>> fake news not going to happen. not going to happen. >> so another deal stop, dish network. everyone forgets about this stock including myself it is up 58% for the month i think it can go higher >> all right, everyone thanks very much for joining us here on this final trading day of the year. happy new year my mission is simple. to make you money. i am here to level the playing field for all investors. there's always a bull market somewhere and i promise to help you find it. mad money starts now. hey, i'm cramer. welcome to mad money. my job is not just to entertain, but to put it all in context. call me at (800) 743-2622. i am constantly on the show telling you that discipline

always trumps condition. i tell you that over and over and over. no matter how much you may love a stock, if the rules say sell, you sell it. one thing i have learned from my investing crew, no matter how much you might believe something you violate the rules of the road at your own peril. that's why we obey them religiously with channel trust. they have become the core guide for the cnbc investing club. where do these rules come from? it's not like they were handed down from high. they are not like the lost physics. you can't just reduce gravity. the roles come from experience. that is right. i have spent over 40 years in this business and in that time you had better believe i have learned powerful lessons. in many cases i did have to learn them the hard way. i want you to have the benefit

of my whole career. i will lay out some of the most important roles for investing. some of this stuff may seem basic, but you forget the roles at your own peril. i occasionally convinced myself it was okay to make exceptions, to have a cheat day or ignore my discipline. whenever i broke my own roles i almost always got burned. it's like the old joke about the guy that goes to the doctor and says, hey doc. it listens when i stretch out and shake my hand around. the dock replies, don't do that anymore. so what exactly should you be doing or not doing? let's take down my most important roles. we will start with the first one. bulls make money. bears make money. pigs, they get slaughtered.

i say this all the time because so often in my business i have seen moments where stocks went up and up and up so much that people were intoxicated. they thought they were geniuses. however, it's at that moment you need to remind yourself that you do not want to act like a pig. i have had some legendary partners in an amazing hedge fund. i made a lot of money, perhaps too much money and maybe i was being a pig. i had no idea what he was talking about. i was just grateful i caught a major gain. not long after we had a vicious selloff. i gave back everything i made and then some. that's when i enshrined the bulls make money, bears make money, pigs get slaughtered thesis as one of my own roles. it is so deeply ingrained that i have a barnyard full of sand affect buttons to tell the whole story. the bowl, the bear, the pig.

just to be clear the same idea applies to people aggressively on the short side. we have had some major declines over the years but other than the.com bust in 2000, most stocks bounce back pretty darn quickly. even in the meltdown in 2021 you had to turn positive because if you push your luck by staying too long you got sent to the slaughterhouse. so the questions. how do you know when you yourself are being a pig? allegedly there's no such thing as stupid questions. only stupid answers. you don't need me to tell you you are being a pig. if you did not feel grady in 2020 and 2021 you needed a psychiatrist. if you took profits you sidestepped a huge decline. if you let it ride you gave a

lot of money if not all of it back. if you are walking around with a huge amount of stock in 2008 you were beyond piggish. why is this so important? simple. one of my chief goals is to help you stay in the game. the hardest part is holding on through the difficult times taking short-term pain so you can have long-term gain. that's what's happened for a century. the people that got wiped out in 2022 were the ones hat never took anything off the table. there piggish nice they never felt it so they got slaughtered. being cautious and ringing the register near the top ended up keeping you near. it is just so impossible to catch it at the top. that's why remind people have you taken any profits, or are you being a pig? you never know when the stocks you on will crash. you can't

have certainty. if you assume the stocks will keep going up forever and a straight line, you are in the house of pain. sure there will be times when stocks just go up and up and up, but i coined the term for facebook, google, i loved them all but i did give up on amazon after an incredible run. it did continue to move up another 15%. i did feel like a pig. when i felt -- i felt like a fool after it kept galloping. that is just the price you have to pay for following the rules. i have been a pig but the. did not get slaughtered. >> it was torture to watch it

go up without me. it was tricky to get back in. for every pile of cash that gets left on the table there are 77 gigantic losses which you would've had a few left everything on the table in 2008 or late 2021. hopefully i'm trying to preserve the last one. never forget, bulls make money, bears make money, but pigs yeah you get it. i will keep repeating that forever. i will keep using the sound effects. how about rule number two. i see people on the street and almost everybody asks about this one. it is okay to pay the taxes. nobody ever likes paying taxes. you know death and taxes are unavoidable. the aversion to paying taxes on stock market warnings often

