it's a good way to capture that. >> all right, d.r. horton. and steve, bring us home. >> you here tomorrow? >> i'm here tomorrow. >> i'm here tomorrow, too. crispr. if you don't know the company, look it up. >> all right, everything is anyofo when it's crisper. thk u r watching "fast money." i've had there is always work in summer. i will help you find it. men money starts now. >> hey, i am cramer. welcome to mad money and welcome to matt cramer. three me at jim cramer. i'm here to talk about stocks every night. he will make some mistakes in a

highly visible and highly public way. and by you, i mean me. i like to hold a day of atonement to help me learn from my worst mistakes. tonight i will demonstrate how we can all improve by examining a number of calls we have made on mad money and it's letting why they occurred and what went wrong and what you can do to learn from me and do better. what are the biggest errors that i see get made and how i will vow to try not to make them as different ones pop up to haunt me. most things i do are not rookie mistakes. that i suggest a quick trade that goes awry. anyone who has watched the show knows that i have moved away against trade and spend most my time trying to control you into investing.

daytrading or even quick trading because i think it will hurt your chances to make money. it's wrong to trade unless you are doing as a full-time job and even then, i would not recommend it. my mistakes have to do with not doing enough homework. terrific stats of savvy people who have been with me for some time. the investing blood. i am crushing it is there hundreds of public companies more now than when i started. it's the opposite of rookie mistakes that i'm making. veterans mistakes. overconfidence in areas of judgment and believe in what has worked before that it has to work again. blunders i make because i feel like i have seen the movie before and i know how it ends. one of the great challenges means in reality, it's like a sporting event where you don't know what the outcome will be.

just when you are sure that you do that is when you get a big upset. the worst errors that i have made have been with trust. trusting too many executives that told me not to worry about things, these are usually people with a lot of credibility. one of the perils of success, you can believe your own bs. there other executives i did not trust that they actually deserved a little more credit. i do this night of self- criticism and i do do it all the time, i do it to remind me and remind you, i come out here daily to try and get right. i fall trip pray to all of the misjudgments that anyone else might fall prey to. let me start with a story that gets me down and i let you down. too much faith in management's power to come over a difficult

situation. the tale of johnson & johnson. one of my favorite companies. probably in the summer of 2023. something has changed at the company or in the industry or the stock price target. if you are members of the club. we care about casing profits. as we teach members of the club they lose the trust and we detail the trades that the trust makes them. we want to contain losses. when you control your losses, your gains take care of themselves. we did not sell j&j because of the fundamentals. they have one of the best pharma pipelines along with -- no, we gave up with j&j because we were tired of being hostage to legal decisions. specifically, they were neck

deep in lawsuits. if it is one time key ingredient had trances of asbestos in it. 20 years ago i would've known that asbestos lawsuits equal sell. it has been so long since we had one of these. i forgot that asbestos is a magnet for claims disorders. they seemed persuasive and had good resumes. said the same thing about all the defense lawyers from the cases in the 1980s. when these lawsuits first exploded, i said that i know how to deal with this. after a considerable amount of research, they acted in good faith. they did not know about the asbestos. there might not of been asbestos in it to begin with. that was a misjudgment. since then, there have been in endless numbers of cases filed

against j&j. there are also lawsuits including a $2 million judgment where i wasn't taking the plaintiff side seriously enough. 20 years ago i never would've bet on a company involved in asbestos litigation. i forgot how tough these lawsuits were. many that i did not think deserved it. that has nothing to do with it. then j&j came up with the absolute strategy. as part of a global sediment that would up with this whole thing behind them and put money into the hands of the claimers. i started feeling hopeful. another mistake. the third circuit court hates these kinds of agreements. these bad settlements. that's what they think. how could i not see that coming? the lawyers were so optimistic and i was a fool to believe them.

