d draft kings. >> dan? >> let's go with starbucks. >> guy? >> we were just breaking down rudolph the red-nosed reindeer. oracle on the selloff, mels. >> thank you for watching "fast money." "mad money" my mission is simple, to make you money. i'm here on the level playing field for all investors. there is always a market somewhere, and i can help you find it. matt money starts, now. hey, i'm kramer. welcome to cramerica, i'm just trying to make a little money for you. to put everything in context, call one 800 743 cnbc. investing isn't easy, but it can be a whole lot easier and much less bouncing with a little instruction.

the whole business manage -- by all the arcane technology and authentic wall street gibberish -- boot! you have to learn -- if you're not familiar with the jargon, the investors could summit there speaking in a tire differently language. -- investing is too hard for you, that ordinary people just can't do it. at the sea one safest thing to do is to give your money turned pro. hey, that's a huge reason why i started my -- when you joined the cnbc investment copy, we can show you that you can do it yourself and teach you how it's done. of, course maybe giving your money to professional is a right move for some of, you have, course we have the time, if you put a little effort, if you do the homework, i think you can do at least as well as the pros or a low cost index fund, possibly a better comparison. and [inaudible] the fact of the matter is that the financial industry is full of people who are just --

their interested in taking your money then in making you money. and if you're hedge fund or mutual fund manager, trying to fund-raise, you have every incentive to keep regular people sadly ignorant. why would they make any of the investing stuff sound accessible when they can make it sound impenetrable? if it sounds too straightforward, it's hard for them to raise money, and harder to convince people, convince you, to pay high management fees. they call it the wizard of oz. they don't want you picking at the man behind the curtain, they don't want you to understand this because if you did, you take control of your own finances. you to pick your own stocks, and don't pay someone else, potentially exorbitant fees to do the things you are perfectly capable of doing yourself. and in all the years of doing the show, i knew you can do it. and that's where i come. and i'm pulling back the curtain and explaining everything. because while authentic wall street gibberish can sound complex -- boo! even impenetrable, it's not rocket science or brain

surgery. you don't have to go into business school or go to an investment bank to understand it. -- we throw around here as long as you have a translator, a coach, like me. who can explain what the darn words mean. i want you to think of me as a defect. someone who played for the other team, and -- money with my own hedge fund, but who's now playing for you. teach you how to navigate your way through the minefield of the stock market every week night here on mad money. and of course, constantly for the cnbc investment cup. forget about the da vinci code, forget -- the code talkers. to be a great investor, first, you have to bring the wall street code and i'm here to help you crack it! that's why i'm tonight i'm giving you my wall street journal brush to plain english dictionary. consider the most important terms you have to understand african effectively manage your own stocks. i want you. two words and concepts that many people in the financial industry don't want you to get your heads around because then you might actually feel empowered enough to pull your

money out of their expensive mutual funds. [applause] even if you're not a pro, you may not know enough, so why not take advantage of my 40 plus years in investment experience to give yourself an extra edge? let's start with a couple of extremely important terms that go hand in hand. cyclical and secular. you hear these all the time. no one but me ever bothers to explain what they mean. even though they're crucial when it comes to being stocks. cyclical has nothing to do with the spin cycle on your washing machine or wagner's recycle. somewhat in classical music. and -- secular does not have to do with the church versus the state, or the -- hook first crack the second clicker washing machine joke that i still remember after 50 years. secular is -- it depends on the business cycle, cyclical, cycle. so --

any kind of raw materials plus most of the industrials are cyclical. the humbler's are cyclical, the commodity camel mayors are cyclical, you want a bunch of copper and iron and b h b, that's the definition of cyclical. these companies are all hostage and destitute's of the economy. one economy heats up, they are in a lot more money. and are willing to pay more for those earnings. when the economy slows down or shifts into a recession mode -- they earn a lot less money. investors pay less for their shares. i would say cyclicals a boom and bust names. secular growth company on the other hand is one where the earnings keep coming regardless of the economy's overall health. think everything you eat, drink, brush your teeth, but or use medication. you have consumer staples that are probably. gamble food companies, like general, mills the drug companies like pfizer, or, merck or eli lilly, these are classic recession proof companies. you want to buy, when the economy slows down, investors

