Not Cramer's best, although there are insights here. I recommend instead two of Cramer's earlier works: Real Money: Sane Investing in an Insane World and Getting Back to Even.
The central idea in How to Make Money in Any Market is to structure your portfolio with roughly half of your assets in a low-fee S&P 500 index fund, and roughly the other half in five or so carefully researched "hero" stocks that are meant to be long-term secular growers and compounders over time. A remaining sliver of your portfolio should be in some sort of hedge: gold or Bitcoin[1]. Chapter 7 walks readers through this elegant portfolio structure.
[A quick affiliate link to Amazon for those readers who would like to support my work here: if you purchase your Amazon products via any affiliate link from this site, or from my sister site Casual Kitchen, I will receive a small affiliate commission at no extra cost to you. Thank you!]
The books' weaknesses show up in the more technical chapters. See for example Chapter 10, which teaches how to value a stock; Chapter 13, which teaches how to research a stock; and Chapter 14, which attempts to teach how to read financial statements. These chapters are neither fish nor fowl: neither thorough enough nor technical enough to do justice to the topics, and yet the information that's there will likely bore the average mass-market reader away from the book anyway. The underlying truth here is that it is extraordinarily difficult to write investing books that really teach that also sell.
In his conclusion, Cramer speaks ruefully about the five different versions of this book that he wrote: a dense, thorough (and too-difficult) version, a version that was too easy, too superficial and glib, etc., until he and his publisher spliced together a workable draft that attempts to split the difference. There's an insight right there about the quality of most mass market financial literature--and the low standards that you'll be held to if you consume it. If you need your investment literature to entertain, if you need investing books to "hold your attention," you're NGMI.
Finally, I'll share two other takeaways that I pulled from this book about my own investing activity:
1) I should be using AI to do more of the early data gathering and context gathering for my investment research, including using multiple AI platforms to crosscheck results against each other.
2) I'm too complacent with my existing holdings: I need to find more room among my investments for growth and aggression, and I probably should be holding fewer (and thus larger) positions. I've gotten a bit too comfortable as a ticker collector over the years.
Footnote:
[1] It appears that Cramer still does not understand Bitcoin well. You can find an absolute howler of a quote on page 82 (see below in my notes if you're curious) that indicates neither he nor anyone else involved in producing this book really grasps it. Also, interestingly, there is no mention (much less an apology) anywhere in the book about Sam Bankman-Fried, who Cramer famously called "the new JP Morgan!"
[Readers, as always, a friendly warning: the notes below are here to help me order my thinking and better remember what I read. The bolded parts might be worth skimming.]
Notes:
Preface:
xiii "We've got a whole industry that thinks you can't handle your own money."
xivff On the core idea of having half your money in index funds, plus "five hero stocks of your own choice."
Introduction:
1ff On Cramer's father's business, which never did well; on how his father acquainted him with stocks and ticker symbols; his father wasn't particularly lucky or good at investing: see National Video, which went to zero.
8ff On Cramer's background; his hedge fund; also on the insight of using ChatGPT and other AI platforms to do much of your "homework" for investing, much of the information can be gathered much more easily;
9ff The book's structure: Part 1: Trust the Market (covers what makes a stock go up or down, index funds, why to invest, why to pick individual stocks, how to use AI to do a lot of the legwork on your stocks); Part 2: Build Your Portfolio (covers how to research stocks, how to read a balance sheet, how to listen to an investor conference call); Part 3: What Makes a Hero Stock (goes over the underlying principles to find companies, also Cramer identifies stocks that are his "heroes" right now).
Part 1: Trust the Market
Chapter 1: Why Invest at All?
13ff On how nobody ever says "this is a good time to invest"; on the bearishness of the billionairista class; on the various crashes and corrections over the decades, including factoids about how quickly you'd be back to even after each of them: the 1987 crash (less than a year), the 2008-09 GFC (less than four years), etc. [These are wise and useful comments here on the financial media. He's right: it is alarmist, it does scare people out of the market.]
23ff Details on Cramer's poverty days, living in his car while working as a reporter for the LA Herald Examiner, drinking too much to the point of coming down with jaundice (!) [I know Cramer's backstory fairly well and was not at all aware of this], but yet he talks about religiously sending $50 a month to Fidelity's Magellan Fund; he then moves back in defeat to his sister's apartment in Greenwich Village. A little bit of Boomer advice here about how young people should save more and stop buying coffee and martinis.
Chapter 2: The Truth about Index Funds
26ff On index funds, how they are good but they're not enough; interesting factoid here on the turnover of the S&P500, some 1/3 of the index turned over from 2015 to 2023, as loser companies literally drop out of the index. [Worth noting however that on a per year basis this is not too bad, only 4-5% per year.]
30 "Consider index funds a hedge against the prospect that some of your best ideas might flame out. Now, your other ideas--five stocks and a hedge, which I'll explain shortly--will most likely more than make up for them... Your index fund is your core holding... What makes me a 'radical' is that unlike the index fund proselytizers, who think you can't do anything yourself, I think you can walk with index funds and chew gum with individual stocks at the very same time."
Chapter 3: The Glory of Individual Stocks
32ff On the FANG stocks, Cramer claims to have come up with the idea of this acronym along with Bob Lang; on the performance of $1,000 in each of the four FANG stocks over time; "Most stocks have zero pedigree... You must ignore them." Cramer recommends picking from the S&P 500, "the preselected base of winners."
Chapter 4: Finding an Edge
40ff Cramer walks through some of his early investing mistakes, buying an orange grower because he saw it written about in Forbes: "I figured nobody knew stocks better than Forbes." [Everybody starts out thinking this, but eventually we all end up fading anything mentioned in those types of magazines!] Then he buys another stock that he read about in Forbes, a women's fashion stock called Bobbie Brooks that promptly went to zero. He realizes he needs to know much more; then he actually stumbles into a piece of useful scuttlebutt that actually has genuine implications: he learned about a local steel fastener company that was hiring, implying potentially that it was doing well. He learns about SEC filings, he has to go to a library and find them in microfiche, etc. "It was... arduous." [Note also the commentary here about how Cramer was only buying like seven shares of a given stock at a time: he was trying to buy enough shares so that he wouldn't get laughed at by the broker, this was all during the era when you had to call up a human being to make the trade, you'd pay 2% in commissions, etc. All these things are ancient history in the stock market now, commissions at discount brokers are free or near-free, you can buy ultra-low fee index funds, all this stuff is done online with a fraction of the headcount they needed back then, etc. Which brings me to one more thought while I'm at it: if those are the changes we've seen since the 1970s, what will the changes be going forward over the next 40 years?]
44ff After he did these three trades, he created a ritual that he still follows: doing an analysis of what he did right and wrong. He discovers his reasoning was either obvious or moronic, but in the example where he made money he actually had scuttlebutt that wasn't widely known, he actually had an "edge" in that instance.
47ff A discussion of the GameStop stock phenomenon: he leaves out a lot of the technical aspects of this theme, it wasn't purely just a "meme stonk"; he also claims the r/wallstreetbets "mob" hates him and threatened him.