but really when the travel trust that owns j&j we thought we were betting on the fundamentals of the company. we were betting on the litigation you never want to play that game. it is a game. in retrospect, i was -- through a novel use of the aggage of it. the bankruptcy side against j&j. the company found itself at the mercy of the lawyers. for the sympathetic clients. j&j was not in financial distress so they did not have the right to the back recourse. these would mount up leading to another procession of hard to predict verdicts. i finally gave up on j&j. it did not matter that i thought they were not particularly callable. what matters is that through this litigation they were on the hook for billions of dollars, incalculable in losses.

it is precarious because of lawsuits. this business is hard enough without playing litigation roulette with the jackpot justice system we have in this country but and want to discover that a runaway jury discovered that it belongs not to the stockholders but the plaintiffs. where the companies had it coming. i don't think j&j is one of them. so what? it doesn't matter what i think. imagine what the juries think. you don't bet on friendly juries when you are looking at a big rich company. it worked against j&j. this company should be allowed to file for bankruptcy. it was not worth hoping for as part of the equation. there is no telling how bad this one could be. bottom line, i like betting on businesses and not to lawsuits and lawyers. if you are betting on a brutal

set of lawsuits, do not bet on a few of the company. there better and easier ways to try and make some money. let's go to eric in florida. eric? >> you for taking my call. >> of course, eric, what is up? >> do you advise that investors take their first $10,000 and put in a low index fund? my question is, as we build wealth over time, the initial $10 thousand dollars from the portfolio inspected, if you're doing it right, it becomes less significant. what do you recommend that home gainers maintain in terms of that position? would you advise using the iw m? >> yes indeed. i think about more about the small investor than the larger one. if you save over time, do it so

that it is about 50% of your portfolio. then you can have some other stocks. maybe missing some bonds as you get older. i believe that the index fund is the bedrock. let's go to sean in massachusetts. sean? >> thank you for taking my call today. you talk about the s&p 500. my question to you is that i should change my current investment and my current plan to a vanguard 500% or should i change it up from what is in the plan? >> i'm very conservative. you want to be diversified. the index fund is best. i am incredibly conservative when it comes to retirement money. if you are betting on a brutal set of lawsuits do not fight it if you love the company. you must believe me when i say that there are better ways to

try and make money. i'm sharing the pain that i experienced in the years that i have been around. i have to tell you something. the best strategy on how to handle it is what you will learn tonight. don't fret. we will get through this together. stay with cramer. >> do not miss a second of mad money. followed jim cramer on x. send it jim an email or give us a call at one 800 743 cnbc. had to mad money.cnbc.com.

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in the market just like real life, failure is a brilliant teacher. what can we learn from my failures last year? when we talk about one of my most eye-catching fumbles in 2023. the 10 best performers of the s&p 500. to keep winning throughout the rest of the year. one of these stocks was called silicone valley bank. i talked to them in february, it was up 40% over the year. everything was fine. that was a huge and ridiculous mistake. kicking off the whole mini banking crisis for the year. you know what, i actually don't care. i'm tougher on myself than any of these critics could ever be. during a strategic moment. almost no one saw it coming. if you look back before the collapse, 22 of them had a

viral hold of the average price target of 222. congratulations. even the had a $90 price charter. it was a $90 stock. and to be sure, it was no excuse that anyone got it wrong. you watch the show because of me. i let you down. the silicone valley bank run shocked everyone. how did we get it wrong? the silicone valley bank did have a fantastic thing going. thanks to the footprint in the land of innovation. it became the bank of choice for a lot of this nation startups. they were doing anything and everything for the startups and these top guys. lending them money using the non-publicly funded stocks as collateral.