borders on the pathological. people have gains but refused to take profits because they don't want taxes to cut into it. wall street is littered with broken hearts of investors that made this mistake. several years ago, for example, i went to a presentation from a prominent hedge fund manager that recommended buying macy's. the stock had run up quite a bit before the presentation. i knew people that wanted to ring the register but they would have to write a check to uncle sam and they would have to worry about how much that was worth. then macy's saw the stock get cut in half and it was not a 2 for 1 split. the darn thing got obliterated. that those that did not want to share the profits with the irs ended up with no profits at all. some gains are simply unsustainable.

a profit on paper is not the same as in your bank account. you have not made any money until you ring the register. the last thing you need is to worry about capital gains and taxes. when it is time to sell, sell. stop fearing the taxman and start fearing the loss man. bulls make money, bears make money, pigs get slaughtered. don't be greedy. be disciplined. don't be afraid to pay the taxman on profits you have earned. let's go to tyler in california. >> how are you doing? >> i'm doing well. how are you? >> i'm doing good. thank you, sir. i don't know how many times i've sold a position and the next day our two watched it reverse. i would like to know, when is a good time to reevaluate and cut my losses? >> i think this is a terrific question. i know when i bothers jeff

marks endlessly. what you do is try to look at it once, just once. i don't want you to get down. you will miss other opportunities. what you're looking for is a change in the margin. it is something set on the quarterly conference call. you don't want to just get up in the morning and decide you want to take the loss. wait for something definitive. if there is a bump up don't be afraid to change the position. how about robert in minnesota? >> thank you for taking my call. >> my pleasure. >> when i retired my company let me keep my 401 which is a time dated fund. it's a corporate rate but it has limited choices. my question is, should i switch it over to a managed fund with another company like fidelity or et cetera with a higher standard rate and more options? >> i am big in favor of the s&p 500. i think it will be terrific.

that is what my retirement is in and that's what you should be fine. i think it will be fine i love the diversification. bulls make money, bears make money, pigs get slaughtered. don't be greedy. be disciplined. don't forget to pay the taxman on profits you have earned. coming up, i'm hitting my investing roles that i think are the key to mastering the market. you don't want to miss it so stay with cramer. >> don't miss a second of mad money. follow jim cramer on x. send an email to matt money at cnbc.com or give us a call at (800) 743-2622. miss something? go to matt money.cnbc.com.

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at the end of the day you are only you. if you only remember one thing about being investor that is a. nobody is perfect and everyone is fallible. it's inevitable we will make mistakes. that's why you need to follow a set of roles that are designed to protect you from yourself. that brings me to my next commandment. this is really important. never purchase all at once. do not under any circumstances buy your whole position at once. ucs practice this constantly. the only reason i think you should join the cnbc investing club. nobody likes to fool around with partial orders. no financial advisor has the time to buy these stocks. the goal is to get the trait done in one level in a big way

and make the statement buy and get the position in the portfolio now. where i stand that is all wrong. 100%. you should never buy all at once and you should never sell all at once. the new stage the buys and work the orders. i wanted to prove to everybody just how clever and smart i was when i first started in this profession. if i felt like buying i would go big all at once and make a statement because i was so sure of how right i was. put me up on 50,000, i screamed as if i were the smartest guy in the universe. i think back to that young cramer with a full head of hair and i was one arrogant son of a gun. arrogant and wrong. if you want to get 50,000 shares of caterpillar you don't get them all at once. what happens if it goes down? you feel like a dope. never do it all at once.

i should have gotten it in increments of 5000 shares gradually over time trying to get the best price i could. you put it in a small position and cross your fingers and hope it goes down so you can get more at a lower level. i do not mind if it goes down if i can get my. i know they say trade-in size as we used to call it that i still invest in what i trust. when we have a new name we get it in small increments. you can do it preferably at lower prices. would like when they go down so we can get a better cost basis. when you buy all at once you are declaring it won't go any lower. that is crazy. buying gradually in stages is about recognizing that our judgment is fallible. why don't more people do it my way? why don't investors purchase

and 500 chair increments. it's because they want to be big. the broker wants to get the trait done. i know they would hate it when my old hedge fund would do incremental orders. it's just outrageous. at the same time many others simply want to pull the trigger and get it over with. they don't want to agonize. that's why you need to resist. i have sold billions of shares of stock at my time. do you know how often i have gotten the absolute bottom? how often the last price i paid was the lowest and then it was off to the races? i am pretty good at this. resist the arrogance. by over a couple of days if you have to. the next will, by damage stops -- stocks not damage companies.

