had this whole chat. >> bonawyn. >> stock puts, tick up will be equity volatility. >> steve. >> i own it now and i think it's got a decent amount of upside. >> thanks for watching "nasa." have a great weekend. my mission is simple, to make you money. i'm here to level the playing field for all investors. i promise to help you, mad money starts now. hey, i'm kramer, i'm just trying to make a little money, my job is to teach and we will do a lot of teaching tonight. you can call me or treat me & jim cramer.

we need to figure out what ind of self -- selloff and work out accordingly. it is always fantastic, all happy rallies are alike. each selloff is happy in its own way. it's true. the bull market, scott's are higher and everyone thinks they should be participating because it is easy. but bigger clients, much harder. they can be the start of a bear market. or maybe something worse, maybe just a glitch. that's why tonight we illustrate some of the common qualities of selloffs so you know what to do the next time the market has an inevitable weakness. there have really just been two horrifying selloffs since i started four decades ago. the crash in 2007 and 2009, but even in the global crash when

they lost 35% in just a month, not nearly as bad as these two. let's deal with the two big ones head-on because they make great samples, 1987 and the financial crisis are actually polar opposites. on october 19th, 1987 notice black monday the dow jones fell more than 22% in a single session. i was trading that day and even the previous week was one of the worst in history. no buyers were to be found from where the crash started to doubt 1738. kept tumbling right into the close. i remember i kept thinking, saved by the bell. but what most people don't remember, the week before was horrendous, too.

the dow already plunged with a 10% decline. that harsh pullback encouraged intrepid souls that thought they could flip monday morning into some strength. but the strength ever showed up and they got badly burned. in fact, it continued into the next day. the dow kind of broke down entirely in the market stopped functioning. i was there and i was actually calculating the bottom. it turned out to be about dow 1400, that was down another 122 points or about 7% from where we closed on black monday. at the end of the day it was just falling piece by piece, one by one. then allen greenspan stopped that decline in its tracks. i still remember the green line and he listed multiple firms around wall street to help put

in the bottom and it took the dow up or than 400 points. it seemed pretty unbelievable. especially when it took just three months. the bear market began in october of 2007, a totally different animal. fell 14,198, down 1198 and didn't bottom until march 6th when it ended at a staggering 6470. we didn't return the 2007 level until march of 2013. why did one take six years to unwind when the other was so quick. black monday was a mechanical selloff, the first i can remember when the average was down because of the pure market dysfunction. the way it played out was

reminiscent of two other flashes , in 2010 and 2015 both times when the market simply failed to work. all three of these started with the s&p 500, when chicago overwhelmed wall street and new york. black monday happen because stock traders didn't understand the power of the market back then which could flood the market with instant unseen supply that no one was ready for. it was relatively new instruments created about five years before the crash and no one knew about the power they had. it was a much smaller market, and because it can fall in easily and out easily became the strongest drivers, even more powerful than underlined companies that stocks are into represent. it used to mean much more to the day-to-day action of stock. even with the relatively new

future, black monday was highly unusual. we had a big run going into the crash, with various substantial decline. and don't i know it, i left goldman sachs to start my own hedge fund. when you rally in the mid to late '80s, it created such stupendous gains that it group of clever salespeople started offering big funds, they claimed as insurance policies. so-called portfolio insurance involving dynamic hedging where specialists said they can use futures to ensure the stock market risk at a 5% or 10% or some other number. the idea was that this policy would let you sidestep losses. of course it is impossible to do that, but they had such a great sales pitch that people believed them. in reality, when it all kicked

in the portfolio didn't work. if anything the future selling of these insurance policies saw a decline, causing massive losses for the poor saps that what these things. many clients were wiped out. people that were selling these policies, just really idiots, maybe not the crooks i thought they were. there is no matching trick with that much risk, come on. don't believe anyone who tells you different. they are charlatans. of course at the time we didn't know the power of the future would cause the crash and we figured where the smoke is, there is fire. it has to be something with the economy. stocks couldn't go down on their own, how could the dow plummet 22% from the week before. i say it turned out wrong. the economy was strong going