they expanded research and investment banking for the same type of customers. given the relationships with tech startups, you have a lot of reasons to believe that the strategy would keep paying off. for many years, it was incredibly successful. the average deposits grew from 20 billion in 2013 to 28 billion and then hundred 86 billion in 2022. stock caught fire as long as the ipo markets. an all-time high of 763 right before they declared inflation in 2021. it stopped plummeting below 200 by december. the aggressive rate hounds with harder rates to get startups funding. the more mature ones cannot become public to raise more

cash. the ipo markets were frozen. the analysts that covered this, i thought it was the sub stock price after it was under 200. why was i so optimistic it could go higher? when i talked about it a little over a month before it went under? the banking crisis is this came out of nowhere. after a great group of analysts sold themselves to these guys, i count on them to get it right. they're such smart people, i thought they had checked it out better. it seemed reasonable, it was wrong. i need to get it right for you. in january we got cooler inflation readings which led many of us to believe that the fed was winning the war on inflation. many thought that the fed would start cutting rates at the end of the year. i never bought into that, thank heavens.

if that had nfolded, the ipo market would've unfolded again and the s&p would've been totally fine. these ended up being flat out wrong. the economic situation turned on its head. we got stronger numbers on inflation started heating up again with a higher consumer price index. we realize that inflation was far from over. something that was confirmed before the bank run. you have to understand they had two problems and none of them were apparent until they smacked us in the face. the deposit base was way too concentrated. they took this money and they made some aggressive investments. with extra interest. they were underwater because of

the rate hikes that crushed bond prices. you just wait until maturity. big deal. when silicone valley banks -- they had to rule sell at huge losses. both a study source of capital. silicone valley bank had neither. a bad mismatch by the regulars. they needed capital badly but they could not raise it as the deposit outflows were coming fast and furious. the response was that the regulators see it closed. and that's what happened here. when we talk about early february, giving our best opinion on the story with the information we had last by the regulars. the macro economic situation

change and i wish i had circled back to this one and told you to forget about it. none of the sales analysts that i know at the time got it right either. we only learn how reckless the firm was right before the bank went under. spending their money that made them vulnerable to losses. i did not count on those who departed running fire in a crowded theater. who thought they would do that? two cursory and relying on public documents that were not vetted by regulars. we did learn that when the regulators were very strict, they were a lot more lenient with banks that were non- systematically important. bottom line here, many of us got silicone valley bank wrong. they have gotten a lot more

aggressive. we need to be better than the regulators are. i wish i had put more pressure than this one. when i get it wrong, i always atone for it. mad money is back after the break. >> i prepare like no one else so you can be prepared for anything.

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while we are on the subject, we need to talk about some trust issues. sometimes i am too tough on managements. right now i want to highlight a situation where great ceos can turnaround a broken company. there is no coming back from even if they bring in a tremendously wonderful management team. this is a process that can take

years and years. that is exactly what i did with the locker when they voted mary dylan as ceo. a cosmetic powerhouse that took over in 2013. in short, she is a legend. hiring her in 2022 she should be able to breathe new life into the struggling base. in march of 2023 she trusted would take a long time. she told a really compelling story. putting money where her mouth is. it was her ultimate match against footlocker. that is why we bought this one for the travel trust. in a small position. that was a colossal error. a mix of ignorance and arrogance on my point.

i knew that turning around the locker would be a big task. i thought that everything would be fine no matter how hard the story god. with how terrific ceos can accomplish incredible things here. some things are hard for the best executives in the world. the great man or woman theory of investing only gets you so far. it is not her fault that i got this one wrong. when i bought the stock, she had not been there long enough to accomplish much. this was my screwup. i like to pass the blame around to my colleagues and people that run footlocker, the buck stops here. i said that turning around full locker would be a herculean task. not a skill set. no matter how great the ceo, they cannot fight the loss of nature. that includes the retail industry. footlocker stock had been

obliterated. the august quarter made that look like child's play. cut us a little slack. i told members of the investing club that it would be a warble order ahead of time. that was an understatement. i had no idea how bad it could get. you see, it was one of the worst quarters that we have ever seen. the earnings plummeted 96% year- over-year. the locker's business was awful. management also has a pause in the dividend payments. a horrifying sign that they do not see anything getting better any time soon. a lot of people were here through the payoff year-over- year into the order. that was the best reason to stick with the stock. the wholesale pause to the dividends is another type of