flocked to companies that can generate safe earnings unless the gop wants to -- take over the world. because you won't stop eating food or brushing your teeth just because of recession. okay, so why is the secular versus cyclical distinctions so important? why is it the first piece of world wall street jargon i'm translating for you? because i want you to figure out how much companies can earn in a -- the guys who have so much cash to throw around that they're buying and selling pretty much defines the whole market. at least in the short term. the whole hedge fund playbook is -- or secular ones, based on how economies around the world are doing. this is what drives the decision-making process. in the old days, 50% of the performance of any individual stock came from its sector which is just a fancy word for the segment of the economies -- machinery, health, care finance. and when it comes to sectors much of the moves are driven by what they fall into the cycle

or cycle canyons. it's much more than 50%, and that's really thanks to the rise of sector etfs. you don't want to -- these talks will be crushed, but the earnings tend to fall apart as they have during every [inaudible] including chinese slowdowns and there's nothing you can do about it. what you're gonna do? by the same token, when business heats up in the cycles are all doing well, nobody wants to go in the boring consistent secular growth, hence the food and the drugs, and you won't make as much money and them during the periods of other. you have to accept them. you're not a traitor, you just accept it. you want some secular stocks and cyclical stocks in your portfolio, but you can never be sure where the economy is headed. but when business seems like it's booed me, you want more cyclical investment, and when business looks like it's falling off the cliff, you want more secular exposure. the bottom line is -- it isn't, usually it doesn't

have to be mystified. you just need to know the language, you know the difference between cyclical and secular growers and always stay diversified. shannon alabama, shane. hey, jim. thanks for taking my call. absolutely. when building a balanced portfolio, is the 60 40 rules still fundamental, and how much have that percentage should be in cash? okay, i'm blowing out all of that. i think we want to bet against -- brig and a bet against ourselves, we want to bet with ourselves. i'm betting that people are gonna have a long life, hopefully all happy life, so we're buying and keeping a lot of stock right almost to the end. when your 60, 70, i still think that's young, i think you should have 70% stock. i know that's higher than what i usually said, but i think you're not gonna get the return from bonds then people want and i'd rather have you and stop and take it down to 30, and then 20. 30 or 20, and if the -- depending on how you feel about yourself, i want you to be thinking about living long and that --

order. that's my psychology. joseph in florida. joseph! hey, jim. has a? going hey, jim, not to. bad thanks for. calling i'm not doing too bad, i wanted to get some insight on a 5 to 9 plan or index fund for my one year old child, derek. so you, see 539 plan is perfect and put it in a low fee, and -- i did that for my kids and they are eternally grateful. and are gonna do it for years. to how about edna in new york, edna? hi, mr. cramer! a new member of your investment club. and -- my husband and i were active investors. i want you to be informed investors, absolutely. how can i help? i actually rolled over and called employee i.r.a., it's brooke's account, and have 20 to 30 years before i'll need the funds. right now it's sitting in the money market account, earning

5%. so would you recommend i put it in and s&p 500 -- here's what i want you to do, i want you to take, starting, now every month, to get 12 of that money and put it to work. we're not gonna put it all to work in one level. 1:12. and then we get to, if we have a really bad month, i want you to double down and put one sixth in. and when we're finished and the third and fourth quarters, we'll figure it out whether you need to have a little more cash. but that's how i want you to invest that money, that's a long term money and that should be in stock, not bought. but overtime, not all at once. investing isn't easy, but it is enough to being miss fine. you just need to learn the language. forget the merriam-webster. i'm going to help you learn the language all of wall street speaks -- i'm crack-ing on the show to help you navigate more and take charge of your portfolio. that's what i want, so stay with one cramer.

don't miss a second of mad money. follow j cramer on x. speak -- send cramer one -- or call us call out one 800 c4 three cnbc. miss something? head to mad money dot cnbc dot com. booyah, jim! i love you,. man i've been watching you since day. wind i've learned so much from your show. i watch your program every day, i love it. i always want to say buoy on your show. thanks for being the greatest in the world. we consider you the money market maker, and we thank you for all you. do i love your show. we think it's the most entertaining program on tv.