into the 1987 crash and coming out of it. there was no correlation with black monday at all. when the treasury department seen what happened it concluded that the future set off immense selling while some specialist firms on the floor of the exchange and some brokerage houses failed to step up and do what is known as the stabilize the tape. the treasury found out that many did not do their jobs. i was fortunate enough to actually be in cash on black monday. the market acted so badly that i didn't want any part of it. it didn't make my career. i look like a true genius, i was just fighting with the market and wanted to reap. i always say it is better to be lucky than good. and that is why we spend so

much time teaching you this. here is the bottom line, sometimes crashes have nothing to do with the economy, they are caused with the mechanics of the market. stay tuned for more examples of this decline from 2007 and 2009 so you can figure out what to do . irma, in new york. >> good evening, mr. cramer. i plan to open a nondeductible roth ira for my grandchildren in their 20s. is that a gross fund or an index fund? >> go with growth, because they are young, you can switch and they are in their 30s. hit it big, right now. i may be alone in that, but i don't care. i really want risk taken when they are younger.

tony, in florida. >> hey, jim, just want to let you know i'm a member from day one. when i want to ask, when we have a stock and it has earnings that are really good but some reason, the market buys it down, is it that role like everybody says, wait a few days until it goes down? >> no, buy t at your prices. a little bit in the beginning. and like we teach, buy it on their way down. now you know we battle in the club and we've been very successful in most battles. that is the way you make it so your battle won't be too hard. tough days don't last forever, and when they come along you need to know how to respond. tonight i will give you a crash course in crashes, selloffs, throwbacks, getting the best

possible outcome from the worst possible situations. stay with cramer. >> don't miss a second of mad money, follow jim cramer on x, you can also give us a call at 1-800-743-cnbc. power e*trade's award-winning trading app makes trading easier. with its customizable options chain, easy-to-use tools and paper trading to help sharpen your skills, you can stay on top of the market from wherever you are. e*trade from morgan stanley power e*trade's easy-to-use tools make complex trading less complicated.

custom scans help you find new trading opportunities, while an earnings tool helps you plan your trades and stay on top of the market. e*trade from morgan stanley rylee! from rylee's realty! hi! this listing sounds incredible. let's check it out. says here it gets plenty of light. and this must be the ocean view? of aruba? huh. this listing is misleading. well, when at&t says we give businesses get our best deal, on the iphone 15 pro made with titanium. we mean it. amazing. all my agents want it. says here...“inviting pool”. come on over! too inviting. only at&t gives businesses our best deals on any iphone. get iphone 15 pro on us. (♪♪)

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my name is oluseyi we and some of my ac favorite moments throughout my life are watching sports with my dad. now, i work at comcast as part of the team that created our ai highlights technology, which uses ai to detect the major plays in a sports game. giving millions of fans, like my dad and me, new ways of catching up on their favorite sport. today i will teach you how to cope with all sorts of declines. already told you about the crash from 1987. it made sense to buy stocks when the smoke cleared. it was a rare opportunity that

gave little time to reveal itself. it was also the first instance of a s&p 500 futures. showing the power over individual stocks. rings me to the flash crash of 2010, one of those negative omens that drove away so many investors that never came back to stocks, not knowing that their value could be destroyed so quickly. who wants to keep their savings and something that can blow up within the blink of an eye. what happened that afternoon was pretty much the same deal as black monday. buyers walked away, bettinger had to be some kind of destruction. the flash crash started to: 32 p.m. on may 6th 2010, lasting 36 minutes, falling roughly 1000 points. immediately money matters try

to play pin the tail on the selloff. others appended on the newfound weakness of the economy. perhaps because i had the trading of black monday, i looked at it for exactly what it was, another situation where the machines were breaking. it was not the fundamentals. gigantic error caused tremendous fear and many buyers walked away. they didn't want to wait o find out what was causing the landslide. they just wanted out as fast as possible. i call it a phony seller because it had no basis in that kind of reality which made for a tremendous buyout opportunity. >> that is not a real price, the system obviously broke down. >> the machines failed,

