Tuesday, April 15, 2008

Cramerica

He may not always be right and may not be the sterotype "street" trader...but you learn from him: Jim Cramer:

1) PEG ratio between 1 and 2: good opportunity.
2) Dividend history: If stable growth in dividend % good sign. But sudden rise/fall in dividends - worrysome sign.
3) Insider Buying:
High Insider Buying + High Insider Shorts = good sign. Lot of insiders know upside potential. So they are selling high(short) and waiting to buy low.
High insider buying + Stock on latest new highs list = insiders buying despite highs is a gr8 sign.
High insider buying = by itself does not mean anything.
4) Stock on new High list: Wait for pullback and then get in if the stock is a good and safe company. Cramer believes that stocks continue the direction they are headed most of the times. (I don't buy that completely).
5) Trading Stocks: defensive way to make money.
Trading around a core position: works in volatile markets but can follow any time. Then buy one increment if stock goes Y amount down and sell one increment when goes same Y amount up. You do this over a period of time. This means trading around a core position although sounds boring. Cramer made ton of money by this!
6) Hot Stocks: small company(low market cap + high growth) stock...if there are at least 4 analysts covering, then stock run is done. This formula has worked!

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