dxj. >> tim >> smart stuff, as always. boeing >> karen >> citigroup and congrats to my sister running the boston marathon again >> oh, congrats, stacy >> dan >> if unh disown a lot tomorrow, thanks for watching ". "mad money" starts right now 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 somewhere, and i promise to help you find it. "mad money" starts now hey, i'm cramer. welcome to "mad money. welcome to cramerica other people make friends. i'm just trying to make you a little money my job is not just to entertain, but to educate and teach you so call me at 1-800-743-cnbc newsom or tweet me @jimcramer. the stock market isn't always a friendly place it can be volatile it can be painful and just

downright difficult. [ booing ] there are tons of big picture problems that can derail any rally. problems you might not have any idea about until they hit us smack in the face. that's why i'm so adamant about trying to make you a better investor i want to teach the tricks of the trade so that when the market gets negative, which it always does, when it becomes hostile, you'll be prepared and you'll know what to do the same tricks i teach you about constantly when you join the cnbc investing club. now i spent my entire career analyzing the way stocks trade, searching for patterns of what's worked for me and what hasn't. and from those observations i put together a set of rules, rules that are designed to help protect you from the worst mistakes you can make in good markets and bad. rules that now make up the investing club's, really the guide book, and i'm sharing that

with you as much as i sometimes might seem like an unhinged lunatic, maybe not as much before, the truth is that i'm all about discipline you're going to make mistakes in this business. [ buzzer ] it's inevitable. but if you stick to your discipline, if you stick to the rules, that should help you minimize your losses and maximize your gains. >> hallelujah! >> i'm always telling you to buy best of breed companies, even if you have to pay up for stocks. why should you try to identify the stocks of the best run companies with the best prospects in each industry let me flip that on its head why is owning the best really even a question this when you're shopping for a car, you buy best of breed or the best you can afford we pay out for the highest quality brand because we know that a brand and a good brand signifies reliability. it tells us that we can expect a higher level of service, a quality of ownership that will make your driver safer and easier for years to come

nobody ever set out to buy a worst car, did they? there are simpler ways to put your life in danger. why is it people seem to feel differently about the stock market for instance, why are we drawn to the penny stocks that are constantly being talked about on twitter? it's the same reason why so many people throw their money away buying garbage crypto currencies there are a couple of good ones. not stick with those many go for what we perceive as a bargain. if you're hunting for cheap stocks of low quality companies, it's more likely to lead to losses than to gains let me be clear. i love bargain hunting but i only want genuine bargains where the underlying merchandise is actually worth something. you know what's not a real bargain? buying junk merchandise because it seems to have a low dollar price. that's why whenever i get asked about a low quality stock, you'll hear me say something like hey, skee-daddy, if you

like blah, blah, blah, you'll love procter & gamble, because that's best of greed sure, pg is not going to give you pyrotechnics, but long-term story, a great balance sheet, a long history of dividend boosts and has some of the best brands on earth what makes a company best of breed? like the late great supreme court justice potter sturewart, like what he said about porno pornography, i know it when i see it if you can get procter & gamble on sale, that's fantastic. if you can't get it on a sale, i'd still prefer wow to pay up for something similarly great rather than try to pick up penny stocks just because they seem cheaper, but they're not remember, at the end of the day there are very few genuine bargains out there when it comes to second or third tier players. they deserve to be cheaper the businesses are worth less. don't worry about paying a

higher price-to-earnings multiple for a best of breed business it may seem more expensive, but addition to usually being the better investment, you're buying peace of mind. a great company like nvidia almost always looks super expensive, doesn't it? but the stock charges steadily higher as it has for more than a detour because nvidia is best of breed. once you find yourself in a best of breed company, the kind of company with a story you believe in, i got another important move for you. high quality companies represent value. and giving up on value is a sin just because the stock doesn't act so well for the moment i see so many people throwing in the towel on companies that have realized some real worth just because their stocks aren't working right now. it's driving me nuts look, patience is a virtue in this business. if you have a reason to believe in a business, don't dump its stock just because it's not getting any traction for the moment. >> sell, sell, sell! [ buzzer ] >> you're not a hedge fund manager, for heaven's sake you don't need your positions to show a gain every quarter, every month or even every day.

