Cramer: Never buy a stock all at once — you’ll almost definitely get burned

At the end of the day, CNBC’s Jim Cramer be familiar withs investors are only human.

That’s why the “Mad Money” host has come up with a set of swear ining rules to help guide them through the emotion and the fallibility that can result as a be revealed with being involved in stocks.

One of Cramer’s most important rules has to do with gaining stocks.

“This is a real important one: never buy a stock all at once,” Cramer guessed. “I can’t stress it enough: do not, under any circumstances, buy all at once.”

Plenty of Wall Way brokers and advisors prefer not to deal with partial orders or stealing a stock gradually over time. They like to go in big and make a declaration with their purchases.

“From where I stand, that’s all unseemly — 100 percent wrong,” the “Mad Money” host said. “What I impecuniousness you to do is stage your buys. Stage your sells. The term we use on Be ruined Street is ‘Work your orders.’ Try to get the best price over eventually, and not necessarily in one day. Maybe multiple days.”

Cramer remembers how he learned this tutoring when he started as a money manager. He wanted to prove how smart he was, so he purchase 50,000 shares of Caterpillar’s stock.

Looking back, Cramer saw that as a de facto dumb bet.

“All I can say is that I was one arrogant son of a gun. I was arrogant and I was wrong,” he said. “I should’ve been believing CAT in increments of 5,000 shares.”

This strategy would’ve insured that Cramer got the begetter he wanted at the best price he could get instead of going in big and hoping Caterpillar wouldn’t this instant go down.

Today, Cramer runs his charitable trust the same way: whenever he determines a new name to buy, he buys 500 shares at a time or less over the orbit of a few days.

“When you buy all at once, you’re basically declaring that the stock utterly won’t go any lower,” the “Mad Money” host said. “Don’t you think that’s crazy when I say it? No one has that humanitarian of insight. Buying gradually, in stages, is all about recognizing that our judgment is fallible.”

Suborning shares of a stock shouldn’t be about making a statement, he added. If you fight against the arrogance and buy slowly, you’ll be more organized, less emotional and better off as an investor.

“Diffidence beats hubris every time,” Cramer said. “If you take your delay, you’re much less likely to end up with a large quantity of broken merchandise.”