sp spurj exists. >> steve? >> i think it was a fun show given that we had a terrible day in the markets. cck, crown holdings. >> that's fine. thanks for watching "fast money." have a great weekend. see you backer he on monday. my mission is simple, to make you money. i'm here to level the playing field for all investors. there's always a bull market summer, and i promise to help you find it. mad mon starts now. >> hey, i'm cramer. my job is to teach, and i'm going to do a lot of teaching tonight. call me at 1-800-743-cramer. you need to know how to respond.

you need a game plan ready so you can figure out what kind of selloff -- the early days of the market are never easyto navigate. to borrow a line, all happy rallies are alike, each selloff is unhappy in its own way. it's true. bull markets and stocks higher, everything thinks they're a genius participating because it seems so darn easy. same every time. but big declines much harder. they could be the start of a bear market or maybe something worse. or they might actually be just a viable glitch. that's why tonight we're turning to history to illustrate some of the common qualities of sell-offs. now, really, there have only been two horrifying sell-offs since i began selling over two decades ago.

even the covid crash when the -- was 35%, that wasn't nearly as bad as these two. especially when you knowtition the market started rebounding immediately. let's deal with the two big ones. 198 andthe financial crisis are actually polar oppositings. although the percentage of declines are similar. on black monday the dow jones industrial average fell more than 22% in a single session. i was trading that day, and even the previous week had been one of the worst weeks in market history, black monday hit fast and it hit hard. it felt there were no buyers to be found where the crash started to dow 1,073 where it ended that day. it kept tumbling right into the close. i remember thinking saved by the bell, except it felt like there wasn't that much money left to be saved. but most people don't remember that the week before was

horrendous too. the dow had already plunged. a 10% decline. that harsh pullback encouraged bargain hunters who thought they could flip monday morning into some strength. bought friday, flip it on monday, except the strength never showed up and they got badly burned. in fact, continued into the next day. that day became known as terrible tuesday where the dow broke down entirely. the market simply stopped functioning, but you know what, i was there, and i was actually able to calculate that bottom. the bottom turned out to be about dow 1400. that was down another 122 points or about # % from where we closed on black monday at the end of the day. it was all just -- i pieced them together one by one. then fed chairman allen stopped the decline in its tracks when he said he would provide everything necessary to stabilize the market. i remember that green line when it came over your screen. he listed multiple firms around wall street to help put in the

bottom. a remarkable two-day rally that took the dow up more than 400 points from its lows. seemed unbelievable at the time. but you know that it took until mid 1989 for the average to return to where they were trade something the bear market that began in 198 was different animal. dow fell 14 thoushg. the other one was 2,000. 14,000. it didn't bottom until march 6, 2009 when it landed at a staggering 6,470. we didn't return to that 2007 level until march of 2013. why did one sell-off end so quickly when the other took six years to understood wind? that's the question to find the two extremes of sell-offs. the average is melded town because of pure market dysfunction. it's constructive to unpack black monday because the way it

played out was reminiscent of the crash of 2010 and its doll l ganger in 2015, both times when the markets failed to work. now, all three started with the s&p 500's futures pitch in chicago. chicago overwhelmed new york. black monday happened because they didn't understand the power. no one was ready for it. it wasn't like it back then because they were relatively new instruments created five years before the crash, and no one knew the power they had. the power of the future snuck up on us as they were initially a smaller market than the stocks themselves. because manager could go many and out easily, though it became the -- even more powerful than the underlying companies that stocks are meant to represent. underlying corporate issues to be much more to the day-to-day action of the stock. the thing is, even with the relatively new impact of

futures, black monday was highly unusual. we had a big run going into crash of '87. it was a remarkable rally with nary a substantial decline, and don't i know it. i left goldman sachs in 1987 to start my own hedge fund because my returns had been so good. it created such -- what they claimed were insurance policies to lock in gains and stop out losses after their funds had gone up so much. so-called portfolio insurance involves something called dynamic hedging where they use futures to make sure you're no longer exposed to risks. yeah, it was like a stop loss. the idea was that these policies would let you side step the losses. of course, it's impossible to do that, but they had such a great sales pitch, people believed them because the stock futures were so novel. in reality, when the losses all

