week, i think it's going to continue. >> bonawyn. >> bitcoin, i think brian made a compelling point. have a create weekend, "mad money" with jim cramer starts right now. >> my mission is simple. to make you money. i am here to level the playing field for all investors. there is always some work in summer and i promise to help you find it. "mad money" starts now. hey, i am kramer. welcome to mad money. welcome to cramerica. i am just trying to make a little money. a lot of teaching tonight. so call me at one 807 43 cnbc. tough cases do not last

forever. but we need to know how to respond. we need a game plan ready so we can figure out what kind of selloff we are dealing with and reacting appropriately because the early days of decline are never easy to navigate. you need all the help you can get it. to borrow a line from oldest like, "all happy rallies are alike. he selloff is unhappy in its own way." it is true. bull market is higher and everyone thinks their g is participating because it seems so darn easy. we see it every time. big declines are much harder. they can be the start of a bear market or maybe something worse or maybe just a viable glitch. that is why tonight we are turning to history to illustrate some of the common quality to selloffs so you know the market in a moment of weakness. now there have only been two truly horrifying selloff since i started investing four

decades ago. 1987. 2007-2009. that was a financial crisis. even the covid when they lost 35% in over a month, that was not nearly as bad as these two. so let us deal with the two big ones had on because they make for great examples. 1987 and the financial crisis are actually polar ices. on october 19th, 1987, also known as black monday, the dell zone fell 22% in a single session. i was trading that day. the previous weekend had been one of the worst in market history. black monday hit fast and it hit hard. 2446 where it started. 1738. it came right into the close. i remember thinking saved by the bell. but there was not that much money left to be saved.

but most people do not remember that the week before was horrendous, too. that is nearly a 10% decline. that harsh pullback encourage bargain hunters and intrepid souls who thought they could flip it. monday morning. by it on friday. flip it on monday. they got badly burned. in fact, this continued into the next day. that day became known as terrible tuesday where the dow just broke down entirely. the market to stop functioning. you know what? i was there. i was actually able to talk like that bottom. dow 1400. down another 22 points or 7% from where we closed on black monday. at the end of the day, it was one by one. people do not believe the data would fall below 1600 but they were wrong. than the fed chairman stopped the decline in his tracks when he said he would provide all

the liquidity necessary to stabilize the market. remember when all that green money came over the screen. he listed multiple firms around wall street. it took the dell up more than 400 points. it seemed pretty unbelievable at the time. the crash is just three months. you know, it took them until mid 1989 for the average return to where they were trading before this big write-down? the bear market that began in october 2007 was a totally different animal. fell from 14,198 -- 1190 at. the other was 2000. it did not bottom until march 6, 2009, when it landed at a staggering 6470. we did not return to the 2007 level until march of 2013. why did one selloff end so quickly while the other one took six years to the client? that is the question that defined the two extremes of selloffs. black monday was a mechanical selloff for the averages went down because of your market

disruption. black monday, the way it played out was reminiscent of two other crashes. 2010 and it's doppelgdnger in 2015. both times the market has failed to work. both of the starter with the s&p 500 future business. you see, chicago overwhelmed wall street and new york where the futures are traded. black monday happen because talk raiders did not understand the power the markets back then. no one was ready for it. it was not like it back then because there were relatively new instruments created about five years before the crash and no one knew the power they had. you see, the power of the future snuck up on us. because portfolio matches could go in easily and out easily though the futures became the most powerful drivers of stock prices, particulate for hedge funds. even more powerful than the other underlying promises

represented. underlying corporate organizations use to mean much more to the day to day action of the stock. the thing is even with the new impacted futures, black monday was highly unusual. we had a big run going into the crash of '87. it was a remarkable multi-your rally. don't i know it. i left goldman sachs in 1987 to start my own hedge fund. it was viable to investors. the mid-rallies in the mid to late '80s had created such stupendous games that a group of tremendous salespeople started offering big climbs. what they claimed were insurers' policies that could lock in gains and stop losses. portfolio performance develop something called dynamic hedging. the specialist used futures to ensure that you would normally be exposed to stockmarket risks . say 10% or some other number depending on the policy taken out. the idea was that this policy would let you sidestep the losses. of course, it is impossible to