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translate the cryptic and occasionally unfathomable terminology that makes buying stock so darn difficult. yet i'm giving you the phrase book to navigate your way through the world of investing. what we call the michelin guide of fine stop dining. considerate of the televised encyclopedia of -- like an impossible task. the process of picking stop shouldn't see master difficult to say was conducting triple bypass surgery yourself. or if you don't have to be stephen hawking or albert einstein to understand the stuff. the way that post talk about stocks, i sure that einstein would have a hard time understand what they're trying to say. now i explain that there is that local companies and -- that need a healthy economy in order to grow. versus secular growth that stick to the pace, okay? they consistently expanded about the same pace regardless of where we are in the business cycle. how you have to sell this and by secular growth when the

economy starts to slow? and in the reverse, it picks up steam. this is the playbook that all the hedge funds use. and even though these hedge funds can often be hey like herd animals, well abuse who often by themselves the same stocks of the same time, they operate this way because their playbook works. the reason for that has to do with another piece of wall street gibberish, lexicon, you absolutely must know that if you're going to get pick stocks by yourself. it's called price to earnings multiple. or piece e multiple. or just the multiple, the referred to the same thing and it's the cornerstone of how we value stocks. when you hear -- overvalued or undervalued, they almost always talking about the price range -- when you hear someone say that pepsi is more expensive than coke, they don't mean that cooks cheap as its trip trading in the 50s as pepsi is -- to make any kind of apples to

apples comparison, you take a step back. see when you buy a stop, your actually buying -- paying for a small piece of a company's future earning streams. that stock is. to value stop, you have to look at where it's trading relative to the earnings per share, which are often see rendered as eps. that's what the multiple allows you to do. here is the basic algebra, not even math, but every fourth grader should do. the share price p earnings per share p for -- e each multiple by m -- from 19 times earnings. we don't care the pepsi come see maybe at the top 60, five we hear that itself at -- footed another, where the multiples a special source of evaluation. the -- how much bigger the earnings will be this your relative to this, year and the year after, that and the after that. on and on. the --

higher price range models, why? okay, remember the multiples are all about but were willing to pay for future earnings. and more rapidly business pros the biggest earnings will be down the road. so if a -- stock sells for -- it doesn't make it more expensive than a store-bought study grower like pepsi at 20 times earnings. the faster grower actually deserves the bigger multiple. here's where it gets really interesting. pressed earnings multiples aren't static, in different markets, people pay more less for the same amount of earnings. when they pay more, we call that multiple expansion. and when they painless, it's called multiple contraction. two more terms that sound much more complicated than the really. are for example, when interest rates skyrocket making the bond market competitional of more attractive, we see market wide multiples contract because everybody's future earnings recently worthless by a comparison. of, course earnings aren't static either. when you buy a stock, you're either making a bed that the easy, or the m part of the

evaluation equation is heading hard. so what goes in the earnings? how do you make sure that they're increasing, not about to collapse? here's some more vocabulary. when you hear people talking about a company's bottom line,. or perhaps their net income, they mean the same things, earnings. we call the bottom line because the number is the bottom figure in a company's income statement. when you want to figure out if the company's earnings will bring the future, you want to find clues -- that's one always telling you to listen -- we do the homework for you in the investment company, but all of the [inaudible] stuff one to get in your head for future earnings trajectory, you need to look at the top line. oh, boy. another analysis airy piece of wall street journalist, it's interchangeable with -- or sales. they mean the same thing. he want to see strong revenue growth which tells you that there is demand for companies part, this is the key of the ability of most businesses to grow their earnings long term. and that's why it's especially important for younger smaller companies to have fast growing