you don't have any investors who are going to pull their money out from you because one particular position is taking too long to pay off. so just indulge yourself you can afford to wait for these stories to play out. i say this because you will be tempted to sell even best of breed stocks if they don't do something in a short period of time you may correctly identify value, but this market is make it very difficult to stick to your guts, even something you truly believe in when you own a stock that is going down, you're going to feel compelled to give up on it but in many cases, if you have done your homework and have conviction in the underlying business, that urge to sell will be a mistake and look, it happens to the best of us. for instance, in 2016, i did an interview with tim cook, the ceo of apple after the stock had plummeted from $31 to 23 in a fairly short period of time. everybody was giving up on apple. i looked at the stock, which was selling incredibly low, i looked at the customer loyalty, the service revenue stream and the balance sheet and what the heck is the point of selling a stock

of a company that makes the greatest products in history that may sound like a no-brainer, but there are a ton of apple skeptics all the time they're always out there saying oh, the company's best days are behind it, presenting these surveys of apple components suppliers as evidence that her business is decline. time after time they've been proven wrong yet they don't give up they don't go away sure enough, telling you to buy apple at 23 turned out to be a fabulous call because the insane amount of negativity gave you a wonderful opportunity to pick up the stock. apple is a high quality company, a best of breed company. when the stock goes down, you know it's getting cheaper. selling apple in '23 as so many great minds told you do, at 23, would have been a classic example of giving up on value, and you would have missed one of the biggest moves of our lives and there is no apology from those who downgraded then, at least that i know of in late 2022, many were attempting to make the same mistake as nvidia as all things tech had gone through a

miserable year i learned my lesson from apple so we stuck with nvidia and the stock eventually tripled in a little more than seven months. don't be afraid to pay for best of breed stocks. they're also much less likely to blow up in your face the best of breed premium is worth it oh, and once you find a company that is best of breed with a story you believe in, don't let the bears scare you away, even if the stock is temporarily broken, because patience is a virtue and giving up on a value stock is a sin let's go to mandy in maryland, mandy? >> caller: cramer, how are you >> i'm fine, mandy how you doing? >> caller: i'm hanging in there. thank you so much for taking my call. >> of course >> caller: love your show. >> >> thank you. >> caller: i breathe it every day. >> thank you. >> caller: i really appreciate all you do my question is if you have $5,000, how do you invest? >> okay. i have said, and i will

reiterate, that for your first $10,000, and not before then, you should put that money in a s&p index fund, particularly a low cost one i care about diversification only after that you can start buying individual stocks how about jerry in missouri? >> caller: thanks for taking my call. >> of course how can i help >> caller: you stress diversification all the time. >> all the time. >> caller: but my investment strategy is mainly growth. things like gold, recession proof stocks and dividend stocks have all back fired for me i prefer cap tech stops. i've been enjoying the ride on my tech heavy portfolio lately i have 20% in cash and i'm waiting for a down turn so i can buy some more. i feel i can have a 235irly diversified technology even though it is technology dominated. what your thoughts >> okay. look, i think that we have to understand that there have been

times in our careers where that strategy has been very bad that's why you can have a couple of tech stocks but to be that tech heavy, if we get something like a 2000 or even 2008 or 2021 where we begin to roll over, i am worried about your position. let's be a little more careful, a little less concentrated please don't be afraid to pay off for best of breed stocks once you find them, don't let the bears scare you away patience is a virtue givingon value is a sin. always remember that on "mad money" tonight, if you're trying to get a handle on any take, i like to look at one corner of the market to get a sense where we're headed how you can learn from it tew. pullbacks are inevitable but how do you prepare for one i'll give you my strategy for handling whatever the market throws at your profile and our rule for investing that may seem obvious, but it's an easy step that could help you design a more high quality portfolio. so stay with cramer!

♪ hallelujah ♪ >> don't miss a second of "mad money. follow @jimcramer on x have a question? tweet cramer, #mad mentions. send jim an email to madmoney@cnbc.com, or give us a call at 1-800-743-cnbc miss something head to madmoney.cnbc.com. at morgan stanley, old school hard work meets bold new thinking. to help you see untapped possibilities and relentlessly work with you to make them real. i have a business idea. and it just might change the world. but here's the thing, i can't do it... alone. so, are you in?

