Never Buy All at Once

If you want to be a good investor, Cramer says, you can’t be arrogant. And the single most arrogant thing you can do is buy your whole position in a stock at once. You should never buy all at once.

Here’s an example: If you’re going to buy 100 shares of Boeing, the smart and humble thing to do is to buy 25 first, then wait. See if the stock pulls back, buy more on any weakness, and patiently wait for good entry points as you gradually build up your position.

When you buy your whole position at once you’re basically declaring: “This stock will not go down any further from here. In fact, it’s straight up from this moment on.” When you think about it that way, it seems pretty arrogant, right? If you buy all at once, and then the stock dips, you feel like a moron – and you should, Cramer says. If you were a little more patient and a little less arrogant, you could’ve waited for the dip and bought more of the stock at a lower price.

Now, your broker might not like getting these little incremental trades, but you’re in charge with your broker. Don’t let yourself be rushed because your timing will never be perfect. As long as you acknowledge that you might be buying at the wrong time, and hold off on buying more stock in case you catch a break, you should be fine.

Bottom Line: Don’t be arrogant. Don’t buy stocks all at once. Be patient and buy incrementally.

Questions? Comments? madmoney@cnbc.com

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  • Jim Cramer

    Jim Cramer is host of CNBC's "Mad Money" and co-anchor of the 9 a.m. ET hour of CNBC's "Squawk on the Street."

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