Cramer Highlights

• How to Play Defense in a Tough Market.
• It’s important to learn how to limit your losses.
• Rules to help investors play the markets defensively and avoid big losses.
• Stay Diversified. Diversification is the only free lunch in investing.
• Do not have more than 20% of your portfolio in any sector.
• Avoid having “two-of-a-kind” at all costs.
• Investors lost fortunes in the past when they sank all their money in hot stocks of the day like dot.coms, telcos and energy merchandisers (Remember Enron).
• Buy and sell slowly.
• Never buy or sell a position all at once.
• Instead, buy into a position slowly,
• Take advantage of weakness, and take profits on the way up.
• Your first loss is your best loss. “If your thesis on a stock changes, take the loss and sell,”
• Don’t let a trade turn into an investment by being afraid to sell.
• If the reason you bought a stock is no longer valid, you have to sell it.
• Dividends limit losses. Look for stocks that consistently grow their dividends year after year.
• As a stock’s yield increases, it attracts new investors and helps limit the downside risk.
• You need only ask yourself, “Is the dividend safe?”
• It’s always good to have some cash. Professional investors always have cash on hand.
• Cash is a tool that should be used to buy quality companies after big market sell-offs.
• Don’t own too many volatile stocks.
• More than one volatile stock in a portfolio is not being diversified.
• Be honest and ask yourself if you can handle the wild price swings before investing in a volatile stock.

Here’s the list of stocks from Cramer’s Mad Money Show for Wednesday, November 26, 2008.

Note: Dow stocks mentioned tonight: Thumbs up for HPQ!

Thumbs up for these stocks………….
BGC – General Cable $14.91 (up 27.44% today)
HON – Honeywell International $27.07
HPQ* – Hewlett Packard $35.21
NUE – Nucor $34.90
RPM – RPM International $12.26
X – United States Steel $29.90

Thumbs down for these stocks………..
EK – Eastman Kodak $7.71
NKE – Nike $53.25
STLD – Steel Dynamics $8.29 (up 10.83% today)

*A CHARITABLE TRUST STOCK.