Unlike clothes, home electronics and other material goods, stocks cannot be returned and refunded for the price you paid. That’s why CNBC’s Jim Cramer said investors need to know which stocks best match their needs before they buy.
“I want you to ask yourself, what is your tolerance? How much risk do you want out of a stock?” Cramer said. “With digital brokers, there’s no real protection, just a signed form that says you get it. You may not know what you’re getting into.”
When Cramer first began giving market advice, he would often leave a general message on his answering machine naming his top stock pick for that week. Soon after he started at Goldman Sachs, however, one executive heard his message and called him back. The executive explained that before recommending a stock to someone, Cramer had to understand the individual’s needs and level of risk tolerance.
Cramer’s bottom line: Be more aware.
“Caveat Emptor? No. Just, buyer, be a little more aware of what you might be committing your hard-earned dollars to when you purchase a stock.”