-- investors will pay off or accelerating revenue growth. 's accelerating revenue growth, our means that the sales are growing at a high rate, a more mature company, should be able to return attorneys into profits by cutting cost and [inaudible] we on the top line in the bottom line, it's crucial to consider the growths warned you which is in no way discussing the -- tells you what's left a few sub strapped the cost of goods will from the sales. it's a key profitability metric. to figure out the gross martins you have to consider the competition. the course of production, and the cost of doing business in general. businesses with cutthroat competition, like supermarkets tend to have terrible margins, while virtual monopoly, like microsoft, they are obese in some industries the margins can widen. take the oil business where the margin is going up and down with the voice of crude -- energy employees for retail,

too much of oil precious price down. too much retail's forces stores to discount their goods aggressively to make a space for new merchandise, but then what we call matching killers. here's the bottom line, you need the cavalry before you can evaluate the. stop look at the price to earnings multiple. the growth rate, the top line, the bottom line, and the gross margins. i know this might sound basic to many of, you but i'm here to educate people, and i don't want anybody trying to pick stocks without a firm understanding of the basics. it's another great reason, by the way, to join the cnbc investing cop. mad money is coming up after the break. coming, up finances full of five dollar words, but don't despair, kramer is breaking down the wall street lexicon. some key terms made easy. next. good evening, mister cramer. thank, you thank you for everything you. do you've been such a wonderful source of information

for your teachings, off to say thanks. thank you for all your advice and saving us from ourselves. you got me to quit a job i hated. elevated. f thank you, thank you for making -- thanks for keeping us from losing money. why are we the only birds heading this way? [ screams ] we're trying to get to jamaica. stay close and... everything will be all right. i'm ok. i'm ok.

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the biggest ideas inspire new ones. 30 years ago, state street created an etf that inspired the world to invest differently. it still does. what can you do with spy? ♪ tonight i'm going into pen a teller mode, despite the overly complicated complicated sounding to brush that you might -- not understand. i want to translate the most over used, under explained terms in the business. consider the show your wall street to english dictionary. a televised glossary that will help you navigate your way through tough markets and a

tough selling terminology that keep so many people out of stocks, not doing myself justice and i've got to help you to understand this stuff so that you can be better. of, course joined the club is going to health. again, all this investment from terminology sounds difficult because -- they wanted to sound difficult. they're the opposite of me. they want to terrified, they want you feeling totally ignorant. and i complete loss when it comes to -- my mission is just the opposite of there's. i'm here to try to enlighten, you to teach, because i know you can do better for yourself than the professionals. i've been doing this for 40 years on wall street, i know this stuff. most of the professions, they want to your fees. i'm not taking anyone else's money, and i don't -- i give away my winnings to charity. and i'll walk you through the whole process of running the trust for the cibc investment club. it's the anti establishment. it's not -- you don't have to come out here and tell you what stocks i like,

you can't own them if you don't understand. know what you own is one of the must, it's a cardinal rule. if you don't have a good grasp on what you own and what you are -- when your stocks turn against, or at some, point they will. you can't know when to hold them and know when to fold them -- we have to know what the heck it is that your actually holding or what might make you fold. of, course in a profusion of our terminology and bolstered it makes it harder to know what you want. so let's continue your vocabulary lesson with another ultra important piece of verbiage, that's never explain to you even though it's used constantly. risk, for forward. the risk for reward analysis -- let's break it down to its component parts. assessing risk is all about the downside. how much you potentially stand to these any given stop. how much the -- means figuring out the potential upside, how much the stock could bradley if

