Cramer's 7 Deadly Investing Sins: Sin No. 6 - Dividends as Protection
Jim Cramer calls the sixth deadly sin of stock-picking "an incredibly sinful misjudgment." The belief in dividends as protection against downside pressure on stocks has proven to be a mirage Cramer told members of his Action Alerts PLUS club investors in an exclusive video conference call.
Cramer noted that for a long time both he and Action Alerts PLUS believed their positions in companies like BP or Schlumberger were protected from falling rates if they were yielding 5%.
Cramer also pointed to the example of oil and gas master partnerships, whose "giant distributions" have provided "little to no downside protection" for the millions of wealthy and retired people who owned them and whose holdings have been "decimated." In the end, it all boils down to growth.
"If a company has growth then its dividend can protect it," Cramer told AAP club members.
"But if it is in a no growth area - even if it is well-covered - there is no stopping the downward pressure." Check Out All of Jim's Video-Conference Call Cramer's video-conference call was only available to Action Alerts PLUS members, but you can sign up for a free 14-day trial and watch a full replay.
Joining Action Alerts PLUS gives you access to all of Cramer's monthly private video-conference calls and provides you with a host of other benefits, including: * A complete rundown of all of stocks that the expert holds in his charitable trust; * E-mail alerts that give you a chance to buy or sell any stock before Cramer makes a trade for the trust; * Custom research throughout the trading day from Cramer and his team of stock-market analysts.
You get to see some of the same research that Cramer and his team sees every market day as they make investment decisions.
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