One individual that has help me to understand and make good choices in the stock market has been Jim Cramer. I’m sure you heard of him and most likely if you’re looking to invest in the stock market, you’ve watched his daily show on CNBC. There’s a lot more to the man and his philosophy than just his one hour show Monday through Friday.

The latest book that he’s written about the stock market is titled “Stay Mad For Life”. The title has is a play on words in regards to his show, Mad Money.

The book starts off with Jim explaining in detail how you need to start preparing for retirement without foregoing the needs of the present. A great message that many of us never received growing up, either by our parents or by school. How many of us were ever taught as teenagers to understand the concept of compounded interest or basic knowledge of personal finance?

He continues by showing us the importance of enrolling into a 401K plan has soon as possible and that the longer you wait, the more money you will miss out on in the long run when it’s time to retire. He writes about how to properly invest and to be actively involved with your retirement fund (he refers to it as retirement capital) and dispels some misconceptions about how certain employment funds can help you.

In the next section he talks about investing for a lifetime, not just investing for your later years. Investing for your retirement and not for the present is something that he goes into detail with and what you can do to make that happen. Explaining the difference between stocks and bonds and how a balance between them will help you.

He writes about the importance of family finances, especially for those with children. The need to teach your children while they are young about money and how it works. Going into specifics about home ownership and getting the right mortgage for your investment.

He also has released twenty new rules of investing. Along with his other rules and his ten commandments, they will give you a clearer picture of what you need to do when investing in the stock market.

Revealing the five bull markets along with twenty stocks for the long term is a section in the book that I found very interesting. I’ve looked back at these stocks and over the long term they’ve have done great and are well-run companies that should continue to do the same in the future.

In his last section he goes into detail about mutual funds. This section is great for those who don’t have large amounts of capital to get started growing their portfolio.

All in all, I found this book to be very informative and I recommend it to anyone wanting to invest in the stock market. I’ll be going into more details about each chapter in later posts but for now I wanted to tell you about a great deal that I took advantage of myself.

After I tried the free trial of Action Alerts Plus investment service, I got so much out of it that I joined for the whole year. Along with my paid subscription, I received Mad Money for free!

First, click the banner below, or the one in our sidebar, to sign up for his 14 day free trial of Jim Cramer’s Action Alert Plus.

After the two weeks are finished, if you sign up for a yearly membership you’ll continue with this great service and get Mad Money for free.

If for some reason, you’d rather just go ahead and buy the book right now, click the banner below. You can purchase it through amazon.com’s secured server. After you read it, tell me what you thought of it.

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Earnings reports are quarterly releases that a company will put out to their shareholders to inform them of their progress over a period of time. The period of time is three months (henceforth, quarterly) where the company did business and either made or lost money during that time.
Along with them reporting their past three month performance, they also give guidance to where they believe the company is going.

Wall street analysts who follow the company will put together their estimates as to what they think the company will announce in regards to their earnings. They look at the company’s past report to see if their estimations were correct and also take into consideration what the economy is currently doing. They look at if the company has had a new product come out during that time and how well that product is moving. They will also look at the company’s competitors to see if they are taking business away from them.

After all the information is put together, they release their estimate on what the earning per sharewill be for the company. If the company’s report is in-line with the estimate, it’s looked upon as a good thing providing that the guidance for their next quarter is a favorable one. The company can also, what Wall street refers to as “miss” their earnings report, which means that they made less than what the analyst predicted. When that happens Wall street will look unfavorable towards that and you will see the price of the stock drop and in some cases drop a large amount. If the company “beats” the estimate and gives a great guidance report as well, you will see the price per share jump by a big percentage gain.

This is where you can make some big money within your portfolio.

In the fall of 2007 a company by the name of Research In Motion (NASDAQ:RIMM) was about to release their earnings report. If you’re not familiar with the company, they are the manufacturer of the BlackBerry cell phones. I was following the company for a few months already and knew the the report would be a great one. The company didn’t miss their last four earnings report and their phones were selling like crazy during the summer months.

I went ahead and bought 200 shares of the RIMM stock a couple of days earlier when the priced dropped for just a day and waited for the report. When the report was released, it not only gave a great earnings, but also stated that it would exceed their previous predictions for the next quarter. In that day alone the stock went up $12 per share and continued for to climb for the next two days.

The reason I shared this story with you isn’t to show off, but to let you in on the different ways to make money in the stock market. Like I stated in the beginning of this post, there can be some costly mistakes as well and I’ve lost thousands of dollars in some of my other earnings report plays. The only way that I feel comfortable with trading on the results of earnings reports is during a bull market. My advice is always to do your research and due diligence on every company that you want to invest in.

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