kicked in at once on black monday, the portfolio insurance didn't work. if anything, the future selling from these insurance policies accelerated the decline of the stock market, causing massive losses for the poor saps who bought them. the people who sold these policies, history remembers them as idiots, not the crooks i thought they were. i lean toward the latter theory because there's no magic trick that can get you returns from investing in the stock market without much risk. come on, the two go hand and hand. don't believe anyone who tells you different. those people are charlatans. we didn't know the power of the futures could cause a crash. we figured where there's smoke, there's fire, if the economy crashed, something had to be wrong with the economy. otherwise how could the dow plummet 22% in a single day after falling 10% the week before? i say, though, it turned out wrong. the economy was strong going

into '87 crash, and it was strong coming out of it. it was the interplay between chicago, much more powerful than realized, and new york, much weaker, that set it off. it concluded the futures set off immense selling while some specialist firms on the floor of the exchange and some brokerage houses failed to step up in what's known as stabilize the tape. the latter had no duty to stabilize things, but the former were supposed to do so. the treasury found out that many didn't do they jobs. now, i was fortunate enough to actually be in cash on black monday. having liquidated my portfolio in the previous week. in retrospect it did make my career. i look like a true genius. the truth is i was frightened of the market and wanted to regroup. i always say, though, it's better to be lucky than good. this can maximize your lot, which is why we spend you so

much time teaching you this. sometimes crashes have nothing to do with the economy. they're caused by the mechanics of the market. stay tuned for more examples of this kind of decline and the more serious animal, the bear market of 2007, 2009, of you can figure out what to do when they really maul us. irma in new york, irma. >> yes, good evening, mr. cramer. i'm planning to open nondeductible roth iras for my grandchildren, who are all in their 20s. >> okay. >> am i better off with a growth fund or an index fund. >> i want you to be in growth, growth, growth, because they're young, you can switch to index in their 30s. let's two for real risk here. they've got their whole life ahead and i want you to hit it big right now for them. i am alone in that, but i don't care. i really want risk taking when they're younger. tony in florida, tony. >> hey, jim, i just want to let

you know, i'm a member from day one and will be a lifetime member. >> thank you, thank you. >> i love your instincts. what i want to ask you is when we like a stock or love a stock and we've got earnings that are really good but then for some reason a market buys it down, can we buy it day one, or do we have to wait three days until you buy a stock that goes down? >> no, no, you buy it at your prices. you buy a little bit at the beginning, and then, like we teach at the club, you buy it on the way down. we may have a real battle on our hands now. you know we battle in the club, and we've been very successful in most of our battles. some of them have been tougher, but that's how you make it so your battle won't be too hard. buying it all at once, we don't want that. when they come along, you need to know how to respond. tonight i'm giving you a crash course in crashes, sell-offs, and big market declines so

you're prepared to get the best possible outcome from the worst possible situation. so stay with cramer. >> don't miss a second of mad money follow @jimcramer on x. send an email to madmoney atcnbc.com or give us a call at 1-800-743-cnbc. miss something? head to madmoney.cnb c.com.

her uncle's unhappy. i'm sensing an underlying issue. it's t-mobile. it started when we tried to get him under a new plan. but they they unexpectedly unraveled their “price lock” guarantee. which has made him, a bit... unruly. you called yourself the “un-carrier”. you sing about “price lock” on those commercials. “the price lock, the price lock...” so, if you could change the price, change the name! it's not a lock, i know a lock. so how can we undo the damage? we could all unsubscribe and switch to xfinity. their connection is unreal. and we could all un-experience this whole session. okay, that's uncalled for. so i'm teaching how to cope with all sorts of declines. i already covered the crash of 1997, how it wasn't really related to the economy. shocker. so it made sense to buy stocks when the smoke cleared. 1987 was a rare opportunity that took a little time to reveal

itself, but when it did, oh, la la. it was the first of the s&p 500 futures exercising pernicious power over initial stocks. sadly, the fist of many. -- because they didn't know their value could be -- who wants to keep their life savings that could blo up in the blink of an eye. what happened that afternoon was the same as black monday of '87. buyers just walked away betting there had to be something behind the destruction. couldn't just be the machines breaking down, could it? the flash crash started at 2:32 p.m. on may 6th of 2010. it lasted for 36 minutes. the dow fell almost 1,000 points from 1,000 level. very memorable for me because i had to be on air at the time. immediately money managers tried to play pin the tail on the