obviously broke down. the machines broke down, that's what happens. >> that's exactly what happened, nothing to do with the fundamentals. if someone listen to what i had to say, many people simply didn't believe it could happen in that fashion and they left. in all the years i've been doing the show i hope i have taught you that stocks are not hard assets, they can change their value within a heartbeat. they are just not perfect enough and people think they are. the market quickly regained its equilibrium but not before investors left entirely and never came back. how about august 2015, the doubt fell 1000 points. i once related it to the federal reserve raising interest rates. but if we had to hear one more story about the china market collapsing, back then it was

the most dominant story out there. it has always been out there but the whole economic edifice could collapse from too much leverage at any given time. suddenly i find myself in all the right times of witnessing these events. had suggested it was time to raise rates, it was a statement that demonstrated a cavalier attitude demonstrating the markets ugly and fragile mood. there were very large orders placed for major stocks but we weren't ready were large capitalization stocks were shedding hundreds of thousands of dollars in value. we had no ability to tell why. it was tough to see what the real prices were. it was like treating the fog of war. some stocks were down 40, 50%.

as the market rolled open it declined about 1000 points. i and my partners were pretty stymied at the time. i remember david's timer and his reaction, it was priceless. >> i don't, i've got to make some phone calls. these are enormous. >> i've got to make some phone calls. i remember what he said, yeah, that's it, i've got to make some phone calls. we just can't go out and say it's wrong. it had to be something very bad in the economy. somebody knew something that we didn't, something otherworldly. maybe there was a war somewhere, something we didn't know about. there had to be a reason for that kind of decline. i was suspicious because some of the hardest hit stocks were

those like the biotech's. that made no sense. once again i suggested it was the machines causing the problem and overwhelmed the stocks just like in 2010 and the flash crash. i midmorning we learned that was exactly the case and it had a beautiful metamorphosis, jumping 500 points. some buyers came in during the opportunity, and thought that the federal reserve wasn't really about the tightening. it was actually about buying stocks. why was there such a fear and confusion in 2010 and 2015? i think investors were not ready for either flash crash because post-1987 the government put in what is known as circuit breakers, they could

stop trading momentarily. but they created a false sense of security that still exists today. even though they did very little to stop the destruction of your nest egg. so when you hear talk of circuit breakers protecting you from past mechanical and naturally substantive. i can think of three days during the covid crash when we were down almost from 7.8% to 13%. but we knew exactly where the problem was. they had to shut down the economy to fight a deadly plague. and if you thought my commentary was useful in 2010 and 2015, like it was, that's even more reason to join the investing club. these will never go away,

always ready for the next one. if you can figure out when the selloff is caused by the mechanics breaking down you may have an incredible buy opportunity. you have to see if it is related to the fundamentals of the economy, if it is, stay tuned, if it isn't, stay tuned anyway. no one ever made a dime by panicking but boy oh boy did they coin money i taking the other side of the trade. mad money will be right back after the break. tear icy hot.

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not all days are winners in the market. knowing how to handle the database is key. there are lessons in really bad days that can help. let's set the stage, back in october of 2007 the dow peaked at more than 14,000 and the economy, after cheering a little bit, fell off the cliff. one season you could have seen coming if you paid attention. specifically if you paid attention to me, august 3rd, 2007, rates were being raised so much, oblivious to the damage it was doing to the economy. >> he has no idea what it is

like out there! bill poole is -- has no idea what it is like. my people have been in this game for 25 years and they are losing their jobs and these firms will go out of business, they are nuts, they know nothing! >> what did i mean by that? i came out with my old friend and i've been talking with major wall street mortgage firms. they knew there were a lot of unsound cracks occurring. it was jarring when i was told by this executive that many people were defaulting on their mortgages. talked about how many mortgages of the 2005 vintage just weren't money good. something that only happened once in the country's history. i was aghast, but i had a lot of friends and a lot of firms and started making calls. i wanted to see if this 2005

vintage was trouble everywhere. it was spreading like wildfire, i called mortgage bankers and guys that we in large firms. everyone said the same thing, big trouble. that's why i went off so strongly on my rant. sadly, the fed didn't listen, especially this credibly important fed official. years later when the transcripts were released i found out my rant was put up not only as a joke, soon after, we had a series of horrendous defaults of large banks, some of them were too big to fail but failed anyway. i did my best to try to get people out, even went on the today show to urge anyone that needed money to take it out of the stock market before it was all lost. >> four investors, what is your

