CNBC’s Jim Cramer began his professional investing career at Goldman Sachs. While there, he began to learn the basics of how to make money on the market, namely the importance of figuring out one’s individual investing goals and keeping a diverse portfolio.
“From my early days at Goldman Sachs, I learned the core principles of investing, finding solid ideas to build a diversified portfolio to create long-term wealth in a way that suits the customer,” he said. “Consider yourself the customer of this show.”
At Goldman, Cramer handled nondiscretionary accounts, meaning he worked on commission and needed clients’ approval to invest their money in stocks he deemed worthwhile. In this role, he discovered the importance of being able to clearly articulate investing ideas before making any moves. He also learned that it’s essential to figure out an investors’ goals when building a portfolio, such as whether they can afford to take risks or would rather make safer investments.
It’s also crucial not to turn trades into investments and vice versa, Cramer said. Investors shouldn’t stick with or try to justify a losing stock, but when they’ve made a good pick, they should let it run. He also came to understand the value of diversification. When he first started at Goldman, he and his clients were eager to invest in oil. But when the price of the commodity eventually plummeted, those with oil-heavy portfolios got crushed.
“But you know who I really learned from? My customers, chiefly wealthy individuals from all walks of life,” he said. “At Goldman, I learned something that, to this day, can’t be understood by so many professionals in this business: Individuals can and do beat the market quite regularly.”
