As an investor, it is hard not to like Jim Cramer and if you read his books you will gain plenty of ideas on not losing money and more importantly making money. He wrote a book called Get Rich Carefully published by Penguin Books, New York, 2013. One of the wonderful things Mr. Cramer does is tries to ensure you do your homework before investing.

The hardest thing to do in the market is to sell unless the company is doing really badly, but in reality someone is on the other side doing the buying. Lessons on when to sell or view better opportunities:

1. When the thesis changes, cut your losses immediately.  – You bought the stock for a reason based on research or homework. If the reason changes, other companies in the same industry can be great alternatives if you want to stay in that sector.
2. Don’t risk it all for a small profit – if you see the sector is in danger, move to alternatives.
3. If a stock goes down on great news, just sell it.   Good news should send prices higher, if the market sends in lower something is changing in the sector that you need to exit.
4. Upgrade clusters should be sold, not bought.  If the stock is moving higher because of the upgrades of the analyst, what happens when they are all bullish? If the next quarter is so-so the movement of the stock will be downwards.
5. Beware of multiple shortfalls – if one company falters, look at the alternatives, if they falter sell
6. Sell stocks that don’t participate in rallies – if you own multiple stocks and the market in general goes up 1% look at your companies did they also go up? If the market rallies the next couple of days did you stocks go up? It is a good time to sell because the market is buying other things.
7. Sector woes = sell.  All stocks are in sector baskets, if all the stocks in the sector are going down, then it is time to go to alternatives and wait for the bottom based on earnings. Then you can buy back in at lower prices.
8. After the crash, no financial should be given the benefit of the doubt – it used to be the banking industry was a wonderful sector to be in. The new rule is if you get bad news, do not battle it just exit the company.
9. Retailing’s tough- bad comparable store number means to sell – If the company is not selling inventory, it will be even harder the next quarter.
10. De-diversification can be costly – if you are diversified but to close to one commodity – prices go in cycles and the market will go down.  Watch your portfolio and try to stay really diversified.

Linking to dividend paying stocks, there are other lessons from Mr. Cramer’s book but it is sufficient to say listen to the market and the market is right. If you do your homework, always try to buy the better companies, you will do better. If you do not sell, ensure you are getting a dividend because the price will go up and down. To follow Mr. Cramer’s is to follow growth patterns because Wall Street loves growth. For the longer term, investors love stability and dividends. For best results, have cash and be ready to buy when the best stocks are lower in price and watch as they rise in the near future.

There are more questions than answers, till the next time – to raising questions