everything goes right. too many investors only focus on the potential upside when they're analyzing stocks. and that's a great, great mistake. it's much more important for you to understand the risk side of the equation because there's the pain from a big loss hurts a lot more than the pleasure from an equivalent skies game. trust me. but how exactly do you figure out the risk reward? okay, these are determined by two different cohorts of investors. the report of the upsides are defined by how much worth -- willing to pay for stop. they create the time. the risk, the downside is created by value oriented many measures. but value oriented many measures -- create the bottom. to figure the rest, gift to figure out where the -- need to think about where even the most foolish of growth guys will starts telling often way out. when asked, i -- five, up three down. but how do we get there? how do you know we're growth many measures will start

selling it for you guys will start by? okay, you need some insight for how they think that that requires translating another piece of is a tarik wall street lingo, it's called growth at a reasonable price. i believe. this growth as a reasonable price. when we talk about growth at a reasonable price, it's not subjective, it's a method of analyzing stocks by the legendary peter lynch. and -- if you want to figure out the maximum, the growth guys will be willing to pay for stop, need to be able to look at the world according to carp. you cannot learn more from peter lynch? it's, easy go to amazon and buy -- or beat the street. it's one of the most important investment books ever written. there's a dirty rule thumbed that's never -- a knee down, although there are exceptions, it can help us realize when a stock is overvalued or undervalued based on what the growing fit -- the stocks probably cheap. and you stop selling out a

multiple that's more than twice the size of its growth rate -- due! probably too expensive. so -- 20 times earnings and has a growth rate of 10%, then it probably doesn't have much upside. it's reached the two times growth ceiling, always remember that. there is another piece of wall street jabbers that can help simplify the process. the puck russia, the peg, that's the price to earnings to growth rate. where that p e multiple divided by a stop's long term growth rate. a peg of one or less is extremely cheap. and two or higher is prohibitively expensive. a high opting's to prevents grower can go for 40 times earnings and still be expensive because even as a 40% plus long term growth rate, giving it a peg of just one right at the cheap end of the spectrum and -- it keeps you celebrating, sending the stock to a new high after new high. that makes sense. where do i come up with these numbers? observation. the value investors will be attracted to stop selling you pays of one or less creative

floor. you should be able to find a buyer for stocks multiples at are below its growth. rate the growth investor should be -- more than twice the growth rate. a peg of two which means that there's almost no way the stocks go higher. so stick with the example of google back when it still held the mega growth mojo. but 30% long term growth rate, it might become a cell if you bring it up to 60 times earnings, just too darn high, as i've learned, over and over again since the show begin or so many years ago. if any of my methods or anyone else, for that matter, this one is rough approximation. a bit of subjectivity. it's useful, especially when you're trying to figure out the risk reward. but it's not always right. and it only applies to companies that trade on earnings, not unprofitable companies with stocks to trade on sales. plus, stocks will often get cheap on an earning simply because the expenses are to. how you see this all the times going on the slowdown. in those cases, the stock to

trade will trade well below the growth floor. it will keep sinking, and sinking. the fact that it looks cheap is a value trap. it's not -- on the other hand, the best time to buy a cyclical stocks, is when the multiples look out to be expensive because the earnings are too low and have to race to catch up with reality. that happens when the economies bottoming and about to rebound. the bottom line, know what you own and know what others will pay for. that means you have to understand the risk reward. the potential downside and potential upside before you purchased anything. by figuring out where the growth investors put in the ceiling and where the value investors create the floor. nicholas in abbottabad. nicholas. how is it going, mr. cramer. i'm from las vegas, nevada. i'm a college freshman in california -- i'm looking for some quick advice and personal i guess advice on how to run that. from a freshman's perspective.