betsy there's a sale and you pick up merchandise to find out it is a broken or maybe there's a hole in it. in the real world you can return that. wall street is different. if you get a stock that is a defective company. there's no moneyback guarantee. so broken companies absolutely deserve to see the stocks trade lower. nearly everybody got the covid vaccinations and we but the pandemic in the rearview mirror all sorts of winners felt by the wayside. many got obliterated because a big chunk of the business disappeared as we knew it would happen. a company that took the world by storm during the worst days the pandemic, the very name became a verb. we would doom just like we

google. once we had a quality vaccine they struggle to use all the money made during the pandemic to pivot into something else. as competitors caught up very tough to go up against microsoft and google and cisco. high in october 2020 to the mid- 70s. there were points on the way down were people assumed it had to be a bargain but every time they did they got burned. you can't call a bottom in a stock that is freefall if the business is changing and getting slower. we saw this in tech stocks that roared during the time of ultralow interest rates. lots of buy now pay later. a firm is one of the better ones but the federal reserve warned it would start rapidly raising interest rates and the group was annihilated. the worst was a company called upstart which is supposed to facilitate loans but they started to manage these loans. that cost risk to skyrocket.

the stock plummeted from ust over 400 down to the low teens less than two years later before eventually rebounding somewhat. on the other hand, sometimes it will sell for reasons that have nothing to do with the underlying company. it could be problems with procedure. just because it is down doesn't mean there's anything wrong with the business. a damage stock but not damage company. so how do you manage that? it is complicated. what i like to do is develop the list of stocks i like very much. a call this the bullpen of my portfolio. when wall street has a sale with the whole market coming down we use this as an opportunity to pick up the stocks in the battlefield of when the market is over. we know these ahead of time so we know there is nothing wrong with the underlying company. the bottom line is you never really know. that is why this

rule works in tandem with the last one. never get a position all at once because what you think is a damaged stock might turn out to be damaged company. you are much less likely to end up with a large quantity of broken merchandise. remember, there is no moneyback guarantee. >> it breaks down the complex into simple. >> join the club today. >> join the investing club. (clock ringing) go. and go and go and go. (tense music) but what if you.

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if you want to build a portfolio, there is nothing wrong with getting all of it from a cheap index fund. you have to be rigorous about it which brings me to my next rule. do the homework. my kids hated doing the homework. they thought it was punishment. sometimes when i looked at what they were studying i could see what where they were coming from. how will this help you later in

life? of course, that's a terrible attitude. i always encouraged my kids to study because you never know what will turn out to be interesting later in life. i bring this up because many of you seem to have the same attitude. you suspect it might just be as irrelevant as schoolwork seemed to my kids. when i tell people they need to listen to the starbucks conference call or know what to expect from netflix, they do not want to hear it. you need to do the work if you are going to on those kinds of stocks. when i remind people that it means listening to the conference call and looking at the business reports they look at me like i am a teacher asking for way too much. owning stocks without doing the proper research is lunacy. people still do it. they do it for a couple of different reasons. on the one hand there is the

old school of thought that you don't have to do any work or keep track of what is happening because you are in it for the long haul. on the other hand there's people that don't have the time to be diligent. for those of you that don't have the time get somebody else to manage your money or do what most tell you to do and invest in low-cost. there is a third option. find somebody else to help you do the homework while teaching you to be your own portfolio manager. i still urge members to do as much homework as they can. if you can't devote a couple hours a week you should not be messing around with individual stocks unless you join the investing club which is what we are meant for. investing may not be a full- time job like trading but it is definitely a part time hobby. it's the presence that is a lot more pernicious. in the 1990s, buy anne holt became the be-all and end-all . i'm just going to hold onto the cmg i because it has to go bac . if you hold things for the

long-term everything will work out. of course that was a zero. this took a real blow during the financial crisis when so many people that practiced it got obliterated. buy anne holt became popular during the pandemic. the market was flooded with cheap money. once again, it got you burned when the fed finally started tightening and the cheap money just vanished. a lot of people that bought and held got crashed because there was nothing worth holding. that's why we go by buy and homework instead. before you get a stock you should listen to the conference calls, go to their website, read the research and read the news stories. everything is available on the web. you have so much more information and knowledge there is no excuse.

