Jim Cramer's Stay Mad for Life: Get Rich, Stay Rich (Make Your Kids Even Richer)

Jim Cramer's Stay Mad for Life: Get Rich, Stay Rich (Make Your Kids Even Richer) | Cliff Mason, James J. Cramer | Another Home Run

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Jim Cramer's Stay ...

	Jim Cramer's Stay Mad for Life: Get Rich, Stay Rich (Make Your Kids Even Richer) Cliff Mason, James J. Cramer Simon & Schuster, 2007 - 269 pages average customer review:based on 54 reviews view larger image
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highly recommended

New Topics for Cramer

In Stay Mad for Life, Jim Cramer addresses a whole range of financial issues that he hasn't dealt with on his Mad Money TV show and in his prior books. He takes a step back from his primary focus of teaching his viewers and readers how to select individual stocks and presents his approach to broader issues of personal financial management that one deals with from cradle to grave. In this sense the book deals with quite basic topics such as avoiding or getting out of credit card debt (about nine pages), creating and following a budget (about twelve pages) and obtaining health and disability insurance. These topics may seem elementary, even boring compared to the topics of Jim's earlier books, but are issues that people of limited financial experience need to learn about.

On the topic of retirement planning he talks about the advantages and disadvantages of 401(k) plans and of traditional and Roth IRAs. He likes 401(k) plans for their employer-dollar-matching feature but dislikes their limited choice of offered funds and their associated expenses. He advocates funding your 401(k) only up to the point where you've reached the maximum employer match. Beyond that he strongly advocates putting additional retirement dollars into an IRA where the range of choices of investments is so much broader.

In the category of family finance he advocates getting your children interested in investing as young as possible and lists six stocks that you might want to buy just one share of for your child that might pique their interest. That same chapter covers college and home financing.

In his prior books Jim has created lists of rules for investing and he does so again in this book. These twenty rules came from distilling his experience with the investments he makes for his charitable trust that he often mentions on Mad Money. For example one of these new rules that I've found myself prone to violating is "Don't quit when you get back to even". If you've taken on a position in a stock and if the price then drops significantly, it's easy to feel so grateful if/when it comes back up to your break even point, you bail out with a small profit. Jim contends that if the fundamentals of the stock are still good, hang in there with it for additional upside.

In the next to last chapter, Jim really hangs himself out on a limb by selecting five sectors that he thinks will be strong for the next five years and climbs even further out on that limb by naming twenty stocks that he thinks will do well over that time frame. I'm a subscriber to his Action Alerts e-newsletter where Jim announces the buys and sells that he plans to make for his charitable trust. At the time of this review, 16 of the 20 stocks are presently held by the trust and the other four are stocks that Jim has mentioned many times on Mad Money.

In the final chapter Jim makes what must be a major concession for him since he's such a strong advocate of selecting and holding individual stocks. At several places in the book he recommends that if you really aren't willing or able to devote the time and effort to individual stock selections (remember - his tough homework rule is one hour per stock per week!) your next best choice is a low cost passive index mutual fund such as the Vanguard VFINX. However if you REALLY want to invest in an actively managed mutual fund, Jim has conducted research and come up with a list of 13 recommended funds. In doing this research he looked at historical fund performance for the seven-year period 2000-2006. He gives especially heavy weight to fund performance in the three down-market years 2000-2002. He also emphasizes the importance of the fund manager and considers only funds where one manager ran the fund.

I recommend the book for those wanting a good (strongly opinionated) survey of the major issues of personal finance. For those not so interested in basic personal finance, just skip the first five chapters and read the final four chapters which stand on their own and will be of interest to the regular followers of Jim's books and TV.

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Another Home Run

I'm a longtime fan of Mad Money, and Cramer's made me some in the past. His new book is different from the last two, but it's just as entertaining with the same trademark Cramer style. I really liked his advice about 401(k) plans because I didn't have a clue about mine until I read this book.

Cramer does a good job of making some boring personal finance subjects actually seem interesting. I guess if anyone could do it Cramer could. Fans of Real Money and Mad Money will especially appreciate his new rules based on managing his charitable trust, and his list of the differences between professional and amateur investors. At the end of the book he actually gives you a list of mutual funds that earned his seal of approval even though he never talks about that kind of thing on the show. Overall, if you like Cramer, you'll like the book, and if you wish Cramer would talk about more than just stocks, you'll absolutely love it.

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Where Ego and Genius Collide

He says it in the intro: he may be teaching people how to invest because he is a nice guy OR he wants to be perceived as a nice guy. THat's the type of unabashed marketer Cramer is. Combined with his ego, that's one side of Cramer that shows up in all of his book, especially his latest- "Stay Mad". THe other side to Cramer is his smart investing sense. He takes positions long (like a good value investor) and he promotes individual knowledge about the stocks people invest on--a good bit of advice that alludes to my favorite social theories from the book The Wisdom of Crowds.

Cramer purports that "anyone can beat any manager" (financial managers) and it's true. Most managers are looking to make the once in a lifetime pick that turns $3000 in a million instead of the commonplace investment that turns $10,000 into a $100,000.

All good investment takes is homework, according to this book- and Cramer provides the first few lessons. Create a budget, save money, manage your own stocks (based on quarterly reports, earnings, and most important-personal knowledge of the stock). He hits on something I've always said- if you like a company enough to buy their products regularly- you probably should buy their stock. I did this with AAPL and have patting myself on the back ever since!

The biggest problem is getting to a point where you can save and invest money. The budgeting mentioned in this book helps, but there are other clever ways to increase your personal profit (How to Take Advantage of the People Who Are Trying to Take Advantage of You: 50 Ways to Capitalize on the System).

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Another one out of the park

Another ferocious effort from Mr. Cramer! Watching his show is fun but watching his books might be even better.

reviews: 1, 2, 3, 4, 5, 6, 7, 8, 9, page 10, 11

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