sell-off. this time everyone was focused on southern europe. others pinned it on the newfound weakness in the u.s. economy, which for the record, there really wasn't any. i recognized the flash crash for what it was, another situation where the machines were breaking as the futures overwhelmed the stocks. it wasn't the fundamentals. a gigantic seller caused the fear. many buyers disappeared. they walked away. they didn't wait around to find out what was causing the landslide. had to be something big, right? they just wanted to get out as fast as possible. lightning. on air i called it a phony sell-off because the decline had no basis in economic reality, which made for a tremendous buying opportunity. error>> that is not a real place, it's too bad the system obviously broke down. >> we are trying to get the specialist to talk about what

happened. >> the machines failed. it obviously broke down. it obviously broke down. the market didn't work. it broke down. the machines broke down. that's what happens. >> that's exactly what happened. it had nothing to do with the fundamentals, just more of this nonsense. while some listened, many people didn't believe that equities could be that fragile, and they left. it was shocking. in all the years i've been doing this show, i hope i've taught you stocks are not hard assets. they're subject to whims that can reduce their value in a heartbeat, including mechanical issues. they're just -- it's just not perfect enough, and people think they are. anyway, the market regained its equilibrium but not before others left and never came back. what about the august 2015 sell-off where the dow fell 1,500 points. that was related to fears that the federal reserve was going to raise interest rates, right in the teeth of one more story about the china market

collapsing. china's been collapsing for ages. back then the chinese market was the most dominant negative story out there. the whole economic edifice of the erp could collapse at any time. it's been a common refrain. i suggested it was time to raise rates despite the sell-off. it demonstrated a cavalier attitude toward the market's ugly but fragile mood. when we came in on monday, august 24th, we heard there were large sell orders in place for major stocks. we weren't ready for the gap downs where large capization stocks were shedding hundreds of thousands of value. many down 20% as the market opened. and we had no ability to tell why. like the crash of '87 was very tough to see what the real prices were. the confusion was that horrific. it was like trading in for fog of war. yes, the fog of trading. some stocks were down 40%, 50%.

it was indeed crazy town. as the market rolled open, the dow climbed 1,000 points by 10:00 a.m. we were pretty stymied at the time. i remember hearing david shouting about the meaning of the sell-off. his reaction was priceless. >> i don't -- this is -- i got to make some phone calls because these are -- these are enormous moves. >> i got to make some phone calls. i remember when he said it. i said, yeah, that's it, i got to make some phone calls. that's how confused we were. that's how wrong we knew it was, but you can't go out and say it's wrong. again, we figured there had to be something very bad in the economy. somebody knew something we didn't. something other worldly. maybe china had collapsed. maybe there was war somewhere. maybe something happened in europe we didn't know about. there had to be a good reason for that kind of decline. i was suspicious know because some of the hardest hit stocks

were the bullet proof names. that made no sense. that's what people buy when the economy softens up, they are safe havens. once again i suggested it was the machines causing the problem, the futures had overwhelmed the stocks and the computers had gone haywire, just like the former crash. a beautiful met forof sis met forof sis. it was an excellent time to buy stocks. why was there such fury confusion at the time both in 2010 and 2015? why were those mini crashes so frightening? i think investors weren't ready for eat because post-1987 the government put in circuit breakers. they were supposed to cool declines by stopping trading momentarily. but the circuit breakers created an odd sense of security that

still exists today. they did very little to stop the destruction of your nest egg. so please when you hear talk of circuit breakers protecting you from fast declines, no, don't believe it. fear can't be legislated or regulated out of the market. it will always be there. there will always be people who react horribly after the initial event, even if that event is mechanical and not substantive in nay chur in any way, shape, or form. there were other crashes worse than those of 2010 and 2015. i can think of days in the covid crash we were down #.# % to 13% in a single session. but the covid crash was very straight forward. government shut down the whole economy to fight a deadly plague. zero confusion. if you thought my commentary was -- we show you how to run a portfolio in real time. these moves are never going to go away. as we get further from the last

one, i always anticipate the next one. what's the bottom line here? if you can figure out when a sell-off is caused by the mechanics of the market breaking down, you have an incredible buying opportunity. you have to determine whether it's related to the fundamentals of the economy or not. if it is, stay tuned. if it isn't, stay tuned anyway. you have first class panic on your hands and nobody ever made a dime panicking, but boy, oh, boy, did they coin money making the other side of the trade. mad money's back after the break.