you have everything right at your fingertips. i can assure you that you will be soundly beaten by professional money managers with good track records that are actively searching for high quality stocks. i am quite certain any index fund can beat. that's why so many tell you to give up on individual stocks. it's not a strategy. like i said, i am in favor of index funds for those that have the time and predilection. the other thing is diversified. that controls risk. it is really the holy grail of this business. what is the biggest risk out there? it's called set the risk. they tend to's trade together. in the old days only about 50% of that action came down to the

sector. thanks to the rise of sector etf it has gotten much higher. i don't care how great the tech stock was in 2000. if you had all your eggs in one basket you got scrambled. the oils in 2014 through 2016 and then tech in 2022. there's only one thing that can keep you from getting nailed by sector risk and that is diversification. diversification is the only free lunch in this business. it works for everyone. if you mix up enough different sectors, at least five, you won't be wiped out when one group gets obliterated. something that happens far more than you may think. if every advisor and commentator has been telling people to do it how can anybody still be undiversified. it comes back to the homework issue. a lot of people simply don't

know what the companies do so they end up with stocks that are very similar. they do not understand. it just drives me crazy. others have zero respect for the history of the bear and how it attacks the digital sectors. i still know people that think all mean -- owning failing is diversifying. that is what i call faux diversification. no matter how much i might like the oil stocks at any given moment i can't count on that. i use halliburton. i always say no to j&j, eli lilly even as i like all four companies. they just leave you way too exposed to healthcare risk that could overwhelm the whole group

all at once. it's not just an amateur mistake. many professionals do not like to diversify because of the bizarre way money-management works in this country. if you are in one sector and it takes off you pretty much beat everybody right then. that is the nature of the beast. it's why it could be the best money-management in 2020 and far from the best in 2021. arcing ovation went almost all in on high risk growth. that's not diversifying.'s they tend to trade as a group but that one huge year made her a household name. once you are a household name, you have it made in this business. she is great at picking high risk growth stocks. i want you to be aware when you go all in it is likely to blow up in your face a couple of times. here is the bottom line.

whether amateur or professional you need to do your homework and keep the portfolio diversified. this will protect you from monster losses down the line. if you can keep your losses to a minimum you will always come out ahead. don't try to rationalize the losses because the stocks don't always come back to even or anywhere near that. let's go to trey in texas. >> the second greatest investor of all time warren buffett said individual investors like me should just get the s&p. my question for you is, what is the greatest investor of all time think we should get? >> first, i'm no warren buffett. i'm a tv guy that tries to do his best, but i thank you for that. here's what i have to say. i think it depends on your ime and predilection. put your first 10,000 and and index fund. if you like picking stocks join the cnbc investing club. if you don't let somebody else do it for you.

if you want to be involved i will help teach you. i have done it for a very long time and i have been very successful. let's go to and in indiana. >> thank you for taking my call. >> you are quite welcome. what's up? >> i have been thinking about this lately and i wondered if you could talk more about suspending our judgment and letting the market take us back up even when a ceo does something they said they were not going to do our company makes a bunch of mistake but they have very little competition or the ceo takes big mistakes that seem to take a long time to fix. >> this is a tough one because i have made this mistake. i have stuck with people for too long. i keep thinking i will give them another try. in almost every case it has not been working. whether you are amateur or professional always keep your

portfolio diversified. there is much more ahead. i am sharing the key rules to follow for the cnbc investing club. think of it as a glimpse behind the curtain if you are not a member. so stay with cramer. ( ♪ ♪ ) ( ♪ ♪ )

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i don't want to go all zen and the art of portfolio maintenance on you but when it comes to managing your money you are often your own worst enemy. don't take it personal. i am my own worst enemy also. we are not robots. we have emotions and they can throw you off your ame which brings me to my next rule for investing. nobody ever made to time by panicking.

