Jim Cramer’s guide to investing: Quality is key

CNBC’s Jim Cramer is sharing key investing tips he’s learned over his decades-long career. He stressed that when picking stocks, the quality of the company itself and its products are some of the most important factors to consider.

“Don’t be afraid to pay up for best-of-breed stocks,” Cramer said. “They may have higher price-to-earnings multiples than the stocks of lower-quality companies, but they’re also much less likely to blow up in your face.”

Cramer said he loves a bargain as much as anyone else, but only if it’s an actual bargain where the underlying merchandise is actually valuable. Buying junk merchandise at a low cost, he added, is not a real bargain.

“If you have reason to believe in a business, don’t dump its stock just because it’s not getting any traction for the moment,” Cramer said. “You’re not a hedge fund manager for heaven’s sake! You don’t need your positions to show a gain every quarter or every month or even every day.”

Being patient and letting stocks’ stories play out often pays off in the long run, Cramer said, recalling a time in 2016 when Apple stock had plummeted from $31 to $23 in a fairly short period of time. Many were giving up on the company, but Cramer said he assessed the situation and felt the company still had the key makings of an excellent stock: quality product, customer loyalty, revenue stream and cash position. Sticking with Apple and encouraging others to buy the stock at $23 has served Cramer well.

“Once you find a company that’s best of breed with a story you believe in, don’t let the bears scare you away, even if the stock is temporarily broken. Patience is a virtue and giving up on a value stock is a sin.”

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Disclaimer The CNBC Investing Club Charitable Trust holds shares of Apple.