i'll tell, you you're young and that means you have to go with higher risk stocks and i typically talk about on the show. maybe some's board capsule, some biotech, some companies that are on the ground floor of a.i.. i do want you to be loaded up with companies that are older because you have your whole life to make it back if they go away. a lot of our older viewers and middle aged viewers cannot afford that to happen, so go with high risk, potentially high reward stocks. mark and i will mark. mark? hi, jim. i'm a happy club member and thanks for taking. michael thanks for being a member of the club, is terrific. how can? help jim, i have a real estate problem -- question for you. higher interest rates make it more difficult for families to afford a new market. what effect will this have on each containing single and multi family units? i think they're gonna be under pressure and i think it's natural that you asked that question and it's one of the reasons why i'm not recommending any of the stocks because you correctly have thought about what is the

nemesis of those particular stocks. as long as you understand the risk reward, the garb and the peg ratio associated with picking stocks, you are much better prepared to know what you own and know what you're -- others, more importantly, will pay. for much more in mad money. do you know the difference between a rotation and a correction? i'm not done cracking the wall street code. and you better be scenic with professor cramer opens the -- my colleague jeff and i take your burning investment questions. so stick with cramer. coming, up what begin best meant less and can you learn from a bottle of milk? kramer is working till the cows come home. keeping it here. booyah, jim! -- the saint of wall street. boo yeah, jim! jimmy. jim bowie yeah, jim! that's a lot of cars.

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a lot less stunting then it seems we have a chance later, someone like, me who can help you to coat the intentionally obscure to criminology to talk about stocks all the time and that's why been giving you my televised wall street gibberish to english dictionary so you can see through the mystery and understanding of -- after get to the essentials of investing, is the most important thing i can do. that's what i do for a living. so far i've been explaining if a complicated sounding pieces of jargon that are actually pretty simple, stuff we do every day at the cnbc -- there's also plenty of other

terms that are much less simple than they appear. take the notion of a trade versus the notion of investment. a lot of people say that these words are interchangeable, there is no difference, but that can beat for the from the truth. they're distinct and in the immortal worlds of those 90 stop guru's offspring, have to keep it separate. isn't this just splitting hairs? nothing that's recommended -- gaza as a t word of the day, that might send you searching for real dictionary. no, a trait is not the same as an investment. and if you treat the one like the other, if you treat a trade, if you turn a trade into an investment, greg in my first commandment of trading. then -- rocky three, my prediction for your portfolio is, paying! well you buy a stop for a trade, you're buying for a specific catalog, a future bid that will drive the stock hard. and -- he will deliver better than expected numbers. i don't recommend trying to game earnings. there's just too much chaos and

confusion individual earnings report, which can cause the stop to be -- even though it delivers stellar numbers. the cars can be some news or event you're trying to project for example you -- or even just some critical trial data that you think we deposited. these are data points that can send the stocks soaring if they go your way. when you make a trade going into a, to know there is a moment to buy before the cows, and a moment to sell, after the cows. sometimes you trade one more, count you may be waiting for something to happen. or the day -- expecting simply turns out to be less positive than you expected. anyway, when you buy stuff as a, trade it has a limited shelf life. it is only been briefly wanting to own it. when the window passes, you must sell. hopefully you turn out to be the right, and will be the right game -- no point sticking around. bring the registry and lock in your profits before they evaporate. but if you turn out to be wrong, guess what? you still need to sell. i want you to think of it like this, when you buy bottle of, milk you don't drink it past

the expiration date, right? you also throw it away. you can't just buy more and called it a large investment because without the catalyst, you have no reason to own the darn stop and you, never ever should own anything without reason. i watch an analysts -- they come up with alibis for sting and stop long after its expiration date. it's really fooling themselves into believing that during the right thing, and then more often than not they get crushed. remember, without a catalyst, you don't have a trade. if you find yourself in that position, then you better sell and cut your losses. no catalyst, no point. and investment, on the other hand, is based on long term thesis. the idea that a stock has the potential to make you serious money over an extended period of time. you are not just banking on one specific catalyst, you're expecting many good things will happen in the company is not too distant future. that's landing skews to buy stock and forget about it. investments can go wrong to. which is why i'm always telling