panic is not a strategy. a stock gets hammered and investors sell after the hammering. the market gets crushed on a huge down day. in short, something gets annihilated and people cannot take the pain. there is something instinctive about panic. if you are a stone age hunter gatherer who stumbles into a family of grizzly bears, it's a very helpful strategy but it is not useful when you are investing. the truth is there will always be a better time to sell than whatever inspired you to panic in the first place. remember when covid hit and everything shut down. the s&p 500 lost a third of its value in a little over a month. for months after almost everybody in the business was convinced the world was ending. larry williams gave us the all clear but he was looking at other countries and realized we

would mostly be out of locked down by mid-may. he told you to buy at the chief of the panic, not flee. sure enough it was better in the summer and when the vaccines came back the market never looked back. the next time there's a big selloff and you feel like fleeing, i want you to do something for me. i want you to take the opposite side of your own trade. the most rewarding you can make are those were the decks have been cleared out by terrified folks that do not get that the exit doors are not as big as they think they are. i am absolutely not stay in that every stock that gets hit is worth buying for the long term. often when people get freaked out it is for good reason. after a big decline he usually get some kind of balance which gives you a better moment to sell. bargain hunters will usually take it up from the lows

and that's when you get out. so take a deep breath and wait before you sell. i have another one that can help you. when the stock market gets unrelentingly negative, remember that he who defends everything defends nothing. it was said centuries ago and it is just as true now. he who defends everything defends nothing. what does that mean? it's about how you evaluate your holdings. you do not need to worry about most of your positions when the market is flying. the more exposure to a bull market, let's just say the better. when things get difficult you need to recognize that many of the stocks he bought during better times may not fit the new environment. and the economy is slowing on the market is getting slammed you can't hang on to everything. if you try to defend all of

your positions that is a recipe for getting blown out. when i say defend, i mean you cannot treat a declining market like it is a buying opportunit . if you do that you will run out of capital and leave you unprepared to get more if we go lower. we usually do. when the market gets negative you need to get more selective and focus your efforts. that is why i wrangle my stocks at all times for investing members. you choose the ones for right now and choose the ones for in a week. sometimes you need some strength but if you get out it is good. that's why i know which ones to cut and run with and use it as a source of capital. so let's say tech is getting hammered but you think it will rebound. it's important that you don't try to hang on to the whole thing. pick the best ones and toss out the rest.

use the cash reserves to get stocks of higher-quality and lower prices. the ones that have no catalyst and that you only own because you wanted exposure to the bull market, they get the heave immediately when things turn bearish. we used to call the circling the wagons. the first few times you do it, you will curse yourself because you might end up putting down stocks you have had for quite some time but eventually you will learn how valuable the process is because it can protect you from a lot of pain. i never try to battle more than a few losing names at once. remember, take on a lot of stocks that are going against you. it is exactly what it will do. you will crack under pressure and dump everything near the bottom. it is human nature but you have to fight human nature tooth and nail.

the bottom line, great investors know how to ignore emotions when they get in the way of making money. the next time the market gets slammed please don't panic. nobody ever made a dime by panicking but also don't double down. vicious negative markets, you need to focus your capital on your favorites rather than chasing bargains. we will be back after the break. >> we are at the intersection of business. >> this is a huge gain.

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welcome back. it's check your files -- check yourself before you wreck yourself. i'm a big believer that once you get your money saved up you are in control of your own destiny. you have to be careful because you have power to derail your financial future. this will always be part of the gig. i just want to be sure you don't make this same mistakes twice or three times. that's why i have rules. that will protect you from the kind of mistakes i used to make. the same rules we preach constantly. rolls like don't own too many stocks. i used to spend three hours every day analyzing mistakes of the day before. that was a major task, one i would complete every morning before anybody else came to the office.

i would analyze every losing trend. the winners take care of themselves. i would try to figure out how i could have made more money or lost less money. for lack of a better word i was maniacal about it. after a couple of years i had an epiphany. i realized good performance can be linked to having fewer positions on fewer stocks. when we on fewer stocks we tend to make more money. that is why i won't get a stock without first taking a different one off the table, even from my trust. that is the only way i can play. you need to limit your holdings. it is a great discipline and you should adopt it pronto. how are you supposed to keep track of that. all of the good managers i know are knowing them inside and out.