advice today. >> whatever money you need for the next five years, take it out of the stock market right now. i thought about this all weekend. i don't want to see these things on tv. >> sure enough it fell another 40%. good call. if you bought any time from when it peaked in 14,000 then when it was cut by more than half, you lost a fortune and probably never came back into stocks. how do you know when you can avoid this kind of dip, how do you know the difference between a selloff and a buy-in opportunity? you have to ask yourself about the state of the economy. as the feds pattern raising rates for things like major companies, are they going under, or can they pay their bills? if the answer is yes then you have a decline and can be

joined at the hip with the real economy, a true systemic risk, meaning the entire country could collapse. that is how it was during the financial crisis. when people say, hey, it will be as bad as 2007 and 2009. nothing like that occurred. only twice in 80 years has it occurred. even the covid session was not as bad. we heard about the systemic risk but within a few months we were over it. so if you are worried about systemic risks, odds are you are worried too much. if you want to see the economy turn around, that is important, too. what brought the market out of its funk was a statement by the then fed chair and he was letting them go under often right. the fed was just sitting on its hands but the moment he decided

that something needed to be done, the stock market bottomed. how to spot the bottom? i have a couple of sites that can help. in investing club measuring buying and selling pressure. when you most likely have too much selling, that's when it is- 10. we were getting signals that these were much worse than near the bottom at 2009. i'd like to see who has been pessimistic or concerned about stocks but is reluctant to say anything positive but then changes his tune. best example of that kind, that big switch came from the late, great marquis haynes. >> i will step out on a limb, i don't think we are at a bottom. i think we will have a rally. >> a man unafraid to make a call.

>> in other words i think today, this is it. >> want to call. march 10th, 2009. the day after being on 60 minutes, huge call i someone who wasn't willing to make it until that moment. before you say to yourself, what happens if no one warns you again, you know what, i have some good news for you. if you waited long enough, six years to be exact, you actually did get back to where you were before the bear market began. but if you set tight and were in the worst market in living memory, you actually got back to it, a lot of people struggle to get back in because they get burned out and it's worse than it was for the one to set type. the financial crisis gave us once-in-a-lifetime bear market

true systemic risk. that's the exception, not the rule. >> oh man, i'm trying to have a cup of water, i can definitely say, giving a big shout out. >> i'll take that shot out. thank you. >> you want advice, don't go all around the world, go to a qualified banker. i'm curious, how do you use dividend stocks as a form of investment? the reason i'm asking, is it too risky, will it lose market value, is there a barbell approach or can you take a balance in the portfolio in a certain way? >> i love it. i want -- don't want diffidence

so high-yielding that something is fishy. i want good companies with good values that reinvest constantly. that is nirvana for me and that is the way i would love to invest if i can own individual stocks. the bear market true systemic risk is the exception, not the rule. coming up i will give you a survival guide and the best way to pop the market pullbacks. then i will answer all your burning questions. stay with cramer. back in to play! and that's in! what an impossible shot!

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in tonight's special survival guide addition of mad

money we show you how to deal with brutal selloffs. specifically how to defend against them, take advantage of them even, because i like to be opportunistic. i don't like the sellers that involve the collapse of the economy but those are easy to spot because it will seem like the world is falling apart. now i want to help you gain on the other less dangerous kind of crash, caused by a broken market in a healthy economy. the best way to deal with these declines is to recognize a bottoming process you can spot. i have a solution that has worked in the toughest of times. i like to look at something i call the accidental high yelder's. those are stocks and companies that are doing fine and have good balance sheets but that share portions have fallen so

low that it is getting to give you unbelievable return. how do you spot these? and you look at these historic level yields, if the stop typically yields a 2% but is suddenly paying double that you are probably looking at an accidentally high yields. and that is why when you are hunting for these you should focus on companies that get the sense to be very good balancers. if the field level is not giving you opportunities, you can begin buying using what is known as wide scales. that is hy i recommended during the 2010 flash, wide scales. don't use market orders, you might end up getting terrible prices. you should never use market orders, but it is especially stupid during a crash. if the market does come right back, you can pick up some