confidence. that would be awful for the super seeable future. the consumer changing the vendor as they tried to get away from nike. one that was hurting the core customers compared completely hard. coming off of a strong holiday season. by december of 2023, there was a week start to after school season and a much more cautious consumer. they had to discount its merchandise. and compete for the market share. it got to the point where they were burning through cash so badly they might have to tap their credit line just to stay in business. losing 30% of the value every single day. any potential turnaround would take a lot longer than we were prepared to wait. by the time we figured that out, stocks were so low that it was not worth selling at all. the worst part is that i should've seen it coming.

i was blind by the mary dylan fantastic track record. this was a troubled company. it took time to assess the full extent of the problem. i still believe she is a great ceo. you never want to own the best house in a bad neighborhood. one of the guiding rules for the investing club. it was a bad house in a horrible neighborhood. it just happened to bring in a good contract to fix things up. there's only so much a contractor can do. when you are running a mall- based store, it is extremely hard to come back. american eagle outfitters, another one that i got wrong. shame on me that i bought a mall-based stock like full locker. i never should've stuck my neck

out on this one. sometimes leadership is not enough. i too much faith in a person and i was too blind to what was happening with a good management team. american eagle, where the worst ones i've picked in this experiment 20 years ago. if you bring in a new pilot on a crashing airplane, they cannot defy gravity. i will take an extremely long time. we never should've bought this one so early. it is an awful trade when it comes to investing and it allowed me to cloud my judgment like a rookie word, shame on me. let's go to mike in illinois. mike. >> hey, jim, thank you for taking my call. what's up? >> i want to open a 529 plan for my two-year-old granddaughter. i wonder what your opinion is where i should invest it where there will be appreciation for the next 15 or 20 years?

>> let's build up the nice position and index fund, probably what you want to do, but 35% in the index fund before you start thinking about individual stocks. i think it is very conservative time and that is what you want to do. index funds are the way to go. many in connecticut. many? >> thank you for taking my phone call. i am a member. i would like to know, if i buy the individual stock and it goes down, what percentage do i think about selling it? >> look, if we change the thesis about it, you should sell it. i don't like this one, i want to hold it for the long term, i think you should sell it. those are the guidelines. there are a few times i've said that before. erwin in new york. erwin. >> hey, jim, how are you? >> i'm okay. >> brooklyn. i have a question for you. you have a wide range of listeners and watchers.

with all the degrees in investment, i know you hate to have people with more than five or six dots. >> that's fine. that's fine. as long as you are excited about it. >> i have 10 stocks at various prices. i want to balance the portfolio. since i have 10 stocks and i have $10,000. it's very easy to pull $1000 into each of these 10 stocks. that does not seem like an equitable way to balance a portfolio. what is the proper way? >> you know i like to rank my stocks. not all of them can be ones, twos, threes, once you have to keep.

let's pick the stocks against each other and pick the best five. that is the best idea. thank you for your confidence. you should never allow it to cloud your judgment as it did mine. a rookie mistake even for a seasonal professional like me. we have a couple more bad calls that i made. including stocks in terrific companies like disney and boeing. we are about to take your questions about investing, retirement, and more. stay with cramer. way back in 1982 we took care of about forty kids

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all night i've been highlighting my biggest

mistakes. because i believe the only way you become a better investor is to acknowledge her screw ups and learn from them. i can't resist. we isolate what we did wrong. we atone, we adjust. we are all the better for it. that is the mad money way. it has been since we started. as long as i've been doing this, basically forever, you can not make it worse mistake than falling in love with a stock. that is how you wreck your portfolio. let me give you a cautionary tale, a love story. my bad romance with disney. not to totally mix diva references. warns us that the day we first met, you told me to never fall in love. i listen to demi when i first came to disney? no. of course i didn't.