56 Boomerisms here on his hours working when he was an active trader: "I got to my desk at 4 a.m. and stayed until 7 p.m., trading for fifteen hours a day."
Chapter 5: The Case of Nvidia
58ff Discussion of Nvidia: it beginnings as a graphic chip maker for gaming rigs and laptops; on Audi using its chips in their cars [as if this is something amazing?]. On CEO Jensen Huang and his unwillingness to be on Cramer's show for a while [this is probably a bullish indicator: the companies that really want the publicity, that want to be on Cramer's show are the names to avoid; in fact you probably should write down and not buy any name that shows up on Cramer's show. Never, ever act on the short-term publicity that might happen as a result of an appearance on a TV show]; on Nvidia's move into AI, he calls Jensen Huang a "modern-day Leonardo da Vinci" and then he writes "I went bonkers telling people to buy it." ...and then the stock promptly dropped 20 points. Other borderline goofy details here: how they made a lifelike video AI simulation of Cramer, other goofy things about Nvidia's headquarters; and the stock just went lower, until the huge upside surprise they printed in May of 2023.
66ff The idea I think Cramer is trying to get across here is that you just have to pay attention, and every so often you will find a name that will provide tremendous upside. This chapter is short on specifics here.
67ff Discussion of Lee Cooperman, who told Cramer to put his clients into Warren Buffett's Berkshire Hathaway, but nobody wanted it at $1,400 a share. Also on how Cramer knew Steve Ballmer from his days at Harvard working at the Harvard Crimson; how he found out about Microsoft and also how he learned about Apple when his daughter asked for an iPod mini and then asked him for another one in a different color, which indicated to him that these things were accessories, not just iPods.
Chapter 6: It's Not That Hard
69ff This chapter is basically about using AI to do a lot of the legwork that you used to have to do manually back in the day. [It's insightful on some level because Cramer is suggesting you can even ask questions like "Does XYZ company have a good or bad balance sheet?" which is kind of an amazing question to ask, but holy cow I would be sure to crosscheck and still look at it myself.] "AI is staggering and has changed everything about successful stock picking." [Also a useful idea on using multiple AI sites to cross-check each other on things like the balance sheet quality question.]
72 On using Perplexity to summarize the key points of a company's quarterly conference call. [Again, a good idea. Heck, SeekingAlpha auto-generates AI articles based on company conference calls, why not do the same for your own purposes?]
Part 2: Build Your Portfolio
Chapter 7: The Make Money in Any Market Plan
75 Note the subtitle here: "One Fund, Five Stocks, a Hedge... and Riches Await"; the structure here is about half your portfolio in an index fund, about half into your five individual stocks, and then a hedge investment which is a non-stock [probably gold, we'll see].
78 Note this quote here: "I wish I could also tell you to deploy my stock-picking strategies within a 401(k) plan, something you might be able to get at work. But the savings industry has captured the 401(k) business, and you most likely can own only index funds or different mutual funds--not individual stocks. I have campaigned against this restriction for years, hoping you would be able to do with a 401(k) the same as you can do with an IRA, but financial firms have managed to convince companies that set up these plans that you can't invest in stocks, just the funds they offer." [This is an important point, something that Michael Hudson goes into in his book J Is for Junk Economics: the idea that the finance industry takes a "rake" from everybody's money, that it exercises control over what you can and can't do with your money, and it exercises this control over tremendous quantities of investors' capital, taking fees before you get anything and limiting your ability to invest your capital the way you want to. It's just another of the various instruments that chain us to the W-2 plantation.] Cramer continues: "I couldn't even convince the board of a company that I started to allow people to own stocks..." [It's also worth thinking about the various agency problems present here: the company, the boards, and the management of the company that enables the 401K program are likely more concerned with their legal liability than they are in your financial options, so they limit your choices so that you can't destroy yourself and blame them for letting you take too much risk. On some level this is totally infantilizing, but if you understand the litigious culture of the United States in the modern era it makes logical sense.]
78 Note also that the other major [and far more favorable] changes that have happened since Cramer got started: basically brokers used to charge huge commissions, now they don't; there was no such thing as a Roth IRA, etc.
79 Again: Cramer suggests 50% of your capital in an S&P 500 index fund, and the other 50% into your five core stocks, and then also a hedge investment [which we haven't gotten to yet].
80 Interesting comments here on how the professionals throttle back your risk as you get older, pushing you into cash and bonds which Cramer calls entirely unnecessary and counterprojective [especially true if there's an inflationary period, which I think is coming]; comments here about how this throttles people out of the market at age 50, whereas Cramer thinks that you should be mostly in stocks until age 70, and then you can scale back. Here he says scale back to 80% stocks 20% bonds at age 70 and at age 80 to only go to 40% bonds. [This is reasonable, albeit absolutely not orthodox advice, that's for sure: but also this also really depends on how much capital you have relative to your expenses!]
81ff On the hedge: Cramer doesn't like physical gold, it's too risky; he prefers the GLD ETF. He says 5% to 10% is a proper allocation. Comments here on Bitcoin, somewhat lukewarm ones: "I am pro-Bitcoin as another possible hedge and a potential source of growth--and I own some--but I also recognize that gold has been proven time and again to be the real safe-haven asset between the two." Also instead of the GLD or actual gold you can own gold mining stocks: Cramer cites Agnico Eagle Mines and Newmont Mining; comments here also on having mines in rule-of-law countries and avoiding less stable nations. [I think during this coming commodity cycle we'll see quite a few examples of countries "nationalizing" (read: stealing) major mining properties from companies, so, yes, making sure your stock owns most of its mines in rule-of-law nation states is a big deal.]
82 [There's some incontinent logic here that indicates Cramer still doesn't fully understand Bitcoin]: "And if you can't buy Bitcoin directly because of the price, then buy a Bitcoin ETF, now offered by most financial institutions. I had feared owning individual Bitcoin at one point; I don't want to have to worry about some supercomputer undoing my holdings. But those fears now feel unfounded and can be delayed by the ETF alternative anyway." [This absolutely incontinent sentence could only survive editing if both Cramer and his editors--or anyone else who looked at this book before it was published--has any clue about Bitcoin. If you're worried about somebody actually breaking Bitcoin's cryptography the ETFs are going to be zeros as well; further what can he possibly mean by "if you can't buy Bitcoin because of the price"? You don't have to buy Bitcoin in units of whole bitcoins--they're divisible into far smaller units! It's astounding that nobody helping to put out this book knows even these absolute basics about Bitcoin. It's so early.]
82-3 Cramer's key thing to worry about going forward is the incredible amount of debt the US has and the risk of inflation, deflation, or both, which is why we need these hedge positions as well.
83 On using selloffs to buy even more of your stocks and index funds.
Chapter 8: Narrowing the Field of Options
87 On eliminating consideration of most stocks: eliminating any cyclical stock (steel companies, materials companies, home builders, etc., because they have too much exposure to the economic cycle and their earnings fluctuate too much); eliminating financials (too much exposure to regulation, fed policy, interest rates, inflation or defaults); also eliminating "fleeting" companies that are conceptual and that don't have earnings ("they are too dangerous").