you to keep examining your stocks if you buy them. that's called by and homework, not by -- of course, we help you with the homework for trustees at the c and b c investment club, so if your investment goes down in the short term, it makes sense to buy more in -- you don't bring the registry after the first time the stock jump surprise, with an investment you're looking for a longer, days larger gains. what to do is you measure it not in terms of trade and cell, but a much longer period of time. and again, that is what we do at the investment club. bottom line, the -- sum of it is deceptively simple, like the distinction between a trade and investment. don't confuse them. remember, they're not the same. and it's a big mistake to turn a trade based on a catalyst whether it's successful or unsuccessful into an investment, which is a long term bet on the future of the business. back up to. break coming, up if only

the market were as reliable as jim dimaggio. when the -- cramer explains, next. last call on cnbc. (carolers) ♪ iphone 15 pro, your husband deserves it! ♪ (mom) carolers? to tell me you want a new iphone? a better plan is verizon. (dad) no way they'd take this wreck. (carolers) ♪ yes, they will, in any condition. ♪

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street gibberish to plane in, listlessly shun guide edition -- all i explain is the arcane and as a terror concepts and financial jargon to help you become a better investor and make the whole process of managing your money less on doing. what else do you need to? no here is another dreaded

misunderstood term in the business, a correction. what a euphemism. a correction is after the markets been warring it turns running crashes. they can feel like the world was ending of course, and -- you never want to own and never another stop again in your life. and that's precisely the wrong reaction. it may feel harmful but -- all the time, especially coming off a major run high. think about this, the more it goes on the 60 -- that doesn't mean you'll never make money again, it doesn't mean that it will be pulverized, it means that it goes too far too thick, and that's why you should expect corrections. you can even have been the bugs and -- and rage beating the spring of 2023, and you shouldn't be yourself up for not

anticipating it. so i will -- you don't have to like him, i know. but you need to acknowledge that they'll manage no matter what. so you should get flustered or adverse panic when they smack you in the face. but -- execution, this is a tough one because it's completely subjective. when we talk about execution, we mean managements ability to follow through with its plans. when the owner stop, there is all sort of risks associated with -- failed new product coins, bad cause controls. there are a number of ways that a management team can screw up and businesses practically infinite. that's one of the reasons why like companies with proven mac two teams, because there is much less likely to make these kinds of unfortunate errors. and it's a big reason why it's so important for you to pay attention when i bring ceos on the show on interviews, there is -- you want to hear what they have to say about the business firsthand. on the show.

this notion of execution is also crucial when it comes to understanding why it's worth paying for best of the companies. the top players on any given industry almost -- expensive than they're cheaper competitors but they are worth the price. -- and we're gonna figure out how to solve them. probably know the last piece of wall street jib, rush the rotation which is just one money flows out of one sector into another. or one big group into another big group. like a cyclical to secular rotation. the kind of thing you get when the economy is soaring, so the cyclical goes out of style. this is probably untie pedicle to what you were told -- right up your own stocks, by the way this is what the convention -- you're not supposed to be able to beat the market until they're so short and you should find high quality companies and stick with them through thick

and thick. eventually, if you hold that long enough, you'll make some money. this isn't -- this is a brain dead philosophy that i spent so much time trying to debunk to you. it's a zombie ideology. even though it's been -- i don't want to discredit the markets performances -- that doesn't mean you should play the rotation game and, not at all. remember the need for diversification, another piece of vocabulary, which means making sure that you don't put all your eggs in one basket, one sector basket. to, me your more diverse than no more of -- in any single sector, that way you won't get annihilated if for example a sector of rotation takes you cyclical stocks, because of some secular growth names that are holding up much better, or making your money at the same time. it will, tech very bit. because -- don't be afraid of rotations and corrections, don't be intimidated who by people who use the words. executions a crucial factor when it comes to picking

stocks. you want companies who are proven, a seasoned, management teams that are less likely to drop the ball. stick with cramer. >> kramer -- handle your most urgent questions. the floor is yours when we return.