that's why i say please don't own too many. you end up selling stocks that are good for stocks that are not as good. hindsight is 2020 but take it from me. it is far more likely you will be selling marginal companies to get better stocks. that's how to make the portfolio work from you. the time that i lost the most money is when my position sheets were thick as a brick. i made hundreds of millions of dollars a please remember it is always possible to have too many positions. if you are just investing for yourself and you have more than 10 stocks you should probably pare something back. you know what? it is very hard to have too much cash. that brings me to the next role. caches for winners.

at times cash is such a perfect investment that it drives me crazy how so few people recommend it. to think the market stinks so they decide to short some high flyers. no. as an investor that is the wrong way to approach things. you don't like the market? cell. then raise some cash. put it in cash. don't get options to get your current positions. that is just too hard. the odds do not favor you winning on both stocks. it is the strategy that is mediocre. if you can raise the cash andto work that is the best way to protect yourself. i was one of the biggest option traders on wall street for a time. i can tell you i almost always lost money. when did i make

money? when i bought put options to profit from low-quality companies or stocks that seemed severely overvalued. you don't need to bend yourself in a pretzel. to sell some stocks and going to cash which is short-term treasuries of less than a year. people start talking about how little cash earns. they say it can't be in cash. that is for losers. that is just wrong. i say caches for winners especially if there's a major disaster heading. i only shorted stocks when i had an edge. i can't shorted all right now. back when i could i did not short them just for the sake of having short exposure. i don't care about not having enough exposure. i care about losing money. if you don't like the market. if you think that there is

nothing compelling than just raise cash. sit on the sidelines and wait for the situation to improve. it is never the wrong call when you can't find something that makes sense for you. be careful not to own too many stocks and not to have too little cash. stick with us. >> thank you for all your advice and saving us from ourselves. >> your advice let me quit a job that i hated. i love you to death. >> thank you for making us money and more importantly thanks for keeping us from losing money. power e*trade's easy-to-use tools, like dynamic charting and risk-reward analysis

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why are we the only birds heading this way? migration is... stay close and everything will be alright. [ gulp ] i'm okay. yeah, no. hold on! [ quack, quack ] my favorite part of the shows from questions directed from you. breaking an analyst to help some burning questions. for those of you that are. they help me to do a great job.

we do this sort of thing during all the monthly meetings where we give you an in-depth look at the last portfolio decisions and answer your burning questions. if you like this to be something to keep up with i need you to join the club. thank you to the people who stop me on the street and love the club. it means the world to me. let's start with a question from michael. he asks what you think about dividend reinvestment strategies? it is one of the great's of our business. i have seen in my lifetime the dramatic amount of money you make taking advantage quarter to quarter unless you need the income depending on where you are in your life. that could be a reason not to but always reinvest.

that can even work for tech stocks that offer a dividend. it is another way to call her got -- to get the average. >> i tried to show him and convince him. no, take the money and be back in and reinvest. we are taking a question from john a california. he asks what is your source of information that you go to daily? >> i make no bones about it. we have all the research in the world. one of the great things, the luck that we have is e get everybody's research. i tend to let that control things. we talk about the most important research calls the day. we are blessed with that. >> on a daily basis you can read annual reports that companies put out. transcripts if you can get your hands on them for the conferences that are happening. >> it is really important to look at those.

>> i have to tell you. more and more start at the website of the company. i would rather go to the research. you need more than that to understand things. let's go to nido in maryland. he asks, is there something that you won't buy above in each sector? >> this is tricky. when you are in tech, for instance, nvidia, if i had discipline and said i would not pay more than 20 times earnings i would've kept out of there for decade. it is about future earnings. >> you have to look at the growth rate. you can compare them relative to their multiples. i don't think there is necessarily one that would keep me out. on the other hand, you can't look at the low multiple and say it is a good bargain because a lot of times there are the value drafts they could have declining earnings or there might be another issue.

>> that is a great point. when people look at automobile stocks they have not got the growth. so thank you. i like to say as always come find us right here on right now on "last call," that is a wrap. 2023 trading gear may be over but we have a big final prediction for next year. irony, sweet irony. why did jpmorgan chase just get tapped for a key role in a bit coin etf. and business with the border crisis only gets worse. when