90fd More types of stocks to eliminate: eliminate LSD (low single digit growth) companies (consumer products, cereals, foods, cookies; these companies "seduce" people with their above-average dividends, but they "cannot make us rich enough to avoid the trap of mediocrity. These used to be what we called safety stocks. But the only safe concept in the stock market is growth." [Interesting perspective here, maybe he's right]. Context here also on how in the 60s, 70s, 80s, 90s and even until the 2000s these companies were expanding overseas and had more growth than they do now; the only name here that he suggests is Procter & Gamble, otherwise there are too many headwinds: RFK, Ozempic, these foods tend to not be healthy, etc. [Again these are interesting thoughts and he's probably right; a Bitcoiner would call these types of stocks "soy slop" investments, or worse: "goy slop" investments!]
91 A fifth and final category of stocks to eliminate: eliminate companies with very high fixed costs (thus you can eliminate department store chains, entertainment companies, automakers, airlines, etc.). "We have now eliminated a huge swath of publicly traded stocks, probably more than half of them. That's good. We need to make money for the long term, and all those stocks could, at one time or another, run us off our path and prevent us from making millions."
Chapter 9: Comparing One Stock to Another
92 "...people lose money investing because they pay too much for bad stocks and too little for good ones." On the idea that bad stocks appear cheap and good stocks never seem cheap enough--they always seem too expensive.
94ff More comments here on using AI to render information about your companies, some good ideas here for prompts: "I have run each of the thirty-five stocks in my charitable trust portfolio through the generative AI mills, and they all produce fairly identical answers, much better than even professionals could offer after a ton of time-consuming work... You can ask the AI agents how your targets make their money, how they generate sales and profits... You can use AI to see how a company has done in times of turmoil and uncertainty... and if it stacks up well against the competition. You can learn easily how and why a stock plummeted in the past."
98ff Discussion of what a stock price "means"; the essence of how a stock works, why stock prices change and move the way they do, what drives their short- and long-term movements, etc. By contrast: oranges at the store don't have price fluctuations that go all over the place, and we have a decent sense of what they "should" cost: we know that if we paid $10 for two oranges we'd be paying too much, and we also know that we can't get a bag of oranges for a nickel; we also know prices are set by the store based on the cost they pay to the wholesaler and including all their other costs like rent, employees, electricity, etc. Likewise, the cost of an appliance or a car are set by manufacturers and dealers. But stock prices are driven by way more factors [and they are way more difficult to value sometimes too]. Finally a cute story here about his mother, how she would call up to buy shares of Giant Stores at $24 a share, and how she couldn't believe that Giant was "half the price" of ACME which was priced at $50 a share. She had no idea that this had nothing to do with actual valuations of the two companies.
Chapter 10: Figuring Out What a Stock is Worth
103ff On the PE multiple of a stock; why some companies get high P/Es why some get low ones, based on growth rate, profitability, management, etc. Basically Cramer here inverts the idea that a high P/E multiple means a stock is "overpriced," instead it means there's confidence in the company's prospects for growth. In other words when you see a high PE you should ask what it indicates about the underlying company. [I think the same should be extended to the stock market overall: if the stock market is going up, or has gone up a lot, you want to ask, "what is going on such that the stock market is doing this?" rather than automatically assume that it's overvalued or it's about to crash.]
107 On fighting the mentality of "looking for bargains"; instead hunting for growth stocks. [This is a great point, a great point, although I would recommend readers digest Mohnish Pabrai's The Dhandho Investor to get an equally compelling alternative view.]
108ff Exercise here comparing Coke to Pepsi even though Pepsi is not just beverages where Coke is more of a pure play, Coke get a 29 PE versus Pepsi at 19; comparing the difference in profitability, looking at the market's judgment and trying to figure out where if and where it might be wrong.
110 on PEG ratios, take the P/E and divide it by the company's revenue growth rate. [This section of the book would benefit from a few extra paragraphs on how to think about PEG ratios; he could have also mentioned his heuristic that a quality high-growth company can merit a PEG ratio of 2x, meaning the PE could be as much as 2x the growth rate. Also, despite the fact that PEG ratios actually help contextualize a company's P/E, there's something vaguely unrigorous about having a ratio of two things that don't even share the same underlying unit of measure! (The P/E is a ratio of two things denominated in dollars, the growth rate measures the rate of change of revenues.) Thus this ratio sort of makes no sense on some level, but it's still a useful heuristic to help compare companies with differing growth rates.]
113ff Comments on GLP-1 drugs and how they don't seem to be affecting soda sales, although they are affecting snack sales. [I know earlier this year this FUD was all the rage among the investment community, but I'm not sure it was anything more than an excuse these companies gave for lackluster revenues!]
115 On "dividend aristocrats" and "dividend kings": companies that have raised their dividends for 25 or 50 years respectively; on why you may want to rotate towards those kinds of companies as you get closer to retirement. [This is a good insight to think about because higher growth stocks are simply riskier and more volatile, whereas dividend-paying stocks in general have a different profile altogether.]
Chapter 11: What Makes a Stock Go Up?
115ff Interesting points here on the innate skepticism of many investors and (most) market pundits who can't foresee companies earning much more than they are earning now; also on the idea that the best CEOs do not like the status quo and will truly try to improve a business, and possibly grow it massively. "You must believe that a company's stock can have a huge gain ahead of it, or you shouldn't own it, and you certainly shouldn't buy it. You are wasting one of your precious five spots in your portfolio." [This also is an insight that's less obvious than it may appear at first: a lot of times you end up just owning stocks "because you've owned them" and they're not genuine Dhandho-caliber investments. Coke and Pepsi are not going to triple, so you want to think long and hard about which stocks you own and why. Buffett addresses this idea compellingly with his 20-hole punch card metaphor for investing: that if you thought all the investments you make over the course of your life as limited to just 20, you would think long and hard about each investment, you'd be patient, you'd wait for your pitch, you wouldn't chase fad investments, and you would really load up on those names you decided on.]
123ff On multiple expansion/multiple contraction and using that as an opportunity to buy in; examples here are when the analyst community turns negative on a stock you're interested in and the price goes down but the earnings or the business prospects are unchanged.
125ff On getting rid of a stock if it can't consistently beat earnings estimates: Cramer writes: "Then you own an average stock, and an average stock isn't worth investing in for the long term." Also on UPOD: having a company run by management that under-promises and over-delivers.
127ff Discussion of how sell-side brokerage analysts function. [For my part, I've completely tuned out 100% this entire domain of the stock market since I left my Wall Street career, but during my career I paid careful attention to analyst ratings changes and earnings estimates changes, I would meet with these guys to learn new sectors, learn which stocks were the best, most well-regarded companies, in a given sector, etc. Cramer pays much more attention to this world than I think it is worth for individual investors.]
