Mad Money was a taped show on Friday, as Cramer returned from his trip to Georgia Tech yesterday. He listed the 5 most important things that amateur investors should do to make money like the pros.
1. Have cash on hand to buy stocks when the market goes down and good stocks go on sale. Cramer recommended having 10% in cash in your portfolio.
2. Focus on downside risk as well as potential reward.
3. Only buy stocks you understand.
4. You can make too much money, because it probably means you overexposed to one sector or stock. The example Cramer gave on the show was the dot-com era where everyone was investing in tech stocks.
5. Don't try to game the earnings report of a stock. Cramer did some backtesting and found that earnings season produces the smallest profits and biggest losses of the year.
Cramer said if you follow these rules, you'll be able to make some Mad Money!