i fell in love with disney anyway. when you fall in love, your disney -- your judgment goes out the window. between the theme parks and the movie properties in this dreaming platform. i did not consider the weekend balance sheet would overwhelm this amazing companies franchise. we stuck with disney through thick and thin. from early 2021 through the summer of 2023, lost more than half of its value. shameful. as the situation deteriorated, i refused to let this one go. it was one of my favorite stocks where i had one physical share of disney hanging in my office. if you give them disney, they will get involved in the market. unfortunately, this disney did

-- that turned out to be a massive overpay that i thought hurt you pristine balance sheet. this man was a bubbler. they spent a fortune building out the streaming platform. they started caring about profitability. he did not get a bad hand. but over time i figured that you guys thought it could improve the balance sheet with christine mccarthy. with who was control of the different divisions when they went wrong. as the situation deteriorated it became more unhinged from reality. that's how it sounded. he assured me over and over

again that things were getting better. i am a sucker, i believed him. in november of 2022 disney reported a truly abysmal quarter. at that point i started calling for his resignation. it did not take long for the board of directors to oust him. in his first few months back in the job, the stock rebounded like crazy. but then i spent the nine months trending lower. here's the thing. i believe that disney has a great set of franchises. the balance sheet has been fixed. i believe that he can turn things around now that he is working with some very smart activists investors to get costs under control. i can see him making even more progress with the balance sheet. with hulu can be bought without reaching. that's a big reason why we have

more of this one for the travel trust. it was a mistake for me to believe in disney when it was trading over easy. it was easy to keep giving him the benefit of the doubt when he did nothing to earn it. even the best franchises cannot overcome cash flow shortages. the ill-advised purchase of fox should've made me cut and run. with broken stock for multiple years. this was far more important than the franchise itself. even then it took some time before the business started turning around. and the stock kept going lower for the better part of the year. here's the bottom line. no matter how fantastic a company might be, do not fall in love with its stock. unless you give serious consideration to the balance sheet. it is like marrying someone

with horrible credit. you will be paying for that mistake for ages. i believe that disney will come back? yes. but that's not the question. i was in love with a piece of paper. nothing that should ever happen. mad money is back after the break. all right. 60 seconds to draw the perfect gift. what's it gonna be? a bottle of don julio, 1942, delivered.

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nothing worse than making a call and then crushingly horrible execution. you know why? you got frustrated and impatient and you could not wait for the thesis to play out. the unforced error that the trust made with this stock,

boeing. core for the travel trust coming out of the pandemic. we thought that 2022 would be the year. we thought they would get the grounded aircraft back in the sky. this was the ironclad thesis for one special simple reason. matter how bad they screwed things up. there are only two major manufacturers for aircraft. airbus cannot fill all the orders. either they wait forever or they buy from boeing. if it is at the right price, you will be a winner. the airlines desperately need that. the order book would swell and the earnings would go through the roof. when you think in the long view, that is more or less how it played out. you would've made a bundle over the last 12 months.

the problem is that is not when we bought boeing for the trust. this story ended up taking longer than we expected to play out. he continued to do what it does best, mismanagement that it is comical. when this company drops the ball, planes crash and people die. no matter how bad that they messed up. the demand coming from the airlines. that these are the only two that can meet the scale. i was right. when the stock went up as part of the post vaccine rally. just patiently waiting for the travel market to kick in. causing a wave of orders from the overburdened airlines. i had to plug my ears and ignore all of the negative

press. that is hard to do when the company in question gives you reasons to sell. it became more and more favorable to my bold thesis, they kept dropping the ball. after these horrific accidents, it was taking them forever to retrofit these planes and get them back in the sky. thousands of these jets were still grounded. even though the warders had started coming back. when they finished fixing the 737, the aviation administration made them hold on the dream wire. from the spring of 2021 through summer of 2022, they could not actually sell them to customers. they could make a boatload selling just to china. china is desperate. they needed to show if they

have any way to demonstrate any kind of friendship with that country, boeing is the way. one of our trading partners to set out the olive branch. with this many congressional districts as possible. creating jobs for members of congress is how they keep the orders flowing. the warders did not comment another source of frustration. if i stuck around, the chinese airline thesis finally paid off. i did not have the fortitude to wait it out. boeing wrote ported a hideous quarter. expensive raw materials. and the company had another top and bottom line miss. they even messed up on the air force one contract.