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and some of my 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. ♪ how can you keep track of a confusing market let me give you advice that rarely steered me wrong. only two things you really need to watch one macro, the big picture and one micro. why don't we start with the big picture. if you want to know where the stock market might be heading? keep your eye on bonds look, i know the bond market is

boring as all get-out. but it's much smarter than the stock market and more importantly, it's very important to the overall direction of stocks. back in the day when i was running my old hedge fund, i would always call in from the road and start the same way. i had to be away from my desk. i'd begin by saying hey, where are the bonds? that's how much it mattered. stock market investors seemingly forget the bond market rules all the time they forgot in 2000 the bond market was soft right near the dot com peak they forgot when the trade 17 times in lockstep in lead-up to the financial crisis, specifically in the worse downturn since the recession paid little attention when interest rates peak and began the best time in years to buy the industrials and even the home builders. it should come -- never come as a surprise to you that long-term interest rates are rising and falling. you've got to know that. you simply must know what the bonds are doing at all times bonds can punch your portfolio in the face.

if you aren't paying attention, on the yield curve, yes, where the two-year, the five-year, the ten, the 20, the 30. that's why i say don't forget bonds. always keep the bond prices and interest rates in front of you if you want to know what might be happening in the future when i was coming in on goldman sachs, i was trained to focus on bonds, the competition i most fear when short-term interest rates, the once set by the fed go sky-high, you have to expect that the dividend stocks, companies like high yields like american electric power, southern, bet they'll sell off because the dividends can't give you yields big enough to compete with the fixed income alternatives but who wants to endure horrible capital losses for measly 5 or 6% yield and not sleep well like you can with bonds when long-term interest rates rise watch the yield on the ten-year treasury. then you have to start be wary that the entire stock market might be worth less when rates

rise if the bond market gets more attractive and the stock market gets less attractive, this can become a giant zero sum game of course, you should be especially worried about rising long-term rates caused by a pickup in inflation, like we saw during the great bear market of 2022 inflation eats away at the long gain assets because the future earning streams have less purchasing power that's really especially true for growth stocks. higher interest rates don't just make bonds more attractive, they also make it more expensive for banks to lend. and of course that puts a damper on the whole economy for a long time we had an ideal environment for stocks low inflation and low interest rates. that's fantastic but then the pandemic hit and the world turned upside down with the worst inflation in 40 odd years which led to a hideous market wide meltdown let's put this another way let's say i'm playing basketball i'd be saying if you just watch the man with the ball, let's call the citigroup and don't

watch what the other group is doing, the bonds, there is no way to get to the basket the man with the ball will determine the action of the stock market so keep your eye on the ball and the bond men without it. what else do you need to keep an eye out? on the microlevel, you need to be very cautious when you see unexplained resignations by key executives to put it bluntly, when the chiefs resign, you should too. >> sell, sell, sell! >> when you see a ceo step down from no reason, you should presume something is wrong and you got to do some selling i say shoot first. ask questions later. i've sold stocks simply because the ceo or cfo resign. and if i turned out the jump the gun, well, i simply buy back the stock. but in my whole investing career, you how many times that a ceo left for undisclosed reasons and the stock was still worth buying then? off the top of my head, one,

visa have i racked my brain to come up with other examples i can't think of them because they're that uncommon. why? simple ceos don't quit for personal reasons, not if they want the keep their bonuses cfos don't quit for personal reasons either these are fabulous jobs. you don't get to be a chief executive by being devoted to your family. no one gets one of these jobs of giving up a great deal of what people enjoy most about life, things like family, friends, nights out, vacation competition is so serious, so fierce that when you finally land one you don't up and leave, not for no reason. when c suite executives leave for undisclosed personal reasons, it's almost always something wrong at the taken, even if it's something they did. when a high level company people quit, it is a sell i know he had a quit about climbing k2 or a cfo left because she did want to send me more time with her family.

fine there are exceptions here is the thing. when you're investing in the stock market, it's not the exception that matters it's the rule. always the rule. there will always be situations where it would be a mistake to sell a stock when senior execs leave. i don't care, because most of the time, sell willing be the right decision this is the kind of rule that helped keep me in the game at my old hedge fund it's all about helping you avoid losses and one way you do that is by not taking unnecessary risks like many campaigns where the ceo resigned for personal reasons. if you want to get a handle on the stock market, watch what's going on with the bonds. that should be obvious at this point. but it's something people quickly forget once the economy regains some semblance of normalcy and when you're looking at individual companies, remember that unexplained high level executive resignations equal -- >> sell, sell, sell! >> sell. "mad money" back after the break.

