Catalyst Stocks

Friday, October 1, 2010

The Challenge of Stock Picking

Picking stocks is difficult to say the least. That is probably why you are here reading more about our stock picking service. Even the famous Jim Cramer struggles on a daily basis to pick stocks. One benefit of Catalyst Stocks is that our service is primarily based on a special system that eliminates human emotion from the process.

NEW YORK (TheStreet) -- "I can help you do better in the markets," Jim Cramer told the viewers of his "Mad Money" TV show Thursday, as he gave a behind-the- scenes peek into how he recommends stocks for the show.

He said it's all about picking stocks that offer the maximum gain with the minimum risk, and in an up market, that's not as easy as you might think.

Cramer said offering up stocks on "Mad Money" is a daily challenge, because getting it right is rarely noticed, but getting it wrong comes with great consequences. Cramer said he's always weighing the risk reward on every stock he pitches, looking at its ability to make you money versus the risk of losing it.

Case in point, Netflix (NFLX), a stock Cramer's championed since the stock got hit hard on a perceived bad quarter.

Cramer said he was tempted to re-recommend the stock after a powerful move earlier this week, but the risk reward was simply too great. The stock, he said, was just too risky after such a big move. Turns out, Cramer's caution was rewarded after today's market slide wiped out most of the company's gains this week.

Cramer said he was also leery of recommending Limelight Networks (LLNW) on last night's show after the stock had run $4.40 this week and 50% so far this year. Cramer said he grilled Limelight's CEO with tough questions to be sure the stock was worthy, but decided to only recommend buying the stock on weakness.