Stay in the Game

There are three forces that keep people out of stocks, Cramer said tonight: boredom, bummers and brokers.

Boredom is a big problem. It can be hard to keep focus when poring over a company’s annual report, the 10k, or listening to a conference call. You won’t be biting your fingernails like it’s a Stephen King novel or sitting on the edge of your seat like you’re watching The Matrix.

But homework is imperative. Investors have to do at least one hour of research once a week for each stock they own, Cramer has always said. Failure to follow this simple rule is a recipe for disaster.

So how do you keep yourself alert and interested? What’s the cure for investing ennui?

Speculation.

Cramer thinks you have to trade these high-risk, high-reward stocks if you want to be a good investor. The possibility of making, or losing, a lot of money in a short period of time should keep you focused on your portfolio. The excitement of tracking your most speculative names will most likely carry over to the rest of your holdings.

Think of it this way: If a nutritionist puts you on a diet with absolutely no cake or ice cream or other treats, your chances of success are slim. Sooner or later you’ll break down and head to Cold Stone Creamery for a “Cheesecake Fantasy.”

Investing is the same way. If you keep things fun, if you speculate from the beginning, then you’ll be able to stay interested, stay in the game and hopefully make some mad money.

Two quick things to keep in mind if you do plan to speculate on stocks: NEVER put a dime of your retirement money into a spec stock. Speculation is for your discretionary portfolio, and that’s it. And even when you’re playing with your discretionary cash, NEVER put more than 20% of your money into a stock or group of stocks.

Bottom Line: The stock market’s a great way to try to make money, but you need to be able to fight off boredom if you’re going to be a successful investor. That means speculation.

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