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not all day is your winners in the market, and knowing how to hand it will down days is key. we have you covered on "mad money." there are lessons on the really bad days that can help. set the stage, back in october of 2007, the dow peaked at a little more than 14,000. if the fed had raised rates over and over again, 17 times, and the economy, after clearing for just a bit, fell off a cliff. it's one of those things you could have seen coming if you paid attention. specifically, if you had paid attention to me back on august 3rd of 2007. when i -- the fed for having raised rates so much oblivious of the damage it was doing to the real economy. >> i have talked to the heads of almost every single one of these

firms and he has no idea what it's like out there. and bill poole has no idea what it's like out there. my people have been in this game for 25 years, and they are losing their jobs. and these firms are going to go out of business, and he nuts. they're nuts. they know nothing. >> what did i mean by that? surely before i came out and set that moment with my old friend, i'd been talking to the head of a major wall street firm about problems in the mortgage market. pretty much everyone who followed the mortgage market knew there were a lot of unsound practice os curing. yeah, here's the keys. he talked about how many mortgages of the 2005 vintage -- he used a term i only associated with fine wine -- just weren't good. something that only happened once in our country's history, and that was never supposed to happen again, and that was the great depression. i had friends at a lot of firm,

so i started making a lot of calls. the problem seemed to be spreading like wildfire. i called guy who is ran major firms. that's what i said, my people. everybody said the same thing, we're in big trouble. and that's why i went off so strongly on my rant. sadly, the fed didn't listen, especially this fellow bill poole, who at the time was an incredibly important fed official. he was so silent about things i had to single him out in the rant. years later when the transcripts for that period were released, i found out my rant was brought up but only as a joke. soon after my they know nothing rant, we had a series of horrendous defaults of large banks and savings and loans, some of which were thought too big to fail and failed anyway, including the two of the largest most fabled brokerage houses. i did my best trying to get people out, even went on the today show urging anyone who needed money near term to take it out of the stock market before it was all lost. >> for investors, what is your advice today in. >> whatever money you may need

for the next five years, please, take it out of the stock market right now. >> very dramatic statement. >> i thought about this all weekend. i do not want to say these things on tv. >> mm-hmm. >> well, sure enough, the market fell another 40% before it bottomed. it was a good call. if you bought any time when it peaked at 14,000 to when it was cut more than in half by 2009, you lost a fortune. probably never came back in stocks. probably gave up. so how do you know to avoid buying this kind of dip? how do you tell the difference between the leadoff to the financial crisis and a sell-off opportunity? you have to ask yourself about the state of the economy. like major firms going under and big companies unable to pay their bills. are there actual runs of multiple financial institutions around the country, not just in one area. if the answer is yes, you have a decline that could be joined at

the hip with the economy. one that has true systemic risk, that's the term, meaning the entire country could collapse. that's why i got so angry when people said this is going to be -- i get angry every time when people say it's going to be like 2007, 2009 when there's nothing like that occurring. the moment we got a viable vaccine, we're back to normal. we heard about systemic risks when the banks went under in 2023, but within a few months we were over it. the odds are, you're worrying too much. second, you want to know if there's anything in place that can save the economy and turn it around. that's important too. our elected leaders did very little. what brought the -- a forceful statement made on 60 minutes no less -- boy, he was letting them go under left and right until then. we had watched. the fed was sitting on its hands, but the moment he decided

that something needed to be done, the stock market bottomed. what are the ways to spot the bottom? there's a proprietary oscillator i watch. it's a paid subscription product. when you get a minus five, that indicates there's most likely too much selling. hey, when you get a minus ten, you've got to do some buying even if everything seems horrible. we were getting signals things were much worse, near the bottom in 2009. i like to see who's been pessimistic or concerned about stocks but is reluctant to say anything positive who then changes his tune. the best example of that kind, of that big switch, came from the late great mark hanes who had this to say back then. >> i'm going to step out on a limb here -- >> this is the big, hold on, everyone, we've been waiting for this. >> i think we're at a bottom. i really do. i think we're going have a rally. >> there we go. man unafraid to make a call.

