- Keeping your emotions in check is the hardest part of being a successful investor, CNBC's Jim Cramer says.
- The "Mad Money" host reveals some of the worst recurring thoughts that can torpedo your strategy.
For CNBC's Jim Cramer, often seen as a fiery, high-energy financial guru, the hardest part of investing is keeping your emotions in check.
"For many of you, managing your emotions will be the hardest part of investing; harder than even picking winners, harder than identifying new trends, harder than knowing when to cut your losses," the "Mad Money" host said. "Why? Because the market is a harsh mistress."
Owning stocks is no walk in the park, Cramer said. Unless you can predict the future, mistakes are inevitable, and losing money can be really difficult to handle.
"You’d need the patience of the Dalai Lama to not get upset when you buy a stock and it falls off a cliff," he said, adding that he learned this the hard way while running his old hedge fund, when he would "flip out" on major down days.
"I was the opposite of the Dalai Lama," he confessed. "You did not want to be around me on a down day, especially if I was way too long. So I can tell you from experience that this is not a productive attitude."
And while not everybody has the patience of a Buddhist monk, investors can't afford to punish themselves when things don't go their way, the "Mad Money" host said.
If you want to be a stellar stock picker, you have to have your head in the game every day so you can spot opportunities and take advantage of them, he continued.
The worst enemies of stock picking, however, are the negative thoughts that tend to bubble up in investors' minds.
"There are a lot of harmful recurring thoughts you can have that will mess with your judgment, but the worst of the worst? When you think to yourself, 'If only, if only ...,'" Cramer said. "As in, 'If only I’d acted sooner on Electronic Arts.' Or, 'If only I’d pulled the trigger on Nvidia ahead of that quarter.'"
And Cramer knows the "woulda, shoulda, couldas" can be some of the most destructive thought patterns for home gamers and professional money managers alike.
To battle those thoughts while investing for his charitable trust, Cramer removes the stocks he made mistakes with from his watchlists on his desktop and smartphone so he doesn't beat himself up about them.
"You’ll be surprised how much better your decision-making becomes when you stop the woulda, shoulda, couldas," the "Mad Money" host said. "Without the right attitude, stocks will break you. I mean it. This is a brutal game, and you need to make sure you’ve got the right head space if you’re going to play it."
Disclosure: Cramer's charitable trust owns shares of Nvidia.