133ff On looking at a company's earnings in the future. For slower growing companies you can look at the next 12 months; but with faster-growing companies or companies not yet printing normalized profits you will want to look several years into the future; growth companies "grow into their multiple"; also you want to think about what the "earnings power" of a company will be after several years of growth, on thinking about what the earnings will look like, and what kind of stock price it would imply down the road.
Chapter 12: Choosing Well
135ff On investing in secular growth [secular growth companies are sort of the existential opposite of cyclical stocks in that they aren't subject to the economic cycle]. On finding secular growth companies with good balance sheets; Cramer also suggests looking at how the company performed during the great financial crisis: if its earnings barely took a hit during that period then it's a secular growth company.
137 Cramer also doesn't care if the stock is ultra-expensive, saying it's an indication that something positive is going on that he doesn't know about. [Again this is a good insight: don't just rule out a company because it has a high P/E, you flip the idea and ask, "What is it about this company that makes it have a high PE?]
137ff On scalable growth: interesting discussion here about his old company TheStreet.com when he was looking for VC money: they all wanted him to do a freemium-type model, where the base site was free and advertising supported so the business could grow as quickly as possible [this was the late 1990s so it was all about "eyeballs"]. Cramer wanted to do a smaller, bootstrapped and more intrinsically profitable version that was subscription-only. [Cramer doesn't talk about this, but this is one of the key problems with the VC financing model, it's subject to fashion just as the mutual fund industry is, and this is why we have a ton of unprofitable dogwalking apps that were supposed to be scalable but never made money in the first place!] Cramer quotes one VC: "If you can't think of yourself running a business with $1 billion in sales, then it's not worth doing." [Note that TheStreet had a burst of investor enthusiasm initially but ultimately collapsed as an entity. Had it been run using Cramer's initial vision it might have been more successful, but it never would have attracted the attention of VC money and likely never would have been able to go public (Cramer talks about this in his autobiography Confessions of a Street Addict). Thus there's a takeaway here, which is you can do very well at different niches and different scale levels, but that public markets tend only to "like" certain types of scalable companies. Possibly TheStreet might have made it if it never went public, never did the freemium version and gradually developed a healthy, bootstrapped following of subscribers. Cramer did take the company public but if I remember correctly, the stock peaked on the day of the IPO in 1999 at more than a billion dollars in market value, but then relentlessly declined ever since, ultimately to be sold in 2019 for $16.5m--a relative pittance.]
139 "You may think like I did when you see companies go public with fast growing revenues and gigantic losses: you dismiss those companies, with your small business mindset, and miss out on fabulous opportunities that might otherwise be perfect, especially if you are looking for the next Amazon or Microsoft (which we all are). With a very young company, the goal of profitability should be a distant second to the goal of scale. When you review a company for one of your slots, you must be able to imagine that one day it could dominate in its vertical or even go outside that vertical and become an even bigger force in our economy." [There's a lot to say about this quote: he's right on one level, but you have to remember that these types of companies are unicorns, the vast number of companies will be positioned and marketed to look like the next Amazon, but they actually won't be, they'll be VC-funded slop foisted on the public markets, structured so that you get suckered into buying it and filling their bags. Think about how many VC slop companies were put out for every Amazon--hundreds, perhaps thousands! However, at the same time it is absolutely worth thinking about this exactly the way Cramer frames it: will the company I'm considering investing in be a dominant player in the long run? Just please realize that it's one thing to recognize an Amazon in retrospect after all the survivor bias has taken place, it's another thing to find it before it's obvious.]
143ff Interesting discussion here of Dave Cote, Honeywell's CEO who turned the company around and made it into a great investment. The context here is part of a discussion of a company as it moves through leadership changes; note also the mention of Dave Cote's book Winning Now, Winning Later which is probably worth reading; also comments here on Larry Culp who split up GE and turned it around, Reed Hastings at Netflix, Brian Niccol at Chipotle; also interesting quote here on how quickly you should be able to tell if positive changes are coming: "Within the first few minutes of a new CEO's first conference call you should be able to tell a big, positive changes are in the future." See also here references to Intel's former CEO Andy Grove commenting on how important the first 90 days of a new CEO is.
146 More comments here about Vimal Kapur who took over Honeywell in 2023 and decided to split the company into three pieces: aerospace, automation and advanced materials. Cramer likes this idea and thanks the three pieces will be worth far more than the whole [I guess we'll see...!]. Note also here comments on Cummins Engines which is experiencing huge demand for backup generators along with its truck engine business; also United Technologies, which spun off Otis Elevator and Carrier before its merger with Raytheon; Kellogg's splitting into a high dividend-paying cereal business and a fast-growing snack business, Kellanova. [Note that Kellanova just got a takeover bid from Mars by the way, while the old Kellogg cereal business got a takeover bid from the Italian confectioner Ferrero (this is the company that owns Nutella). I didn't know anything about these deals at all until pulling up these stocks while reading this book!]
Chapter 13: How to Research Stocks
149ff On what Cramer means by "buy and homework": listening to earnings calls, looking at quarterly financials, reading research reports, scouring corporate news using Google alerts, and studying the company using AI platforms like Perplexity, Grok or ChatGPT.
152ff A huge discussion of the various research sources that Cramer uses to think about "macro" stuff [none of which are all that useful in my opinion, and this is especially true if we are trying to invest in secular growth companies that don't have any sensitivity to the economic cycle! I'm not really sure why this section is even in the book at all]; looking at working papers from the San Francisco Fed, the Dallas Fed's quarterly energy survey, the Cleveland Fed's inflation research, the St. Louis Fed and its Federal Reserve Economic Data (FRED) reports, the Atlanta Fed's GDPNow forecasting model, the International Energy Agency reports on energy markets, the Mortgage Bankers Association reports on housing information, etc.
154ff Some borderline useless information here on what Cramer looks for in each of the "Magnificent Seven" conference calls; then some somewhat more useful ideas on which major company conference calls he tunes in to: Walmart, Target, Home Depot, Lowe's, all to formulate his views on the consumer; also William Sonoma, Best Buy, Restoration Hardware, Tractor Supply, Dick's Sporting Goods and The Gap.
155ff Also some more specific companies to tune in to: Federal Realty Investment Trust for shopping centers and mixed-use properties, Simon Property Group for malls and Tanger which is an owner of outlet properties for mixed-use and housing.
156 Other companies Cramer tunes in to: Salesforce, ServiceNow, Adobe, Cloudflare, Palo Alto Networks, Crowdstrike, Okta [these are cybersecurity names],; Cisco, Applied Materials, LAM Research, AMD, Micron [various subsectors of the semiconductor industry]; FedEx, CSX and JB Hunt for transportation; PG&E for utilities; Chevron and Coterra Energy for oil and gas; Linde, Dow, Nucor and Cleveland Cliffs for materials; Coke, Pepsi, P&G and Clorox for consumer goods. [Again, I don't know what the purpose of explaining all this is if what we are really doing is looking for our five hero stocks and otherwise letting index funds carry the bulk of the weight of our portfolio. The idea here is to actually avoid dealing with all these conference calls! It gives readers a sense of the types of companies and industries that our out there but with the exception of the cybersecurity names I doubt he would seriously consider any of these names for hero stocks for any reader.]
