Review of Jim Cramer's Stay Mad for Life: Get Rich, Stay Rich (Make Your Kids Even Richer) (Hardcover)

In Stay Mad for Life, Jim Cramer addresses a whole range of financial issues that he hasn't dealt with on his Mad Money TV show and in his prior books.He takes a step back from his primary focus of teaching his viewers and readers how to select individual stocks and presents his approach to broader issues of personal financial management that one deals with from cradle to grave.In this sense the book deals with quite basic topics such as avoiding or getting out of credit card debt (about nine pages), creating and following a budget (about twelve pages) and obtaining health and disability insurance.These topics may seem elementary, even boring compared to the topics of Jim's earlier books, but are issues that people of limited financial experience need to learn about.

On the topic of retirement planning he talks about the advantages and disadvantages of 401(k) plans and of traditional and Roth IRAs.He likes 401(k) plans for their employer-dollar-matching feature but dislikes their limited choice of offered funds and their associated expenses.He advocates funding your 401(k) only up to the point where you've reached the maximum employer match.Beyond that he strongly advocates putting additional retirement dollars into an IRA where the range of choices of investments is so much broader.

In the category of family finance he advocates getting your children interested in investing as young as possible and lists six stocks that you might want to buy just one share of for your child that might pique their interest.That same chapter covers college and home financing.

In his prior books Jim has created lists of rules for investing and he does so again in this book.These twenty rules came from distilling his experience with the investments he makes for his charitable trust that he often mentions on Mad Money.For example one of these new rules that I've found myself prone to violating is "Don't quit when you get back to even". If you've taken on a position in a stock and if the price then drops significantly, it's easy to feel so grateful if/when it comes back up to your break even point, you bail out with a small profit.Jim contends that if the fundamentals of the stock are still good, hang in there with it for additional upside.

In the next to last chapter, Jim really hangs himself out on a limb by selecting five sectors that he thinks will be strong for the next five years and climbs even further out on that limb by naming twenty stocks that he thinks will do well over that time frame.I'm a subscriber to his Action Alerts e-newsletter where Jim announces the buys and sells that he plans to make for his charitable trust.At the time of this review, 16 of the 20 stocks are presently held by the trust and the other four are stocks that Jim has mentioned many times on Mad Money.

In the final chapter Jim makes what must be a major concession for him since he's such a strong advocate of selecting and holding individual stocks.At several places in the book he recommends that if you really aren't willing or able to devote the time and effort to individual stock selections (remember - his tough homework rule is one hour per stock per week!) your next best choice is a low cost passive index mutual fund such as the Vanguard VFINX.However if you REALLY want to invest in an actively managed mutual fund, Jim has conducted research and come up with a list of 13 recommended funds. In doing this research he looked at historical fund performance for the seven-year period 2000-2006.He gives especially heavy weight to fund performance in the three down-market years 2000-2002.He also emphasizes the importance of the fund manager and considers only funds where one manager ran the fund.

I recommend the book for those wanting a good (strongly opinionated) survey of the major issues of personal finance.For those not so interested in basic personal finance, just skip the first five chapters and read the final four chapters which stand on their own and will be of interest to the regular followers of Jim's books and TV.




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