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icy hot. ice works fast. ♪♪ heat makes it last. feel the power of contrast therapy. ♪♪ so you can rise from pain. icy hot. ♪ before you can be a god investor, you need to be a realistic investor there are far too many people in 24 game who are a are not realistic. either they allow their emotions to cloud their judgment, or they allow themselves to be surprised by the inevitable. so let's start with the inevitable you think people get comfortable with the idea that stocks can indeed go down --

>> sell, sell, sell! >> after the dozens of correction and meaningful sizable pullbacks we've had over the past several years, you think we get used to the process and watching the stocks drop in price, something can happen and will happen. if people were reasonable, if we were a realistic species, you might assume we would say something let's prepare for the inevitable correction because it could be around the corner aside from the permanent bears, most people act like every correction is a total shocker, the type of thing that never happens. every time the stock market goes down there, is a huge contingent of people who seem stunned, just totally caught by surprise to me, corrections are like the rain i know the rain is inevitable. so do you? i expect it to rain. i prepare for it when the rain comes, i'm ready have i an umbrella or coat or i stay indoors that's how you need to approach the possibility of a pullback in the market sooner or later we're going to get one. so best have some cash ready on the sidelines just in case that time turns out to be now of course, plenty of corrections happen in allegedly unexpected times.

in recent years, we've had a lot of major declines that were preceded by terrific updays during which we made lots of money. in january of 2018, the stock market roared higher people were acting like we had this unstoppable rally but in february, they got obliterated. >> sell, sell, sell! >> in the fall of 2021, we were coming off a magnificent year and rally where practically everybody was making money because picking winners so so darn easy. then the whole market rolled over, and it took months for people to realize that no, this was not some temporary dip it was a bear market but there were some terrific days in 2021 before everything fell apart why do i mention this? because the time to be most worried about a looming correction is the moment when nobody else is concerned that's when we get these brutal, supposedly unexpected declines when everyone is so euphoric i used to have a rule at my hedge fund when i made 2% in the day on the upside, 2%, i knew i was too exposed. i knew i was too long, as we

say. i knew that my portfolio would kill me if we got caught in a storm. i simply had made too much money all at once. so as the market lifted or as my performance was swinging too much to the upside, i'd pull back, sometimes fiercely, selling. >> sell, sell, sell! >> to prepare for that big down day just around the corner and it does prove to be just around the corner. sometimes the corrections never came, and i had toswallow my pride days later and maybe buy everything back that i had sold. but when we did get hit with a major sell-off, my hedge fund outperformed that my clients thought i was genius itwas discipline, preparation. plus, i'd been able to use that money to buy all sorts of high quality stocks into weakness look, we may not be able to predict when a storm is going to strike, but we do have a barometric readings that can help immensely where should you get your weather report well, i got one. i like to follow the proprietary market edge oscillator a terrific indicator

i pay for it that tells us when the market is getting overbought and oversold whenever there is an oscillator, which you can subscribe to through the investing club at a pretty good deal, 5 or above, that tells me we've come up too far to fast to where it's gotten dangerous. you need to pullback aggressively and then -- >> sell, sell, sell, sell, sell, sell. >> and wait before you buy in. what do i mean pullback aggressively if you're nimble, admittedly a big if, you might want to ring the register on a nice part of your profile, as we always, always advice you if you're a member of the club we spend hours teaching you how toe sell discipline. that way you have a ton of cash on the sidelines that you can use to buy back your favorite stocks at lower levels when the storm hits even if you're not at all nimble, you should be selling something to raise some cash when the oscillate they're we talk about all the time is plus 5. by the same token, when the oscillator hits minus 5, it means the market is totally oversold and it's time to, buy, buy, buy, buy, buy, buy!