>> i don't think it's going to be a bear market rally. in other words i think today this is for real. >> man, what a call. hook at that, march 10th of 2009, the day after he was on 60 minutes. just a huge contrarian call from someone who hadn't been willing to make one until that moment. best call i've ever seen. it made a ton of sense to sell when i said to sell in october of 2008, but before you say to yourself, what happens if no one warns you again the next time, you know what, i got some good news for you. it's sobering but it's god news. if you waited long enough, six years to be exact, you did get back to where you were before the bear market began. six years. if you sat tight in the worst market in living memory you broke even and went on to make a killing. a lot of people struggled to get back in at a lower level because they got burned out of the asset class. so here's the bottom line, the financial crisis gave us a once-in-a-lifetime bear market with true systemic risks, but

that's the exception not the rule. let's take questions. let's go to washington. >> but boo ya, jim. >> what's going on with you? >> oh man, you know, i'm trying to have a cup of water. we have a lot of bad weather out here. i'm trying to get it together. we've got to give a shout-out to you from the great northwest. you're doing a great job. >> done, thank you. i'll take that shout-out. >> because you get advice from around the world, might as well go to a qualified banker. what i want to say i'm curious high hielding dividend stock as a form of investment. are they too risky or lose market value, are you going to be hit? and if you do agree, is there a barbell approach? >> stackwell, i love it. i don't want to reach. i don't want dividends that are so high yielding that something's fishy.

what i want are very solid companies with good balance sheets that pay dividends that we reinvest constantly. that is nirvana for me, and that's the way i would love to invest if i could own individual stocks. the 2008 financial crisis gave us a once-in-a-lifetime bear market with true systemic risk, but that's the exception not the rule. much more "mad money" ahead. i'm giving you a flash crash survival guide with some takeaways from the crashes of 2010 and 2015 and the best way to pop pullbacks. and then i'm answering questions with jeff marks. so stay with cramer. loin lienz [due at target in 5!] copy that. make a hard left down the alley. network's got you covered. [please confirm requesting back-up.] -changing route. -go. roadblock ahead. ...back up, back up... reverse! reverse!

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in tonight's special survival guide edition we're

discussing how to deal with brutal sell-offs. specifically how to defend against them, take advantage of them even because you know i like to be opportunistic. but those are easy to spot because it'll seem like the world's falling apart, like in 2008. you don't need me for that, but now i want to help you gain out the other less dangerous kind of crash, the mechanical kind, caused by a broken market and a healthy economy. now, the best way to deal with these sudden declines is to recognize that there's a bottoming process, one you can spot. so what should you do? i have a solution that's working even the toughest of times. i like to look at something i call the accidental high yielders. i used to actually call them ahys on this show. those are stocks of companies that are doing fine and have good balance sheets. that's very important, by the way. but their share pressures have

fallen so low that they're giving you a good yield. when you look at historic level dividend yields, i want to look at the ten-year treasure. if it's paying double because of a marketwide decline, you're probably looking at an accidentally high kwleeld. as long as the stock's been going down for no particular reason. that's why you should focus on companies that aren't particularly sensitive to things in the economy that have very good balances. second, if it isn't giving you opportunities, use a mechanical sell-off to pick stocks you like. you can do this on a wide scale. that's why e-i recommended during the 2010 -- i told people to use wide scales. premier stock and buy some using limit orders only. don't use market orders because you might end up getting terrible prices. frankly, you should never use market orders, because it's especially stupid during a crash. if the market does come right back, like it did after the

flash crashes, you've picked up terrific merchandise and amazing prices. then you can flip the stocks for big profits or hold on to them for the long haul. take a look. i demonstrated exactly how this works during an appearance on tv when the flash crash happened in 2010. >> p&g is now down 25%. >> if that stock is there, you just go and buy it. it can't be there. that is not a real place. it's at 47, well, that's a different security entirely. so what you have to do, though, you have to use limit orders because proctor just jumped seven points when i said i liked it at 49. from the market was down 900 points. we're now down 688. >> i flip it at 59. i just made 500 gs. >> yeah, that's the craziest one i'm talking about. a lot of people did that proctor trade. i've been thanked a dozen times people thanked me. the limit order advice really

does ring true. we talked about meltdowns and gut churning moves that are untentative for the economy. what causes these declines? >> there are usually different varieties. first sell-offs by the federal reserve. there's a reason that -- when the economy's weakening, it's the federal reserve's job to try to restore growth. as long as the fed's printing money almost every decline is a viable one. it's just a fact of life. it's been like that since i got in the business. but when the economy is strengthening and perhaps starts to overheat, the fed has a different mandate, stamping out inflation. the market started rolling over with the highest risk groups getting evis rated. nobody wants persistently high inflation. those of you who missed the '70s and '80s know from the post-covid experience. it caused the great recession.

