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What Cramer learned at Goldman Sachs

(Click for video linked to a searchable transcript of this Mad Money segment!)


Jim Cramer has enjoyed a storied career. And part of it involved working at perhaps the most prestigious brokerage on Wall Street.

"I had been courting and been courted by Goldman Sachs for three years before I got a job in what was then the Securities Sales Department, helping individuals and small institutions manage their money," the "Mad Money" host said.

Of course all that Jim Cramer learned at Goldman Sachs could fill a book. (It's called Confessions of a Street Addict).

Some of the many lessons Cramer learned are below.

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"Goldman is where I began understanding the process of actual money management," he said. "That is, the ability to build a portfolio from the ground up."

This is something Cramer advocates time and again. Pick stocks that present the appropriate mix of risk and reward that works for you.

Cramer also said at Goldman, "You have to know your stuff." Complete education about a company, its business, it's leadership and its prospects are a must. (Read More: Single Most Important Investing Concept)

Also an unexpected turn of events illustrated just how important it is to understand whether a stock is a trade or an investment.

"I had a real cantankerous client who I had worked hard to get," Cramer remembered. "At the time I liked Kimberly-Clark, the paper company. I told him that I thought this one would be terrific for his portfolio. He agreed and I bought him 1000 shares. Almost immediately it went up 8 points. I had a winner. So I called him and said 'I want to ring the register and sell.' I thought he would thank me. But he was furious. He told me that I had said Kimberly would be good for the long-term, that it could have great gains over time, and that he wasn't the least bit interested in only making $8000. Then he questioned my integrity and wanted to know if I was churning him, a horrible charge meaning that I was just trying to generate commissions."

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Although it's never wrong to take profits, in this example the stock was intended to be bought as a long-term investment - not a short-term trade.

Events outlined above were also an accidental lesson in humility.

And humility, Cramer said, is another important tenet of investing.

Nobody is infallible and everyone makes mistakes. The trick is to have a plan in place in the event the market turns against you. Never get caught off-guard.

Call Cramer: 1-800-743-CNBC
Questions for Cramer? madmoney@cnbc.com
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