Michael Delaney

Buy Value - Cramer's Lightning Round (7/29/08)

You cannot buy a stock when JC says to buy it and sell it when he says to sell it, and make money. If you need somebody to tell you what to buy and when to buy it and how much to pay and when to sell and for what price, Mad Money is not the answer. Send the Gorilla $600 and they will hold your hand through the whole process. But where is the fun in that?

Mad Money is good for ideas, but you still have to do the research. Some of his ideas are good for 25 year old gunslingers. Others are better for us old f*rts. Some of his recommendations carry PEs of 70 or PEGs of 1.8 to 2.0. Not for me.

If JC touts a stock that your research says sounds good, please wait for a good buy-in point. Nothing wrecks returns by being too eager to buy and paying up. At least pick the lowest closing price from the last two or three weeks and put in a limit order. If it never executes, oh well. Find another.

Regarding missing the show where he says Sell! Sell! Sell! If you wait for JC to tell you to sell, you may be too late. (He talks about more buys in a week than sells so there may never be a sell sell sell). If you wait until the analysts downgrade, you will be too late. If you wait until IBD lowers its composite score, you will be too late. Pick some percentage dip off a high that you are uncomfortable with. If you hit your stop loss in heavier than normal volume, have the conviction to sell. You can always get back in later if the price continues to drop.

The Bottom Line: You need to decide what to buy and when and for how much. You need to stay diversified. You need to take some profits on the way up in case something bad happens while you are at work and not watching the market. And you have to sell when you hit your stop loss in heavy volume. There are no guarantees, but this will keep you out of too much trouble most of the time. Oh, and remember, this is supposed to be fun!