a certain point, Cramer motivates us and lightens up the atmosphere with actual informative points and relations to his real life stories. At first, I thought it was easy to read an investment book. To my surprise, the reading part was indeed easy, but understanding and digesting all the information and pointers is the challenging part. I had to go back and read again and again to fully grasp the concept.

Cramer shows us several pointers that are important in being successful. Pointing out one particular section of the book, when comparing stock prices within the same sector, we should not be blinded by the actual price. Instead, we should calculate and compare the price-to-earnings ratio. In the stock market, and Cramer stresses, only in the stock market, a $49 stock can be more expensive than a $400 stock! We need to find out the price-to-earnings ratio (P/E Ratio) of each stock, and divide the stock price with the P/E Ratio. By comparing the P/E ratio, is how we know if a $49 stock is more expensive than a $400 stock. Cramer shows us one step at a time how this works, but it is really up to the reader to remember and utilize it in the real world.

Secondly, Cramer also teaches us to always use limit orders, especially in unseasoned situations, with new or just-issued stocks. We must first analyze and decide the price we are willing to pay for that stock and then enter it. A stock's price can fluctuate at any time so if you see Nortel at little over 86, instead of just saying that you want to buy 50 shares of Nortel, instead issue a limit order for 100 shares of Whirlpool at 86. If you don't do this and use a market order, you will probably get a price that you probably will not like for the sale.

Thirdly, the author also advises us to be conservative with our retirement. At the same time, the book gets very conservative when it comes to retirement savings. He stresses how important it is by bringing up the fact that he insisted on socking some money for retirement even though he was living in his car. Your retirement money is not your "get rich quick" money - it should be invested in mutual funds and bonds, not in individual small cap stocks.

How do we diversify our stocks? I learnt that it does not mean that we are diversified when we own a networker, a personal computer maker, a semiconductor company and a software company. They may be different devices all together but they are somehow inter-related as they each reply on each other to make a main component. If they do not trade well among each other, each one of them will be affected. So, your top five individual holdings should never be in the same industry, or else you will be facing more risks than others. If you get greedy and start having a portfolio of just one sector that seems great, you could be in the same spot as NASDAQ in 2001 - straight to the basement.

Next, Cramer tells us that we only need $2,500 to start a portfolio of five diverse stocks with $500 in each stock. Then, we need to do some research and find stocks that will go up faster and more consistently than other stocks. Every financial report, article, analyst report and conference call need to be read and listened as it is vital before one decides on a stock. There is constant monitoring and homework that needs to be done so we cannot just buy and hold the stock and expect it to