157 He lists still more names here: pharma, entertainment, autos, also for manufacturing he cites Otis, Carrier and Trane Technologies; for financials: JPMorgan, Wells Fargo, Bank of America, Goldman Sachs, Blackrock... [this chapter is devolving into kind of a name-dropping exercise because I don't think anybody is going to listen to all of these conference calls and at the same time have a life. Again it's good to pick and choose every once in a while and tune in to a conference call transcript of a company you haven't turned in to before, just for some the context and to learn something new.]
158 Finally a short list of a few other CEOs who impress Cramer: Airbnb CEO Brian Chesky, Harvey Finkelstein of Shopify; Dara Khosrowshahi of Uber, Tony Xu of DoorDash.
Chapter 14: Reading Balance Sheets and Income Statements Like a Pro
159ff This chapter is disappointing: it attempts to explain the income statement, balance sheet and cash flow statement and how to read them, but it's neither fish nor fowl--it's titrated for a relatively unsophisticated reader [which probably is this book's target anyway], but the problem is it is not technical enough for true understanding.
172 Note the discussion here on free cash flow which is operating cash flow minus capex. [This is a really important number! It gets a one paragraph discussion here and it should probably have a much more thorough explanation. I like to look at OCF and capex as a ratio, to help me quantify how capital intensive (or capital light) a company is. And then you'll want to look at the dividend payment in the third section of the cash flow statement (cash flows from financing) to see that amount and judge how well it is covered by free cash flow.]
Chapter 15: The Conference Call
175ff On conference call transcripts: Cramer says to look at sales dynamics: what's driving sales, is it discounting, what is happening with inventory, what other consumer behaviors are happening; what are the industry metrics, what are the intra-quarter dynamics, and what's the outlook and the qualitative comments from management. He goes through excerpts from a Procter&Gamble conference call, and then another one for Amazon, and it's useful to see his commentary here.
177 Note the nuance here from the P&G about sales growing 7% but volume was down 1%, and the fact that sales growth came only through price increases, they're actually selling less stuff. As Cramer puts it: "Here, P&G got away with raising prices and didn't lose much volume." Note other comments here about discounting or cutting prices to move more volume.
181ff Interesting thoughts here on Amazon: their dry goods deliveries and other products are eating the lunch of a still more retailers; see for example what they are doing to drugstore-type purchases; also instead of going to Walmart and feeling like a criminal as you ask to get items from behind locked cabinets, you can have these items delivered (in some cases same day) from Amazon. Also interesting comments on Amazon dropping their shipping costs to as low as 40 cents a package [which to me seems practically inconceivable]. Comments on Amazon's cloud business, Amazon Web Services, which came from their original attempts to keep track of their own operations and then morphed into a third-party cloud business. [I have always underestimated this company!]
Part 3: What Makes a Hero Stock?
Chapter 16: Ten Winning Sectors
189 This chapter offers up investing themes in sectors that Cramer likes, with plenty of example names for each sector. A rather odd and interesting comment right here from the author: "Incidentally, I have gone out of my way here not to pick tech stocks. Tech stocks will find their way into your portfolio no matter what. I'm sure of it. But after tech's steep drops in early 2025, a not uncommon occurrence that could nonetheless scare you out of good long-term stocks, I wanted to be mindful of assuring you that other worthwhile sectors are out there, and they deserve attention and your portfolio even if I know you will find classic techs irresistible."
Sector One: Financial Firms for the Long Term: he's not a fan of insurance companies or banking/credit/lenders here, but rather prefers fintech companies like Block, PayPal or Fiserv [Ouch! This name has had repeatedly atrocious results in 2025 and Cramer would probably blow this stock right out of his portfolio if he owned it on the "missed two quarters in a row" test. See photo below.] Note also he cites Visa, Mastercard, Blackrock and BNY (which is a custody bank).
Not exactly what I'd call a "hero stock"
Sector Two: Dining Out Responsibly in an Era of Inflation: stock examples here are Texas Roadhouse, Brinker (owns Chili's) and Dutch Bros (a coffee store and a "regional-to-national" theme) [I would avoid this space, it's too hard to tell what's going to happen and inflation may crush certain restaurants irretrievably.]
Sector Three: Bargain Shopping at Off-Price Retail: "Most retailers are full-price, and I just don't think we're a full-price nation anymore. Too much inflation and too much Amazon." TJX is the only idea here. [Note that "we're not a full price nation anymore" may be another reason to avoid restaurants.]
Sector Four: Our National Shortage of Power: Here Cramer suggests natural gas producers like Coterra Energy Cabot Oil and Gas, Cimarex; also Dover (natural gas compression), Emerson (control and measurement equipment) and Eaton (systems for gas turbines); also GE Vernova, which sells turbines and wind systems and also does mini nuclear. [I would also suggest playing this theme by buying uranium producers, like UEC, UUUU, etc.]
Sector Five: Blockbuster Drugs: citing Lily here, note that Cramer loves GLP-1 drugs; supposedly there are additional applications for these therapies for things like sleep apnea [??], kidney disease, cardiovascular disease, compulsive behavior and addiction [???], liver ailments, etc. "The GLP-1s are being misjudged; the size of the market is much bigger than analysts seem to believe. This is going to be the greatest drug stock of all time." [A few thoughts here: first, holy crap did I miss this name, and it's $900b in market cap now!! But also note that harms from novel therapeutics are always discovered with a lag...] Also comments here on Vertex Pharmaceuticals, "a disruptive biotech known for its cystic fibrosis treatments but also now with a CRISPR gene-edited cell therapy for sickle cell disease." Also on its non-opioid med suzetrigine (brand name Journavx), "the first new class of pain medicine approved in over twenty years."
Sector Six: The Subscription Model: Costco, interesting comments on what they did to their suppliers who tried to raise prices during the post-COVID inflation; also NFLX and Spotify.
Sector Seven: Small Business Infrastructure: Here he's talking about companies like Cintas or Ecolab which do uniforms and cleaning supplies; also Shopify for its e-commerce and payment processing platform; also Intuit which performs accounting and payroll functions, Paychex for payroll processing.
Sector Eight: The Constant and Growing Need for Cybersecurity: Palo Alto Networks and Crowdstrike (more on crowdstrike in the next chapter).
Sector Nine: Aerospace: Interesting take on Boeing as Cramer thinks the new CEO Kelly Ortberg can turn around the company; also GE Aerospace.
Sector Ten: Spotting Tech Companies Early: See ServiceNow (enterprise software that manages digital workflow), Salesforce (CRM), and Palantir (software and defense, this is a cult stock doing data analysis for federal government and commercial customers including for military and healthcare; it was also behind operation warp speed; also it's redoing procurement for the Pentagon; also he says Palantir displaced Raytheon for a 2024 contract for mobile ground stations to do target identification; also note the company's work with Doge, [this sounds kind of like a phony company to me but what do I know]. Note the discussion here about the "Rule of 40" where you add together revenue growth and profit margin [EBITDA or EBIT, you can choose] and if it adds up to 40 or greater this is a tech company to take a serious look at. This is a measure of quality, it indicates a company with a good combination of both growth and profitability; Cramer suggests using ChatGPT or Grok to find these companies with this "badge of honor."
