Wednesday November 22 2006 Recap of Mad Money with Jim Cramer

Wednesday November 22 2006 Recap of Mad Money with Jim Cramer

Show Theme: Be a better speculator

Cramer admits he is on vacation and this show is prerecorded.
How to Speculate stocks: When to buy and sell stock.
2$ to 10$ sweet spot for speculating on stocks.
Under 2 bucks... company is probably owned by incompentance
Under dollar probably run by criminals metaphorically.
Penny stocks are most likely going to zero.
Penny stocks are a pure gamble.
Avoid the spam penny stock emails.

Caller: can I play all my money all at once?

Cramer: Pyramid of buying. Buy in stages.
Bottom line: do not do everything at once.

Caller: Currency trading. What are the opportunites of getting into currency trading.

Cramer: Cramer bought the Dutch gilder and lost 500k in the time it took to go to Burger King and back and he used the drive through. It is too hard a game. to complicated.

Commercial Break:

Not a fan of BUY AND HOLD.
Buy and Hold is not how the game has looked in decades.
Pay attention to the life cylce of these stocks in order to book some gains.

Look for a good balance sheet. Small float.

example: Taser
not like Lucent (LU) and Nortel
Taser has a very small float. Float is the number of shares available to freely trade. If a major institution wanted to pick up some shares the stock price would really move.

When volume spikes GET OUT OF THE STOCK

example: BVSN

Get out of a stock before the idea fades.

Caller: How do you value a company with low revenue?

Cramer: No sales. No speculation.


Commercial Break:

10 Bad habits of Speculators

1.) Do not sell a stock that starts going down. Never sell a stock that has just started to go down. Do not panic. Buy some more if you believe in the stock. This is different from habit #2.

2.) Do not hold onto a position that keeps going down. examples: AMMC and LU

3.) Do not sell too soon. Have an exit point before entering a stock.

4.) Do not buy cheap stocks of hot sectors. Buy "best of breed" in a hot sector.

5.) Do not believe the hype. All the companies play the spin game.

Caller: EBAY and CAT before earnings caller took CAT but Ebay popped.

Cramer: Look at where stocks have come from. Ebay was down from 100 into its 30s.

Commercial Break:

10 Bad habits of Speculators (continued)

6.) Do not buy cheap stocks under 10 dollars because you think they are a take over. Check the company fundementals.

7.) Sell into strength. Take profits. Take something off the table. It does not have to be everything. Remember pigs get slaughtered.

8.) To speculate you have to have patience. You have to have patience.

9.) Day trading is hard. To volitale.

10.) Do not shy away from stocks you have never heard of... If there is already buzz around the stock it is quite possible you are late to the game.

Cramers Rules:
1.) Always buy in small increments
2.) Do not be afraid to chase momentum.
3.) Remember to SELL!

Caller: What is a good place to find speculations?

Cramer: Investors business daily.
Another way... find out what the region brokers following.

Caller: Can you speculate in a Roth IRA?

Cramer: Look for something more conservative. Never speculate with retirement. Only speculate with money you can afford to lose.

Commercial Break:

Speculating with Options

Most of you should not use options.

You can control more stock for less with options. There are different types of options. Calls and Puts.

Anyting that multiplies your returns also multiples your RISK.

Caller: Why do you advise callers not to buy stock at a certain time of day?

Cramer: example: AAPL. Friday to Monday. Pressure monday morning after Strike price for the first 90 minutes of the day. Good time to buy aapl.

Caller: Naked puts and naked calls. Am I nuts.

Cramer: Yes you are nuts. Cramer is a conservative. Options have risks as great as the rewards. Stick with the common stock.


Commercial Break:

Hit the 2 - 10 above ten maybe use options. Under 2 stay away.

Be early, if you already know the name you are already too late.

Cannot be afraid to sell.

From the blogger: Boyahgobble!
HAPPY THANKSGIVING EVERYONE!