now, there are plenty of times in the fed's tightening, but the stock market didn't get crushed because the economy didn't get crushed. that's how we got the incredible bull market in 2023. some prognosticators will tell you the market will crash or at least take a very big header. that's inevitable. when you hear these comments, don't panic. federate hikes don't necessarily lead to crashes. i've seen plenty that do next to nothing. there are reasons why the stock market deserves to go down when the fed tightens. i like gold as a safe haven. i believe every person should hold some gold, prefly buiant, but there's a hedge against economic chaos. actual real estate can be a good hedge. we have -- as a whole.

finally, we have bonds as an investment alternative, and bonds are the source of the problem when the fed tightens. when short-term treasuries give you more than 5% risk free, lots of people cash out. it's not a bad return. as the fed tightens bonds, short-term pieces of paper become more competitive with stocks. high yielding dividend stocks are among the worst performers. suddenly they've got competition from fixed income. so please be careful of these dividend stocks as safe havens when you're dealing with a sell-off from the fed. they can spring back when the fed starts tightening. the second reason stocks can go down legitimately when the fed raises rates, because the fed isn't perfect. they raised rates when they should have stood pat or cutting rates fast because the economy was slowing rapidly. in recent years, j. powell has been more responsible about not pushing us off a cliff than some

of the previous feds. but sell-offs in the wake of the fed raise, those are trickier. although they can lead to decent opportunities. as long as you stay away from the high yielders that become less attractive when the fed tightens and stick with the accidentally high yielders that might just give you the delicious bounce when the fed's done tightening. "mad money" will be back after the break.

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tonight we're talking sell-offs. specifically during this block what causes garden variety pullbacks. many time the problem is indeed

the fed, but sometimes there are other issues that are driving the carnage. for starters, there's the issue of margin. as a former hedge fund guy, i'm well aware there are many times when money managers borrow more cash than they should. they don't have the capital to meet the demands. these kinds of declines have repeatedly happened, including february of 2018 when funds that had borrowed money to bet against stock market volatility got their heads handed to them. they were short, expecting the market to remain calm, stupid, at the same time they borrowed money. real stupid. when the stock market fell, these managers were forced to dump their s&p 500 positions. they had to raise capital and unwind trades. there were so many doing it at once that the selling ended up causing severe marketwide losses. these margin breakdowns often occur after the market is down for days in a row. that's why i'm telling the market to be agressive in the

first few days of the decline. it doesn't happen immediately. they got to have to keep chopping. how do you spot these margin proven declines? i use the clock. they don't want their firms to be on the hook for overstretched individuals or for hedge funds. they want to get out before the night. they raise some cash or sell you out of your positions without your say so. i would consider the margin the butcher. it occurs between 1:00 and 2:00. i think you have a decent chance to start buying safety stocks, the kind of stocks that tend not to need the economy to be strong, to advance like the healthcares. mightalso want to buy the second growth place, i, look, i talk about them all the time. especially members of the cnbc investing club, because we like to own the best ones for the travel trust. what else can create viable

opportunities? sell-offs from overseas. i cannot tell you how much commentators scare the bejesus out of us because they say it's from mexico, places. ask yourself do, any of these woes impact the stocks of the american companies in your port foal wroe? do they really make you want to pay dramatically less for individual u.s. stock? usually the answer is no. unfortunately, you can't start buying stocks hand over fist and do an overseas-driven sell-off. you should always assume there are people who don't understand how unimportant these are in the grand scheme of things, and of course, those people are going to panic. you would have thought they would have known better, that's why these international declines often last for three days. again, the best way to figure out if they're done is to watch the clock as the sellers usually need to be margined out against their will if there's going to be a bottom. another kind of sell-off, the

ipo-related decline. stock marks are markets first and foremost, and markets are controlled by supply and demand. so if the bankers start rolling out lots of new ipos and these companies sell smars you end up in a situation where there's just much too much supply and not enough demand. by the way, we saw this near the end in 2021, after we've been drowned under the weight of 600 odd ipos and spag deals, oh man. >> don't buy, don't buy. >> my suggestion, avoid the blast zone, the area where most of new ipos are concentrated, and focus on stocks that are down. we've got to be nimble with these. isolated the sectors where the shortfalls are occurring and avoid them like the plague. there's no reason to stick your neck out here. instead buy unrelated stocks that have been hit by the much

