In more than three decades of investing, Jim Cramer has learned some valuable lessons. Sometimes the hard way, and sometimes just from having common sense. He has now decided to open up his lesson book to share his most effective lessons with investors, too.
One of his rules is that it is OK to pay taxes. Some investors despise having to pay "the man." However, Cramer has learned that sometimes the least of your worries is related to taxes. So never, ever allow the abhorrence of taxes to transcend good judgment.
Many investors choose to hold a stock for more than a year, because they are then subject to paying a more favorable long-term capital gains tax. If the position is sold in less than a year, then they are frequently required to pay short-term capital gains tax that can be a higher tax rate. However, Cramer says taxes are never a good reason to hang on to a position.
For instance, in March 2000, when the Nasdaq was at its high, he told investors at his hedge fund that he was going to sell out of his common stocks to buy bonds. People were startled as he had never made a call like that before.