>> yeah, it's time to buy. we usually come down so far so fast that we're due for a short term to be trading in it's a good place to put your cash to work if you haven't already. and some of our best work with the charitable trust has come when we tiptoe in down 5 on the oscillator when it hits minus 10 where it was about the week before the market bottomed in october of 2022, you all get massive moves higher so then we hold our noses and -- >> buy, buy, buy >> so this tool can help you spot bottoms and avoid tops. worst case scenario, you sell something at a high level. but there is no storm and stocks go ever higher, which means you underperformed the averages because you have too much cash on the sidelines i will take that risk. i'll admit, it is real risk. at my hedge fund i gave my investors a 24% compounded annual return after all fees, about three times what the s&p 500 would have given them over the same period. as i see it, that's pretty strong evidence that avoiding

losses on big down days more than makes for the possibility of missing some big gains on the up days. let's talk about the other component of realistic investing. you need to stop yourself from making investment decisions based on misleading emotions, and the worst of those emotions is hope. whenever i hear the word hope as i hope the doom stock du jour will come back to where i bought it so i can tell it without taking a loss, i get angry hope should never be part of the equation don't hope for anything. hope is emotion, pure and simple and that is not a gym of emotion, or at least not your emotions every stock you own because you hope it goes higher is another position in your portfolio that's not being filled by a stock is that you belief will go higher as opposed to hope. yet i hear hope constantly that's fine if we're talking about religion it's good if we're talking about sports you know some of those come from behind ncaa teams, they keep their players motivated through hope but in the stock business, hope is a mistake because hope

supplants reason, especially when we're talking stocks that trade in the single digits you tell yourself i bought this stock at 5 now it's at 4. i hope it goes back to 5 and then i'll sell how hard could it be to go from 4 to 5, right? wrong. no company ever sets out to have a single digit stock most companies will fight tooth and nail to keep their stocks from going into single digit territory. so if you find something that sells for a few bucks, the market has already rendered a very harsh judgment indeed when you let hope become part of the equation, you can end up holding these low quality pieces of paper, waiting for something that will never likely occur forget hoping and waiting for higher prices. cut your losses and move on to a stock you can actually see that could go higher under its own power, not because of hope because hope cannot be the reason of course, when there are times when hope pays off like 2020 and early 2021 where all sorts of

garbage could roar higher because there was so much easy money and so many credulous investors looking for easy wins. the moment the fed took away the easy money, that whole playbook blew up in your face and anyone who keep buying stocks especially on margin or with borrowed money basically got eaten alive. >> the house of pain >> the bottom line, it pays to be realistic in this business. so prepare yourself for corrections. big pullbacks are like rain. they're inevitable and whatever you do, don't make stock-picking decision based on hope you need to invest in the real world, not in the fantasy land let's go to denise in massachusetts. denise -- dennis >> caller: dennis, dennis. >> dennis, how are you doing >> caller: i'm doing fine. glad to talk to you. >> you're very kind, dennis. thank you. >> caller: i'm honest, yeah. i have a question real quick if there are any kind of mistakes or pitfalls that people should avoid when managing their 401(k) accounts?

>> i think what people do is they take too many -- based on thinking that oh, it's for the long-term. they take flyers now i think it's find if you take flyers when you're in the teens or in the low 20s because you've got your whole life to make it back but when it comes to 401(k), we want standard strict discipline, good dividend, good balance sheet, good growth that's what i believe is right being realistic is key expect corrections and don't allow hope, please no hope is an investment strategy bazillion because it's not. much more "mad money" ahead. do you know what you own i'm sharing why having a thesis for each of your holdings can be a winning strategy then, when it's time to raise cash, how do you determine what to sell i'll give you my plan. and one of my favorite aspects of this show is getting to hear from you so i'm bringing in my investing club partner jeff marks to answer some of your most burning questions. so stay with cramer.