terrific merchandise at amazing prices. then you can flip them at great prices or hold nto them for the long haul. i demonstrated exactly how this works during an appearance on tv when the flash crash happened in 2010. >> p&g is down 25%. >> that is true. it can't be there, that's not a real price. it's at 47, that is a different security entirely. proctor just jumped seven points. i liked it at 49. >> they are now down 68. >> flipping it at 59 i made 500 geez. >> that is the craziness am talking about. and a lot of people thanked me, i mean, dozens of times people have thanked me. we talked about melt downs and

true systemic risks untethered for the economy, but what about the pullbacks we experience all the time? what causes these declines? first you've got the sellers caused by the federal reserve and there is a reason businesses constantly talk about the fed. it is their job to try to restore growth, which they did when covid shut down the economy in 2020. almost every decline is a viable one. it's been like that since i went into business. but when it starts to overheat, that's a different mandate. with the inflation in light of 2021, the market started rolling over. those of you who missed the '70s and '80s, now you know the post-covid asked -- experience. it was in lockstep going into the great recession.

the stock market didn't get crushed because the economy didn't get crushed and that's how we got the incredible bull market in 2023. however, whenever the fed tightens, they will come out to tell you the market will crash or take a big header. when you hear these comments, please don't panic. in fact i've seen plenty to do next to nothing. but there are rational reasons for the stock market deserving to go down. stocks are only one of the assets available in institutions. i believe everyone should own some gold, to get ahead of the economic chaos. real estate can be a good hedge but most people don't have the money to invest in that kind of real estate that big institutions can buy. we have real estate investment trusts but they are not as reliable as a whole.

finally, we have bonds as an investment alternative, you've seen it yourself when short- term give you 5% risk free, lots of people park their money in the bonds. they can become more competitive and as it jacks up rates, high-yielding dividend stocks will be among the worst performers, because they have some serious competition from fixed income. please be careful with these dividend stocks as safe havens. they are very different from accidental high yelder's. another reason they go down, because the fed is not perfect. they raised rates when they should have stayed or even cut. jay powell has been much more responsible with not pushing us off a cliff in recent years.

garden-variety put backs can be redeemed, but they can be trickier with decent opportunities as long as you stay away from high yield there's that can be less attractive. mad money will be back right after the break. a force to be reckon with. no, not you saquon. hm? you! your business bank account with quickbooks money, now earns 5% apy. 5% apy? that's new! yup, that's how you business differently. it's time. yes, the time has come for a fresh approach to dog food. everyday more dog people are deciding it's time to quit the kibble

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and infrastructure with lenovo thinkpads and powerful edge to cloud solutions, delivering faster insights and increased performance, giving them the scale to stay ready for whatever's next. make amazing happen. lenovo and cdw. tonight we are talking selloffs. specifically during this block and what causes garden for narrating -- variety pullbacks.

sometimes there are other issues, for starters, the issue of the margin path. as a former hedge fund guy, i am aware that many times they cash back more than they should. these declines repeatedly have been, in february of 2018 that is the moment funds apart money to bet against stock market volatility and they got there heads handed to them. at the same time they bought the s&p 500 using borrowed money. when the stock market ell they were forced to dump their s&p 500 positions. there were so many doing this that it ended up causing severe marketwide loss. these breakdowns often occur after the market is down for several days in a row. that is why i tell you to be aggressive in the first few days

of the decline because there will always be margin clerks against these managers that buy stock with borrowed money. then they have to keep chopping. how do you spot this market brutal decline? i use the clock. they don't want to be on the hook for overstretching individuals or hedge funds. margin clerks demand the cloud to be put up, raise the cash and sell you out of your position without your say-so. i always considered them the butcher, it always occurs between 1:00 and 2:00, bite 2:45 p.m., i think you have a decent chance to buy safety stocks. not to help the economy and be strong and advancing healthcare's, you may want to do it for the sake of any environment, i talk about them all the time. especially members of the investing club, we hiked to own the best ones. what else can create viable