Chapter 17: Ten Recent Greats
207ff Here, Cramer offers 10 companies (out of all the IPOs in the past five or six years, so this is yeoman's work, thank you) that he thinks could be future "trillionaire club" members, arguing that these names all demonstrate both staying power, scale, good management and profitability; thus this would be a good starting point for your own research and to maybe choose a few or even make a "field bet" on all of these companies. [As usual remember that Cramer's nickname when he first started appearing on CNBC many, many years ago was the "Reverend of the Church of What's Happening Now," thus he will tell you what is popular, and he may not always be correct--and sometimes in the short and medium term he is way off--this is why he is trashed widely on Twitter and mocked by accounts like Inverse Cramer. But I will say that he does have good horse sense in judging company quality and management quality, and some of his picks do very very well, he has a knack for sussing out good long-term performers from time to time.]
1) Affirm Holdings [AFRM]: this is a buy now, pay later company that Cramer says has good transparency; it managed delinquencies and charge-offs very well during the interest rate cycle we had a couple years ago, thus now that it's survived an interest rate cycle we can see for real this is a high-quality company.
2) AirBnB [ABNB]: Cramer sees this as both a way to travel and a way monetize your living space, it turned out that AirBnB thrived during COVID, although it also ran into conflict with some countries like Spain; note also VRBO is in this space (it's a division of Expedia); Cramer thinks highly of ABNB's CEO Brian Chesky; he sees it as sort of a democratization play with good profitability. [Interesting also to note that this company IPO'd in December 2020 and it's performance is actually flat since that first day, and the stock is still down about a third from its all-time high in early 2021; at the current price of around $125 a share the market cap is $75 billion and it's 30 times earnings, maybe this is a name to take a closer look at?]
3) Arm Holdings [ARM]: Semiconductor technology licensing, kind of like the Qualcomm model; this company has been around for decades, it was taken private by SoftBank in 2016 and then in 2023 brought out public again when Softbank needed liquidity; note that SoftBank still owns 90% of it and controls it; this company licenses sending another technology and design, kind of like the Qualcomm model. [I think I would probably pass on this company, I don't know. It is a good company.] Also interesting comment here that Nvidia tried to buy Arm for $40 billion a few years ago but it was shot down due to antitrust.
4) Cava Group [CAVA]: Cramer calls this the next Chipotle, except that Cava serves healthy Mediterranean food at reasonable prices. [Note that this name also has been caught up in the "restaurant Holocaust" and the stock price, here at $53 and $6b in market cap, is down huge from its peak of $144 over the past year and is right back down fairly close to where it was when the company first did its IPO. I think you can table this name as well. Note also that CAVA badly missed estimates the last two quarters. I don't know the future any more than the next guy, but I don't think names like this and Chipotle are going to do that well in modern "inflationary neofeudalism." People don't want to pay eighteen bucks for a burrito bowl or twelve bucks for a gyro, no matter how ethically grown the food (allegedly) is.]
5) Cloudflare [NET]: This company does website caching to help with websites' security, reliability and speed; also they have a cyber security business; revenues are up massively over the past five years, from $287m in 2019 to $1.7b in 2024. "This stock may never come cheap; the great ones rarely do." [It is a good business with tremendous cash flow from operations and very low capex (a six to one ratio), although note the possible negative that the CEO is on Mad Money all the time.]
6) Crowdstrike [CRWD]: "You have to own a cyber security company," Cramer writes. These guys compete with Palo Alto Networks, Microsoft is a big source of this company's business; note that the CEO is also a regular guest on Mad Money, and note also that the P/E is 100x; but then again, note they didn't even miss the quarter after having that tremendous outage/glitch earlier this year.
7) Doordash [DASH]: Cramer has high regard for CEO Tony Xu, he argues that ordering food is now an ingrained consumer habit since the pandemic. And holy cow, the cash flow characteristics are incredible: $2b billion in OCF vs $100-200m in capex, a 10 to 1 ratio, very interesting. $96 billion in market cap and 44 times earnings.
8) Dutch Bros [BROS]: This is a coffee kiosk/drive-thru company, note the CEO Christine Barone who came from Starbucks. It did its "regional to national" move before it was really ready in 2021 and it's been sitting below its post-IPO price of $76, and actually hit a new high of $86 in early 2025 before falling back down to around $61, around $11b in market cap. [Note that the cash flow characteristics are not that great for this company, but maybe that's fine for now, as they're spending about all their operating cash flow on capex for expansion, it's now the number three coffee store behind Starbucks and Dunkin' Donuts; it's not a franchise model, it owns the locations. One way to think about this company is as a lower-footprint (thus more capital efficient) version of Starbucks. One final thought: if this company actually gets to $1 trillion in market cap (heck Starbucks is only at $97b!), this means it would be a 100x. Implausible.]
9) Uber Technologies [UBER]: The cash flow characteristics here are incredible: OCF is 10-20 times capex, and the stock is only at 16 times earnings at $180b in market cap [maybe this is an interesting name to consider? See also LYFT, the little brother competitor, which also has great cash flows at least in the last calendar year; LYFT is much smaller, at 19x P/E and $9b in market cap, and LYFT is way off its prior post IPO peak of ~$88 in 2019.] Uber's IPO went very badly, priced at $45 but it fell 8% on it's first day and then fell another 10% the next day; also note the CEOs leaked letter to employees about how the growth-at-any-cost era of tech companies had ended [this is a good thing: it suggests the guy is non-delusional and he can see and adapt to a changing market zeitgeist]. Uber then became profitable, leaving Lyft as a distant second and also added a delivery and freight business and even an advertising stream. Note Uber has some 8.5 million drivers in 15,000 cities in 70 countries.
10) Vertiv [VRT]: This was a SPAC that had Honeywell's Dave Cote as chairman, it is a data center infrastructure company, doing cooling, power management, monitoring and control, etc. [Note that this stock is up monstrously over the past three years, more than 10x, to $161, $61b market cap and 39x P/E. Also surprising how good the OCF/Capex ratio is, some 7x, I'd have thought this company would be far more capex intensive.]
Chapter 18: Eight Income Producers with Growth
222ff This is a list of stock ideas that Cramer suggests you switch towards as you get older; this in contrast to the standard advice to shift to bonds, which Cramer [likely correctly] argues is bad advice in an inflationary environment. Thus these income stocks will give you both growth and income. The names here tend to involve energy production or energy transportation. "This list is stress-tested."
1) Enbridge [ENB]: an independent pipeline company, also a data center partnership with natural gas utilities, also an Amazon partnership, think of it like a toll road, with a "very safe dividend."