(subway noises) ♪ ("tosca, act ii: vissi d'arte" by maria callas) ♪ ♪ (orchestra del teatro alla scala, milano) ♪ ♪♪ ♪♪ ♪♪ (cat meowing)

♪ ("huge beats" by louis perez) ♪ ♪♪ ♪♪

you know you don't need me to tell you that the internet has been kind of a double-edged sword. that's true in every area of life, including investing. it makes everything more convenient, right? you have all sorts of information available at the push of a button and your fingertips, something that was unimaginable when i got started in the business. it was much harder to do homework in the old days it took real efforts these days everything is searchable then there is chatgpt. so the internet is great for investing, but creates tons of new problems when we have new problems, we need new rules to help contain them you have to be able to explain your stock picks to another human being. if you can't explain it, you don't understand the story well enough to be buying the stock in question, right? in the old days this rarely came

up but the rise of the internet took away one of the most important breaks in the process, one of the most important warning systems which is talking to another human being about what you want to buy it used to be you had to took tauk to a broker to buy anything now with the stroke of a key you can buy without ever having to tell another person why you're doing it then it's cell phone, then it's lithium. so even that, you don't even have to pay a commission to me, i'd much rather have the commission and a real person but it might not happen. why is this an issue why do you need to explain this stuff to someone, to anyone else it doesn't have to be a professional, by the way it could be anybody. preferably an adult. but you can fall back on explaining if you can't find an adult willing to listen to you babble about the market buying stocks is a solitary event, too solitary if you can me to err is toe-r-r. if you want to cut down on these mistakes, force yourself to

articulate to someone else why you like that stock. do you know how they make their money? do you know how their earnings is supposed to look. if you don't, then you're setting yourself up for trouble. you won't know what you're look for. i always see this problem in biotech. so many people in biotech without even the vaguist understanding. they have no idea what the underlying company does or how it can possibly turn a profit. they don't even know the drug pipeline they just know it's hot, hot, hot. and that is a real bad reason to buy. i urge you to be able to articulate a thesis for owning every stock in your portfolio. you've actually done the homework if the stock gets slammed, you'll know whether to cut and run or maybe buy more. if you don't actually know what you own, believe me, you're going to get slaughtered on the next decline you are going to sell at the bottom, and there is always a next decline when i was in my old hedge fund, i always made my employees sell me the stock before we pulled the trigger, literally like a sell person. i'd pitch to it the boss

if you're in a position where you're picking stocks yourself, get someone to listen to you and let you articulate your reason i always like to say hey, what's going to make this dog go up what's the catalyst? that's the key word, catalyst. or have we missed the move in this overvalued stock up 100% already this year? and of course what is your edge? these are all important questions. if you can't answer them, you shouldn't be buying. and look, the ability to make hasty decisions is not the only thing you need to be wary of on the web. there is something else you need to watch out for the internet has vastly increased the power of the wall street promotion machine most people simply don't have enough respect for the promotion machine. you don't have to like it, but you have to acknowledge its power, and you have to know what it is. when wall street falls in love with a stock, it will go much further than anyone expects in efforts to hype the stock to high heaven. think about all the garbage spec stocks in 2021, '22 by merging with special purpose acquisition vehicles, big pools of money

that exist to make big acquisitions originally they were meant to make lots of little acquisitions but in 2020, some geniuses realized they could use spac murders while skirting all the intense regulatory scrutiny you get when you actually do an ipo which is what they should have been doing the electric vehicles. jason spac in 2021 with totally made up forecast that went out many years into the future if you tried to pull something like this with a real ipo, you might end up in prison the s.e.c. would never sanction this stuff if went to a bank to borrow money with these projections, they would laugh you out of the room yet wall street let the spac details happen because the investment bankers wanted the fees the securities and exchange commission was asleep at the wheel. you couldn't count on them wall street is a strange place there is no one around who says you know what? we shouldn't crush people with made-up estimates and impossible to meet projections. we shouldn't close our eyes to what we know can't work, because they want the money.

