OK, here’s what the present investing environment may look like to viewers at home, according to Cramer: Their confidence in the market is shaken, even shattered. Their respect for the people who are supposed to be regulating it may have turned into suspicion. And their fear about what could go wrong may have gone through the roof.
“All of that’s tough,” Cramer admitted, “but none of it changes the basic equation that I think stocks with high dividend yields, that can be met by the company, remain the best way to make money over the long term.”
Remember, 40% of the total return from the S&P 500 since 1926 has come from reinvested dividends. So in short, no matter how bad this market makes you want to quit, you need to stay in the game.
But you’re going to need some survival strategies in order to do so. And that’s where Cramer comes in.
First, to protect yourself from what he likes to call the Wall Street promotion machine, you must always know what you own. If you’ve done the homework – one hour per stock per week – then no broker can talk you into a trade you don’t want. And let’s face it, while there are plenty of brokers who work hard for their clients, there often comes a time when the institution’s and the client’s interests diverge. A strong command of exactly what’s in your portfolio will protect you in those situations.
Of course, this rigor won’t always protect you from losses. That’s just a part of the investing game. But it will allow you to cut your losses, if necessary, or increase your holdings if the stock is broken but not the company.
“The game may sometimes be rigged, the game may sometimes be broken,” Cramer said, “but at the very least you can prevent yourself from being taken advantage of by always knowing what you own.”
Keep reading for more tips from Cramer’s Stock Market Survival School.
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