2) Enterprise Products Partners [EPD]: note this is a limited partnership; natural gas processing plants, natural gas fractionators, export-import ship docks.
3) Federal Realty Investment Trust [FRT]: this is an unusual REIT that has raised its dividend for 57 consecutive years [almost unheard of for a REIT]; mixed-use properties in suburbia that can be converted to residential units; interesting comment here that demand supposedly exceeds supply for open air mall supply, which is why failed retailers like Bed Bath & Beyond can be immediately replaced by a new tenant at higher rents, this is hard to believe but this sector has been distressed for so long maybe it's finally true.
4) MPLX [MPLX]: this is Marathon Petroleum's limited partnership that owns and operates midstream energy infrastructure oil and gas pipelines as well as storage facilities and fuel distribution services; Cramer argues this segment of the marketplace was overbuilt and out of favor, but now the USA is now exporting nat gas this name is more interesting.
5) ONEOK [OKE]: this is another midstream oil and gas company, also a play on the recovery of the Bakken region, it runs a natural gas pipeline from the Bakken thus oil producers no longer have to flare off nat gas from their oil rigs; also it bought Magellan Midstream Partners and thus refined product terminals and storage, also 25 years of dividend stability; note that the stock is also down 24% year to date and down quite significantly from its local high of $116 to its current price at $76, $48 billion and a 5.4% yield.
6) Realty Income [O]: owns commercial real estate in the US, UK and six other European countries; note their exposure to Red Lobster, Rite Aid but other tenants are clamoring to take over these failing chains' space. [Note the yield: 5.5%, and the dividend has been growing--another surprise, as this sector also has been given up for dead; note also that the stock has done nothing the past 10 years, just sitting in a range between 50 and 75, interesting. I wonder if this could be an okay inflation play going forward.]
7) Simon Properties [SPG]: this is basically a play on "the shopping mall not being dead" like everyone thinks; these can be converted into mixed-use and other uses as physical retailing collapses; the stock yields 4.8% and interestingly the stock has doubled over the past five years, but it's flat over a 10-year period. Note also the stock troughed at $48 during the COVID sell-off and now is it $182 and $68 billion in market cap.
8) Tanger [SKT]: another REIT that builds giant outdoor outlet malls.
Chapter 19: The Future of the Magnificent Seven
233ff "This book has been about trying to spot the next FAANGs instead of relying on the past." Citing the diminishing magnitude of these stocks' "beat and raise" results recently; on Tesla's poor results lately; on criticism of Nvidia's chips using too much power; on Apple wanting to bring manufacturing back from overseas because of the tariffs on China, India and Vietnam; also Cramer cites the fact that multiple index funds are out there to mimic the Mag 7 so this is a type of leverage to fund flows that could be bearish going forard. However, also the idea that there can be opportunities to get back into these names: see for example after Steve Jobs died and Tim Cook took over you had a glorious chance to get back into Apple. [Note that with the exception of Meta all of these stocks have come back quite smartly from their early 2025 sell-offs. Honestly, this chapter is disappointing: it's entirely backward looking, I'm not sure what kind of insights there really are here.]
Alphabet (Cramer gives it a C): he gives a backgrounder on Google's IPO, their dominance in search--stuff everybody knows--also the acquisition of YouTube which has now become a gigantic part of people's media consumption and has devoured cable media profits; see also the Chrome operating system and Android devices; also on Google's conflict with the political establishment and the Justice Department; also on the DoubleClick acquisition and DoubleClick's DART (dynamic advertising, reporting and targeting) service, which absorbed a lot of the ad revenues that used to go to various websites, letting Google take most of that revenue and then spray ads everywhere. "No site ever recovered from Google's DoubleClick purchase unless it had a dominant subscription component. You would not have spotted the disruption of an entire industry, the hundreds of billions of dollars in ad business, unless you were in the scrum." [Here he's talking about his own site thestreet.com and realmoney.com, which got eviscerated by this event]. This is pretty disappointing "on the one hand/on the other hand" type analysis but comes out as lukewarm on this company: he thinks Google's AI platform Gemini is cannibalizing its search business, with the offset that YouTube is the number one video site in the world, so he gives this company a C, the lowest grade of the seven.
Amazon (Cramer gives it an A): on the rollout of Prime in 2005, now with 200 million subscribers, on the rollout of Amazon Web Services in 2006; on 2009's roll out of same-day delivery service for certain products and markets; on the rollout of sponsored ads and third-party sales; note that at this point the stock was still $8 a share split-adjusted [!!]; on the rollout of its drug business and how this may absorb the national drugstore industry, especially if they can do same-day prescription delivery; also with Amazon's sports programming and entertainment production businesses. Also on Alexa which seems to be the only bust, but even Alexa is going to get an upgrade to a new version called Alexa+. "You will want it. Everyone will want it... This company is the envy of the world, and its stock can still be bought without reservation."
Apple (gets a B): noting that Apple stock was $4.30 split-adjusted when the iPhone rolled out in June 2007; and then when the Apple app store rolled out in 2008 the stock was at $6.20. Cramer tells readers this is a stock that was always expensive versus any other stock no matter what, and you kept buying it assuming the fundamentals had to follow; he's concerned about the valuation and thus gives it a B grade.
Meta (gets an A): some background on Facebook's IPO: how the stock opened at $42 in 2012 but then fell to $17 that year after criticism that they had no mobile strategy; also a good example here of a major "scandal" that happened to this company that nobody even cares about nor remembers anymore [I don't even remember it either]: the Cambridge Analytica scandal, some supposedly obscure political organization that targeted voters during the 2016 election [this is why you have to buy the great stocks during sell-offs even though they look like they are "real reasons" to sell off, because years later nobody even remembers anything about it]; also on the stock's sickening slide from $382 down to $88 during COVID. "Zuckerberg has been the most on point of any executive when it comes to melding AI with advertising. The company's superior ad tools and it's generative AI capabilities make it an advertising must-buy for everyone from gigantic consumer products companies to small and medium-sized businesses. The tech is so powerful that Zuckerberg is disrupting the entire advertising business..." Also: "Meta Platforms is one of the cheapest of the seven when it comes to its price-to-earnings multiple."
Microsoft (gets a B): interesting here once again to learn that Cramer was classmates with Steve Ballmer, they worked on the Harvard Crimson newspaper together. "He was boisterous and lovable." Also on how Ballmer wanted to buy more Microsoft when it went public even though Cramer tried to get him to diversify; this is yet another stock that was never cheap; also on how it fought the US Justice Department more or less to a draw during Justice's attempt to break the company up. Ballmer retired in 2014, handing the company over to the new CEO Satya Nadella; on how MSFT's cloud services business was a massive grower, comparable to Amazon Web Services; Cramer also calls MSFT the most opaque of the Magnificent Seven; also on its weak AI product OpenAI.
Nvidia (gets an A-): he's already discussed this company in depth; he thinks the US government and the Chinese government are liabilities; NVDA's chips cost too much, the company is not permitted to sell into China [but then Trump reversed course]; but because of the unclear political climate Cramer gives it an A-.