they didn't care that you, that the people running the spac targets, though, were charlotte ta charltons. they didn't care we couldn't spot it. eventually the most egregious got prosecuted, but not until after they lost people fortunes. and the level of hype of legitimacy here was ridiculous the whole spac boom started with nicola, an electric vehicle play with a stock that soared to the stratosphere and then we found out that it made outrageous claims that couldn't be backed be uppity facts. nicola is the one with the video of the electric truck. they rolled it down the hill to make it look like it could run under its own power. i watched. i thought that thing was incredible it's the dumbest fraud imaginable so i want you to do this the next time you see this kind of enthusiasm for potentially dubious merchandise, take your cue from public enemy. don't believe the hype one last thing, and that is really true of all media, both

online and off, whether you're watching tv like watching me, or scrolling through tweets, please be skeptical it pays to be skeptic. my general approach is when you hear on tv is possibly right and likely not fraudulent, but no more than that same goes for the web, except you have to be a lot more careful because there is a ton of junk information and uninformed comment taken online. and chatgpt, going it after, okay so repeat after me just because someone says it's on tv, that doesn't mean it's true you can't believe everything you hear that's one reason we mostly just talk to high level executives ow mostly ceos, right a couple of cfos now and then. they can still mislead you but if a public company's ceo outright lies about how their business is doing, let's just say their legal bills will really start to add up get me but generally speaking you see a lot of money managers coming on

television and future a variety of legitimate reasons, these guys aren't well vetted and often managers can't help themselves when it comes to being promotional. so here is a good rule of thumb for you. if a money manager on tv and he is moving his lips, he might be hawking his book when someone comes on and says some plunging stock is a buy, do you think hmm, that sounds like an opportunity no instead you should wonder he must really be stuck in that pig. is he bailing when i'm buying? you know it's awfully hard to tell here is the bottom line. please, always be able to explain your stock picks to another human being, and never take anything on faith in this business not gospel, not from the wall street promotion machine and especially not from money managers who love to come on tv and tell you they are right 100% of the time. "mad money" is back after this break.

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you can stay on top of the market from wherever you are. e*trade from morgan stanley. ♪ no matter how smart you are, no matter how well informed, no matter how lucky, sooner or later you'll make suboptimal stock picks. it happens to the best of us every portfolio manager has a few duds the difference is how you handle your losses. people seem to have a natural aversion to selling losers i don't know professionals and amateurs alike hate doing it. i know, believe me, i sure hate selling them for the charitable trust, but it has to be done still, somehow we keep hoping, operating under the assumption that a sinking stock is somehow wrong and everything will be just fine if we just hold it on

long enough. they rationalize that the weakness they see will be fleeting and others will soon recognize the value of the stock in question, hope, hope, hope. that's all well and good until you need money maybe you want to raise cash because your portfolio has gotten a little too stock heavy. maybe there are some real life expenses that require you to put together a lot of cash in a hurry. maybe your money manager with some investors want their money back redemptions. this is where the tendency to hold on to our losers shows its sinister side. a lot of investors would prefer to sell their best performing holders rather than their worst performers they'll sell their winners to subsidize the losers that's where it's wrong. you get a self-fulfilling spiral as the bad stocks stay bad with fewer winners, performance will get worse this is particularly dangerous for a hedge fund, because bad performance trig mothers redemptions from your clientsasm vicious circle and if you keep selling winners to give them their money back, it becomes a nightmare

vicious. you only have a finite amount of capital to invest. rather than taking your medicine, the loss, far too many people prefer to remain in denial and pretend the losers aren't losing. you've done it i've done it that's my rule never subsidize losers with winners. my advice to anyone snuck this position is simple sell the losers and wait a day if you really want them go, back in the next day and buy them i bet you won't want to. once they're out of the portfolio, i doubt you'll be tempted to bring them back you can't keep hanging on to low quality stock because you're hoping for a takeover. look, i get it nothing is more exciting than a takeover nothing is as lucrative. a lifetime worth of gains in a day from a takeover. it feels good. these include buying a lot of bad companies in the hope that they might catch a bid funny thing about bad companies. they rarely get bids in reality, what gets acquire ready great companies with cheap

stocks, not crummy stocks that seem cheap but are pretty expensive. somebody buys the junk merchandise because they a takeover is going to save me next rule. never speculate on takeovers of companies with bad fundamentals. the odds are you'll end up owning something that could go down much more than you thought. even if it has a limited upside. even if a bad company gets a take it might come in at a much lower price than you initially paid for the stock that's the thing about bad companies, the stocks tend to go lower, as they should. you would do better buying a well run company in good shape and still get a takeover from bad companies. not in ceos can turn bad companies into good ones don't wait around for a company with lousy fundamentals to to be taken over you can be waiting forever, especially in a world where some regulate verse gotten more aggressive about blocking mergers. you've got my blessing to speculate on takeovers if you're betting on well run companies only even if the deal doesn't happen,