i always say my favorite part of the show is to answer questions directly from. you i'm bringing in jeff parks,

my colleague who's gonna help me answer some of your branding questions. so those of you are a part of the investment club -- for those of you who aren't members, i hope you will be soon. and i would say that just insights and our back and forth will help you do a better job for you. so please, i want you to join the club. tonight jeff and i are covering all grounds, and answering some of your email question, so let's take some calls. and you from new jersey. hey, andrew. hey jim, is the kramer, booyah! how are you? doing not bad, how are you? >> doing pretty good. i'm a 66 year old guy, ex tech guy and low about dividends and this cash environment right now, i may have more for requests than a question, and i wonder will be able to do that in the future. i was wondering if at times you could do more of a contrasting, acknowledging that you're not a

text adviser, but acknowledging more often which companies, which investments have the -- turned extend capital gains for income tax brackets range from anywhere to 25, 37%. some of the higher and people -- part of my question, real extra credit, is as we approach the end of the year and we do a lot of tax harvesting about the -- tax purposes, would you ever go so far to say this star recommended a hole that if you think i got the 40-day watchful, maybe you want to sell it harvest a lot and then bite back for 30 days? >> these are probably interesting issues. and i've gotta tell, you my first book i wrote, do not fear the taxman. what matters are the quality of the stocks.

i would not ever sell a stock if i thought it was gonna be great for a watch cell, again, if it was gonna be great. and i really don't want to sell any stock bases on maybe it might be long-term, short term. jeff, i think we're investing. and reinvesting for the long term. and if a company does poorly, we sell it. and if a company does, well we don't touch it. and i don't think that attacks person should figure into our equation. no, of course, our capital gains and devoted income and -- each here gets donated to charity. but if you do have a specific talent to seek a text adviser, it will -- were more focused on how stocks are performing. people can be in different -- let's go to kevin. jimmy, booyah. >> boo yeah, kev. whatsapp? >> thanks for helping millions

of people build themselves into a better investor. you are single-handedly responsible for encouraging millions of americans to get into a stock market who otherwise would not have myself included so thank you. >> you made my day. >> i appreciate everything that you do for all of us regular people. jimmy, quick question, my child had only -- price, volume, and o b t, or on balance volume. i'm sitting on a few ten backs and 1:30 back, jimmy, if you were forced to choose only one tool on your chart which one would it be? >> okay what i would check is to see the oversold over bought. this is to, down is a too far up, i would use the same thing for stocks i wish we had an isolated for the stock exchange. i wish we had an isolated -- stop, that's what i would be

looking at. >> i'm not a technician so it's a little harder for me to say but i think also moving averages is something technicians often, quote, so that will be my -- >> that's the stuff that -- william says that i really like. >> let's go read some emails. let's start with diane in ohio, and she says, i mean nope is -- at the stage of not owning as much as does desired, how do you balance taking profits and building position? things. if it -- you missed, it you didn't get it. that's okay, we'll get the next one. otherwise, what you do is you build it all the way down and pyramid style and what you'll do is you will have a better base to try to prove the basis, provide the thesis and still write. and that's what matters. >> i think just because it's a smaller position, that doesn't mean you should break discipline and be greedy if the stock has a huge.

run we also don't want to chase talks either just because it's small and you think it may go higher. you want to discipline it, it comes back, too. >> i hate having to wait. i hate having to build a pyramid. it doesn't matter. this is not a game of emotions. it's a game of empirical analysis and it's worked. all, right let's go to chris in illinois who asked, who addressed the -- based on -- this is another one where it's different from most people. but we do as we look for good companies. and if the companies are, good we don't care about the sector. we don't have all we want to write stocks and if we won the -- it's not the way we think of things. >> more diversified, but if there is a mega theme that we like, electrification, clean energy, infrastructure, then

we're not opposed to investing more heavily in that space because there are multi year trends that are seeing a huge fall of investment dollars. >> that's why you joined the club, or unconventional, but we are -- >> i'm jim right now i last call, a michael milliken exclusive. the investing legend joining us for a rare wide-ranging interview. u.s. production hitting a record. couldn't help send global prices tumbling? oracles share sinking right now. the economy is popping, but the presidents poll numbers dropping. plus, big pharma fighting counterfeit drugs.