Tesla (gets a B-): Cramer is berating himself here for missing the stock: it's "beyond my powers of observation"; a stretched balance sheet, an erratic leader; Cramer tells a story about a dinner he had with several industry captains where Elon shared a mortifyingly silly insight about running all US energy from a gigantic solar field in Northwest Colorado, an absurd idea [Elon was probably high], and when Cramer challenged him, Musk told him he was dead wrong and that there was a 50% chance that "I was a hologram if not a figment of my [Elon's] imagination" [WTF? Elon was definitely high.] "There is a price to pay for being erratic."
Chapter 20: Mistakes, I've Made a Few
259ff This chapter contains ten lessons Cramer has learned over the course of his career. Note the comment here about when Cramer ran his hedge fund there were physical tickets for all the trades and he would put all the losing trades in a shoebox in a closet. "Once a month, I painstakingly went over the losses." [This is the kind of work almost nobody does, but this is how you get better: you actually have to dwell on your losses, sit with them, and then build rules and heuristics to grow from them so you don't repeat them.]
Lesson One: Don't Jump on Earnings Reports Until You Check the Details
Comments here on the news organizations that want to break stories quickly about companies earnings and thus they miss nuance [and often make bad mistakes!]. Thus the initial reaction of the stock can be contrary to what it should be and this can be an opportunity. Examples here of Caterpillar, where you have to wait to see the inventory numbers, or Boeing where you have to see the cash flow numbers because their accounting is "tricky," and so on.
Lesson Two: Your Stocks Will Tell You When to Sell
Cramer has already written earlier in this book about selling a stock after a really bad quarterly miss; here he goes further: if you can't figure out why a stock is getting "obliterated" that means "big sellers know more than you and you must take the loss, no matter how big the decline." [I don't agree with this approach: in the first place I want to have it so that I never own such a huge position in a stock that it can hurt me in this way--and this is why I'll probably never hold as few a number of individual names as Cramer recommends here in this book.] Also on instances where a stock takes a huge hit and then does nothing for months which Cramer calls another bad sign because "good stocks almost always bounce after a shellacking like that."
Lesson 3: Don't Make Excuses for Management
Here we get an example of Estee Lauder and a CEO who was a deer in the headlights during COVID as it started badly missing its Chinese sales numbers as China cracked down on luxury goods; eventually the family replaced management.
Lesson 4: Internal Turmoil? Sell.
A story here about Disney and how the new CEO Bob Chapek, hired in 2020, was in over his head and put highly disliked people in charge of the various divisions; stories about dissension inside the company leaked into the media; Cramer says you have to sell when these situations happen.
Lesson 5: Mounting Lawsuits? Sell.
Here we have examples of the J&J talc lawsuits and--as ridiculous as they are--Cramer argues that whenever the tort bar starts winning victories against your stock you have to sell. [Note in the case of J&J this would have been a terrible tactic: the stock has completely recovered since then and gone much higher]. Also interesting points here about 3M and some lawsuits that they began losing over chemicals found in groundwater; 3M lost half its value before new management could begin to deal with the problem.
Lesson 6: Anger Is Not a Strategy. Calm Down Before You Act.
Cramer gives an example of how he got shaken out of Oracle after a couple of extremely disappointing quarters, and then was too angry to buy back in later when things changed for the better. [It is absolutely true that when you are emotionally labile or in any way emotionally aroused, you will make terrible decisions: what happens to people is they become hypocognized by strong emotions and their decisions seem far smarter than they actually are to them at the time. I think another takeaway here is to never make "statement sales" where you blow out an entire position: just let some of it go, let it play out, then maybe let a little more of it go, etc., but never make one huge decision like selling everything, or buying a full position right away.]
Lesson 7: Diversification Is Not a Replacement for Excellence
This is barely two paragraphs and it doesn't really articulate the idea as much as it could. Don't use the idea of diversification as a justification for holding a stock that you don't think is a good stock. [Each of your stocks should have their own reasons and a good thesis behind them.]
Lesson 8: Billionaires Won't Save You; They Are Out for Themselves
[Good insight here, a meta-insight about financial media.] "One of the more abhorrent traits of business journalism is that we can't stay away from the billionaire class and their holier-than-thou opinions. Few things get in the way of you making big money more than a the musings of a billionaire hedge fund manager who has made his or her money but doesn't want you to do so, too. These managers were at one time optimists, picking stocks, building positions, hunting for big game ideas. Now they are just gas bags content to tell you how horrible everything is." [Holy cow hilarious! Tell me what you really think! But again he's totally right.] More insights: "they have already made their money." These guys are in a completely different league, they don't want to have to get rich again, and any individual stock does not move the needle for them thus they tend to will opine about the markets in general, "and do so in a negative way because they are so risk averse as a class. They don't do enough homework on individual stocks because they don't need to. It's somehow beneath most of them. Sometimes they are disdainful of the entire process of looking for good stocks." [These are good insights here.]
Lesson 9: Don't Sweat the Small Stuff
On the endless movement involved in trading frequently and how it's not worth it; Cramer talks here about how his fund needed to make $400,000 a day to hit its benchmark for outperformance and so he had to trade almost everything all the time. [For the vast majority of investors this kind of trading and hyperactivity is absolutely unnecessary, and he even recognizes it wasn't even true for him either.] "In retrospect, it was all nonsense. A diversion. A total waste of time. I should have been focused on the quality of individual stocks. So should you." [Notice that Buffett and Munger hardly traded all and crushed the markets.]
Lesson 10: The Bond Market Is Often Wrong
Here Cramer touches on (in layperson's terms) the idea of an inverted yield curve and how it may signal a recession, but often this turns out to be a false signal. [Also recall from earlier in the book that people "hide" in bonds because they're "safe" but you want to keep in mind that bonds get eaten alive in an inflationary environment. Thus the safety is a total illusion.] "Do not listen to the people who examine the curve of the bond market and decide that they should sound the alarm about the future--which includes selling perfectly good stocks."
Conclusion: The Show's Over--What Are You Waiting For?
275 Interesting comments here on the various versions of this book Cramer produced as he was working on this manuscript. [The reader really does get the impression across the course of this book that he wasn't sure what he was trying to do and that the book "changed direction" during its creation.] He muses about what he was attempting to do with the book: some versions were too hard/too technical, some were too easy, one version had no financials at all, a later version had a very dense comparison of one company to another, etc., as he tried to balance educating people but not boring them. "So, in version 5, the one you are about to finish, I stripped out much of what my mother would have found unfathomable, betting that you would get here, all the way to this point, the conclusion." [I think there are some useful metathoughts in here: from this, a perceptive reader can arrive at some reliable conclusions about the quality and level of sophistication of most mass-market financial literature. It indicates the (relatively low) standard that you as an individual are held to if you consume material meant to entertain. This is going to sound harsh, but the bottom line is if you demand that something really holds your attention, or if you demand to be entertained when reading in a domain like this... you're probably not going to make it.]
To Read:
Dave Cote: Winning Now, Winning Later