a good business has other ways to win plus, when the stock of a good company goes down, you can confidently buy more into weakness that's not something you can do with a company gone bad to worse while you're waiting irrationally for lightning to strike the bottom line, please, please, please, never sell your winners to subsidize your losers if you need to raise money for whatever reason, take the darn loss and sell something that's underperforming. and absolutely do not speculate on takeovers in companies that have deteriorating fundamentals. a possible stakeover is the only reason you have for liking a stock, you shouldn't like it in the first place. stick with cramer. boo-yah, jim your integrity makes you the boo-yah saint of wall street >> boo-yah, jimmy chill. >> boo-yah, jimmy chill. >> ba-ba-boo-yah, jim. >> quadruple that's a lot of boo-yahs

♪ i always say my favorite part of the show is answering questions directly from you. tonight i'm bringing in jeff marks, my portfolio analyst and partner in crime to help me answer some of your most burning questions. for those of you who are part of the investing club, he'll need no introduction. but nose who aren't, i hope you will be soon, i would say that jeff's insight and our back and forth helped me do a better job for you, for all "mad money" viewers, and of course for members of the club. jeff and i do this sort of thing during our monthly meet wrgs we give you an in-depth look at the latest portfolio questions, answer your burning questions, which i know you have. if you like, we would love you to be joining the investing club so let's take some questions. ty when you advise people to take out their cost basis and play

with the money and let it run, what do you suggest for people taking profits >> i find this difficult because i want people to take their cost basis out. i also don't want them to miss out on a big move. cross disciplines. but i still favor making sure they don't give back the gain. take the cost basis out, and then let it run. but i don't know you're more conservative. >> absolutely no one ever got broke taking a profit. in leli lilly was a big performe in a tough year, but because it was doing so well, a lot of new drugs were being approved, good trial results, we were taking profits every 20% or so higher it's a good way to look at it. >> it's an art, not a science. but i think that staircase worked well for us all right. here we're taking a question from herm, who wants to know, jim has been talking about battling the stocks that are down what exactly does that mean? trading a particular for a

while, doubling down on a stock that is down from its cost basis, finding good exit point to sell the stock? thank you. this one is so tough when i say battling, i mean yes, it's a stock that's down that we like and we want to try to get our cost basis lower by buying some. but we also want to scale out if it goes up rapidly this is, again, jeff, i think you and i go back and forth because when we're battling, that means we're playing a little too much defense, but sometimes we're just stuck. >> and the whole time we're trying to understand do we have a broken stock where the company's fundamentals are still good, but maybe it's not being fully recognized by its value in the market or is it a broken company where there is something really fundamentally wrong. i think that's all part of the battling process broken stock, got to have patience >> yes and broken company, you got to sell next, let's go to michael. can you recommend a few stocks when you're investing for young

children investing four our children or grandchildren. that would be helpful. >> there is a time when i would say buy disney i find disney troubling. you have to buy cereal stocks. try to put something on the breakfast table or the dinner table, campbell's soup but i think a younger person should own technology, a really super growth stock so i'm thinking maybe drug stocks, high growth drug stocks, or maybe what you do is you try to find some kind of new technology that would be really exciting years from now. that might be. >> i think you want to use companies with a lot of products and services that the young children will use every single day, because that's a great way for them to learn not only about the company, but if they have an investment in that company, it's a great way to get started with investing too. and it's never too early to get started with investing >> i think that's terrific advice and yeah, i do think that this is fine. it's just that it's no longer

the way. >> apple, amazon, alphabet. >> they all work. >> people use these products every single day they're going to get acclimated to it when they're quite young so all great companies >> i totally agree absolutely i like the all of the sudden say there is always a bull market somewhere. i promise to try to find it for you right here on "mad money." i'm jim cramer. >> see you next time right now, on last call, whiplash. the conflict in the middle east fueling what lashes -- bricking moments ago, boeing fighting back against studding whistleblower allegations. >> a serious warning from pilots at a major airline. one of those pilots will be here. income -- incomes in the fbi. while baltimore's bridge collapsed just turned into a criminal investigation. tesla --