broader seller via the s&p 500 futures. then there's the trickiest kind of risk, one that's truly -- political risk. i find this overblown. whether it's because of strife between parties or trade policies or even all out war risk, i am not a political guy, and i hate talking about this stuff on air and off air, but with every stock you own, you need to ask, does this company have direct earnings risk when it comes to washington. if not, then you've got nothing to worry about. however, if you own something that's directly impacted by, say, a trade dispute with why that or a government shutdown, it could turn into a house of pain. there are so many pundits everywhere waiting to give you their two cents. i think these guys want to scare you. tune it all out, please. look for companies that have nothing to do with the political fray, even as their stocks might be brought down by it. as we see every time there's a debt ceiling stand-off, i can't tell you how many times since 1999 i've seen politics used as a reason to sell stocks.

they may be a reason to sell some stocks, but really anything in washington is enough to sell everything. there are all sorts of sell-off, but unless they involve systemic risk, which is increasingly rare, like in 2007, 2009, there are going to be buying opportunities long term. you need to recognize what's driving the decline. note the signs that it might be subsiding and then take action to buy, not sell, and never to panic. stick with cramer. power e*trade's easy-to-use tools, like dynamic charting and risk-reward analysis, help make trading feel effortless. and its customizable scans with social sentiment help you find and unlock opportunities in the market. e*trade from morgan stanley. with powerful, easy-to-use tools, power e*trade makes complex trading easier.

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i always say the favorite part of this show is answering questions directly from you. so tonight i'm bringing in jeff

marks, my partner crime, to help me answer some of your most burning questions. for those of you who are part of the vinnesting club, he'll need no introduction. for those of you who aren't members, i hope you will be soon. i will say jeff's insight and our back and forth helped me to do a great job for all "mad money" viewers, and more importantly, members of the club. first up we're taking a question from peter who asks as a younger investor that is able to add funds to the market biweekly when paid and the trust having a set amount of funds, how do you recommend putting your new money into the market? i always remember when my late father would look at the list and say, listen, i'm not going to buy all these. which he was never supposed. to i'm going to pick six of my favorites. my suggestion is every two weeks pick six of your favorites, stick with the six if you want to, but invest, invest, invest. if it's up invest, and if it's down invest. we have a question from michelle in california, who asks, how do

you know when to break your cost basis. you must never do this. when we do it, and we've done it sometimes for magnificent seven stock is what we call them, what's happened is those are the only ones you can do it because they come down a lot. when they come down a lot, you want to buy it. we've had stocks come down, come up, and then when the market got oversold we feel tempted but do it rarely. >> after the stock is down, call it 10% from a level, but the story has gotten better, and the stock is down just due to market forces, that would be a good time to violate -- >> it goes up, goes down less, you want to be able to be in there. that is true, that is something you can do. we don't do it very often. now we're going over to one of your mentions. this is one from the blues rock who says, jim, are you sure you're not a fellow italian, the best sauce, not gravy, starts with those tomato jar, so let's

eat. i've got irish, not italian. i don't know what to say. i will point out the saucing came from the fact my tomato yield was so great i had no choice but to sauce. sauce or throw out, and i was not going to do that. next up, a question from jeff in florida who asks if a stock has been in the red for a couple of years and i average down three at a time, when is it good to sell some of that stock? when it gets back to even or do i risk it and what until i have more substantial gains? what you find is at the same time you see when it gets back to seven and you want to sell it is precisely when there's a lot of people who start getting interested in it. i've always found -- i call it stuck in the mud -- when it finally gets out of the mud, people get very excited to sell. what you should think is, no, a stock's out of the mud, people want to buy so. the answer is hold on. >> yeah, and something that i learned from you is we don't care where stocks came from, we care about where they're going. so if the outlook is still

strong you want to hold on, absolutely. >> definitely. i was going to say there's a bull market somewhere. i know i've got to end the questions. i only can do that and say thank you very good, jeff marks, to have you on the show. i promise to fry to find new ideas that are good for you right here on i am contessa brewer, and for brian sullivan. now on "last call", apple's about-face, the tech giant pulling out something we haven't seen in years. during the gold rush, why wall street things are suddenly warming up to the precious metal. and half inning as a moment, a huge day for bed coin, how should investors prepare in this final countdown? are brittle week for donald trump, on track for $1 billion bonus. why? we will show you. plus, sh