at this point, they had huge credibility problems. what does management do to fix things? they move the headquarters to chicago. finally, i just gave up, i could not take it anymore. it was like torture to me. we sold boeing in the spring of 2022. right when we should've been buying at discounted prices. i did not have the patience or the pain tolerance to think of my original thesis that was dead right all along. the whole idea was no matter how badly these guys drop the ball, they will make a fortune for the upcoming bull market. we sold the final shares for her hundred $21 in may of 2022. if we had stuck around for the

last 12 months, we would see it shoot above $200. if you believe in your own thesis, you cannot let the naysayers turn you away. did i miss the spectacular rally because i did not trust my own work. the moral of the boeing story is simple. if a thesis looks like it will play out, do not let the unrelated negatives scare you away. i was not a reason to sell. it was a reason to buy. only if you had the fortitude to stick with it. i didn't. >> boo yah, jim. you are the bully yah saint of wall street. wall street. maybe that is a lot of boo yah

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my favorite part of the show is answering questions. he is going to help me answer some of your most burning questions. for those of you that are part

of the investing club. you don't need an introduction. insights on the back and forth help me to do a great job for the mad money viewers and members of the club. the yen and the yang here. let's get started. first up, a question from pete in michigan. how does this apply to the trades. a lot of times when we have a bad day it challenges the thesis. when i come back and say it is okay to have a cheat day. this is what i've been working on. yes, we have been pigs, theoretically with apple and nvidia. those stocks are not piggish if we look at forward numbers. it turns out that it is cheap and it justifies owning it. just by keeping this much, that

is a subjective question. i have often felt that it is okay to say, it's okay. you can trim it. these are stocks. >> what i would add to that, when we look at the trim, it is at a certain point when the stock becomes too large as a percentage of the portfolio for the out percentage. we have average about 33 stocks in the portfolio. just to pick on apple. we trim it back and it is because we had a good run. >> it is actually a nice discipline we are pushing. i have been doing a lot of profit-taking. 50% cash. right now, i will tell you, here's the way i look at it.

when we had these situations we are interest rates have spiked and when the markets are oversold, the oscillators that we have specialty over for our subs, you can sneak a pass. the market must be down, we do not pick hi, we pick low. i'm not saying to go and take that from the market. >> that's exactly it. the average if you do have the cash position into the market. doing some type of regular schedule. that's what works. >> a paycheck, monthly, something like that. you will get the best prices over time. >> remember, when you have the situations where everything is going wrong, it only takes one thing to go right.

you understand when you're at 5%, you will miss some opportunities. 5% is great if you are already rich. 5% does not cut if you are not. all right, let's take a question from bennett. what is the aximum exposure to any stock? we do not want more than 10%. the sector is a little harder. >> you can always try to follow the s&p 500. i will give you a first example. we listen to the fed. keep rates high for longer. we know that those stocks tend to underperform as rates go higher. you can do some mixing and matching within a period.

>> we try to do much more than this for the club. we tried to use the stocks as more of a teaching moment. this is representative of what >> right now on "last call" how a top chinese e vvment maker put elon musk on notice and maybe the entire american auto industry. a love gold the metal striking a record-high. is it still a time to bhooi? open season on open ai will a "new york times" lawsuit upend the boom? a feast of fees. if you think the cost of your food delivery is skyrocketing you are not crazy. wait until you see the numbers. plus america's best and worst airports we will break down