opportunities? sell overseas, i cannot tell you how often i heard commentators scare the be jesus out of us, i always tell you to ask yourself, do any of these woes truly impact the stocks of the american companies in your portfolio? does it make you want to pay dramatically less for individual american stock? usually the answer is no. unfortunately, you can't just start buying stocks hand over fist overseas and get a selloff. you should always assume that there are people that don't understand how unimportant these things are in the vast scheme of things. of course these people will panic and sell. if you thought they would have known better, that's why these international declines often last for several days. the best way to figure out if they are done, watch the clock. they are usually margin and out against their will. the other day stock markets are

first and foremost and they are controlled by supply and demand. if bankers start rolling out lots of new ipos, you can end up in a situation where there is much too much supply and not enough demand. like in 2021, after we were drowned in nearly 600 ipos. my suggestion, avoid the blast, and focus on the stocks down due to collateral damage, especially the ones with yield protection. sometimes they go on to client from simultaneous shortfalls. by stocks after the earnest earnings pull back. no reason to stick your neck out here. instead, by unrelated stocks ahead by the much broader

selling of that s&p futures. then there is the risk ones, the political risks, whether because of strife between parties, it trade policies or even all-out war risks, i'm not a political guy and i hate talking about this stuff, but with every stock you own, you need to ask, does this company have direct earning risks when it comes to washington? if not, you have nothing to worry about. but if it is directly impacted by a government shutdown, i know political risk is intensely negative, there are so many waiting everywhere wanted to give their two cents. save it for companies that have nothing to do with the political frame. like we see every time with the debt ceiling standoff, i can't tell you how many times i've seen politics used as a reason to sell stocks.

they may be a reason to sell some stocks, but rarely has washington been enough to sell everything. there are all sorts of selloffs, but unless they involve systemic risk like in 2007 or 2009, they will have buying opportunities long-term. you just have to recognize what is driving and noticed the signs to what might be subsiding. take action to buy, not sell, and never to panic. switch to shopify and sell smarter at every stage of your business. take full control of your brand with your own custom store. scale faster with tools that let you manage every sale from every channel. and sell more with the best converting checkout

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i always say, my favorite part of this show is answering questions directly from you. so what's happening, my

portfolio partner will help me answer some of the most burning questions for those part of the investing club. for those of you who aren't members, i hope you will be soon. that back-and-forth has help me do a great job for all the mad money viewers. so if you like this, be sure to join the club. we are taking a question from peter who asked, as a younger investor who can add flex to the market biweekly when paid and chose to have a set amount of funds, how do you recommend putting your money out into the world? it doesn't matter. i remember when my late father would look at the list and say them a listen, i'm not buying all of these, i will pick six of my favorites. my suggestion is, every few weeks pick some of your favorites, but invest, invest, invest. if it is down, invest, if it is up, inves. next up, a question for

michelle in california who asks how do you know when to break your cross basis, we almost never do this. what has happened is, those are really the only ones you can do it with because they come down a lot. we've had stocks that have come down and come up and then we feel tempted but we do it very rarely. >> general rule of thumb, if the stock is down: 10%, but the story says it has gotten better but the stock is down due to the market, it would be a good time. >> if it goes up and then goes down less, you want to be in there, that is true. it is something you can do. we don't do it often. now we are going over one of your magic mentions, he says, jim, are you sure you are not italian? the best sauce, not gravy, starts with those tomato

sauces. i don't know what to say. i will point out that saucing came from the fact that the tomato yield was so great that i had no choice but to sauce or throw out. next up, taking a question from jeff in florida asking if the stock has been in the red for a couple of years and the average down three at a time, when is a good time to sell some of this stock? do i risk it? this is a really important question because what you find is that at the same time you see when it gets back to even and you want to sell it, that's precisely when a lot of people interested in it. i always found, i call it stuck in the mud, when it gets out of the mud people get excited to sell. what you should think, no, people want to buy, the answer is, hold on. >> something i learned from you, we don't care where stocks

came from, we care about where they are going. if the outlook is still strong, you want to hold on. >> i know i've got to end the questions, i don't like to do that. i will say thank you, good to have you on the show. i'm going to try to find new ideas that re good for you . >> right now on "last call" a huge moment, a make or break conference could determine the next phase of the ai group. we have a special preview. not again, another incident involving another boeing jet. we'll give you the details. an earthquake for housing. how a historic settlement stands to change what buyer