Cramer: Bet on the best CEOs to get rich
With the market at a top and seemingly falling, author and TV financial journalist Jim Cramer's latest book seems ill timed by promising that you can still "Get Rich Carefully".
But the Philadelphia native and mainstay on CNBC insists there's plenty of opportunity left in the market if you're willing to go against the grain.
And Cramer, 58, does just that, advising readers to forget the naysayers who claim timing the market and picking the right individual stocks is impossible for the lay person.
"It's the most arrogant, self-serving and patronizing view," Cramer said. "I'm appalled that people think they're too stupid to pick stocks. ... Why can't we find the next Berkshire Hathaway? This is disrespecting younger people especially who want to own stocks. They have time to get tremendous gains."
Cramer's book is as much a breezy read about his past trades and the business leaders he's met, as it is a heady text book on the reasons behind the movement of specific stocks.
Like a poker player revealing his secrets after a lifetime at the tables, Cramer uses his seventh book to detail some of his worst beats, looking back with the clarity of hindsight. "Each chapter is about learning the lessons from your mistakes and how they, in turn, can create opportunities."
What may shock some is that Cramer isn't advocating a return to the days of the day traders and easy flowing money that set the economy on its latest roller coaster ride.
"Everybody wants to get rich quickly and that's what we got wrong," Cramer said. "In and out is a sucker's game."
Instead, he advocates taking a longer view by buying stock in a company whose top management you trust. "Building a very good position over years is exactly that which can make you money."
But Cramer makes a point of noting that even the smallest investor can make more money if they know when to sell as a bump in the road appears. For example, he cites four Congressional crises over missed deadlines in the last three years that caused the U.S. market to plummet after politicians' early promise of compromise.
"But here's the trick. You must take aggressive action and do some selling the moment you hear these false reassurances and not one second later. You cannot afford to wait."
Those who stayed put in their stocks lost money needlessly each time as the entire market fell, regardless of how good the companies they owned performed, Cramer contends.
"Your worst fears about the market are true on a short-term basis," Cramer said. "If you can sidestep an accident you should. You don't have to take it."
This isn't gambling, he insists. It's investing, which takes a lot of homework to do successfully.
"Man, this is hard," Cramer said. "But if you want to do it you can and profit from it. If the inputs befuddle you, you can put your money in an index fund."
In fact, Cramer insists that the money investors put into the market be "Mad Money," not necessarily funds that would otherwise be heading to a 401(k).
"Your first $10,000 has to be in a diversified mutual fund," Cramer said. "Depending on your (risk) threshold, you can have your money in mutual funds with some in stocks."
To simplify the process of selecting which companies to invest in, Cramer advocates a new approach, focusing on the man or woman in the Chief Executive Officer's office.
"As someone who has analyzed thousands of companies from the top down and participated in the hiring and firing of CEOs as a member of the board of directors of a public company, TheStreet, I can tell you that knowing the record and character of the CEO - what he's brought to the table before and what he can bring to the organization in the future - will determine more than any other factor, whether you will be able to get rich investing with that leader."
Cramer lists the "bankable 21" CEOs you should put your money on, having interviewed them all on his TV show. But which is his favorite?
"I have two," Cramer said. "Bob Iger at Disney is really a sensational and thoughtful CEO. The other is Jim McNerney at Boeing, who has shown brilliance over time."
Jim Cramer's "Get Rich Carefully" is available at bookstores everywhere from Blue Rider Press.