do that but they had such a great sales pitch that people believe them because the stock pitches were so novel. in reality when the losses all kicked in on black monday, the insurance did not work. if anything, the selling from these insurance policies actually accelerated the market. many of the actual clients were wiped out. the people who sold these policies were charlatans. although history remembers them as idiots. of course, i believe they were. there is no magic trick that can get your returns without much risk. come on. the two goes hand-in-hand. do not believe anyone who tells you different. those people are charlatans. of course, at the time we did not know the power of the futures could cause a crash. we figured if the market has crashed there has got to be something wrong with the economy. we simply had a recession lurking. the stocks did not go down on their own. how could a plummet 22% in one

day? i say though it turned out wrong. the economy was strong going into the '87 crash in strong coming out of it. that was just not any economic correlation with black monday at all. it was the interplay between chicago, much more powerful than we realize, and new york. it concluded the futures set off amends selling while some specialist firms on the floor of the exchange and some brokerage houses failed to step up and stabilize the take. the latter had no duty to stabilize this but the former were supposed to do so. the treasury found out that many did not do their jobs. now, i was fortunate enough to actually be in cash on black monday. the market acted so badly i do not want any part of it. in retrospect, it didn't make my career. i looked like a true genius. but the truth is i was just frightened of the market and wanted to regroup. i always say it is better to be lucky than good. this helps maximize luck which is why we spent so much time

teaching you discipline in the cnbc club. sometimes crashes have nothing to do with the economy. they are caused by panics in the market. stay tuned for more examples of this kind of decline. and a more serious look at the bear market of 2007-2009 so you can figure out what to do when they really maul us. irma in new york? >> yes. good evening, mr. cramer. i am planning to open a nondeductible roth ira for my grandchildren who are all in their 20s. >> okay. >> i am i better off with a growth fund or index fund? >> i want you to be in growth, growth, growth. you can switch the index to the 30s. let us have some real risks here. i want you to hit it big right now for them. i am alone in that but i don't care. i really want risks taken when they are younger.

tony and florida. tony? >> hey, kramer. i just want you to know i love you. what i want to ask you is when we like a stalker love a stock and earnings are really good but then for some reason the market buys it down, should we buy it day one or do we have to use that role and wait three days before we buy a stock that goes down? >> no. no. you buy it at your prices. you by a little bit at the beginning. then like we teach at the club, you buy it on the way down. we may have a real battle on our hands. we have been successful in most of our battles but some have been tougher. that is the way you make it so your battle will not be too hard. we don't want that. tough days do not last forever, people. but when they come along, you need to know how to respond. tonight, i am giving you a

crash course in crashes, selloffs, and big market decline so you know how to get the best possible outcome in the worst possible situations so stay with kramer. this is clem. clem's not a morning person. or a night person. or a...people person. but he is an "i can solve this in 4 different ways" person. and that person... is impossible to replace. you need clem. clem needs benefits.

work with principal so we can help you help clem with a retirement and benefits plan that's right for him. let our expertise round out yours. okay, team! oh, thank you so much i couldn't have done it without you. honestly, i don't do a whole lot here. i'm really just here for the at&t internet, it's super-fast so, any pre-launch concerns? what if nobody buys them? that's mean or, what if everybody buys them? oh, i hadn't thought of that

that's probably not gonna happen can we handle that kind of traffic? the network can handle it! i downloaded eight hours of true crime stories just during our last video call i'm learning a lot the moment i met him i knew he was my soulmate. "soulmates." soulmate! [giggles] why do you need me? [laughs sarcastically] but then we switched to t-mobile 5g home internet. and now his attention is spent elsewhere. but i'm thinking of her the whole time. that's so much worse. why is that thing in bed with you? this is where it gets the best signal from the cell tower! i've tried everywhere else in the house! there's always a new excuse. well if we got xfinity you wouldn't have to mess around with the connection. therapy's tough, huh? -mmm. it's like a lot about me. [laughs] a home router should never be a home wrecker. oo this is a good book title.

>> tonight i will teach you how to cope with all sorts of declines. i already covered the crash of 1987 and how it is not really related to the economy. shocker. 1987 was a rare opportunity

that took a little time to reveal itself when it did, gualala. sadly, it was the first of may. that remind me the flash crash in 2010. one of those negative moments that drove so many investors away from stocks because they did not know their value could be destroyed so uickly. almost instantly. who wants to keep their money and instruments that can blow up in the blink of an eye. what happened that afternoon? it was pretty much the same deal as 1987. there had to be something substantial behind the destruction? it cannot just be the machines breaking down? could it? the flash crash started at 2:26 p.m. on may 6th of 2010. lasted 36 minutes. in that 36 minutes, the dell fell nearly 10,000 points. i had to be on air at the time. immediately, they plied to pin

the tail on the selloff. this time, everyone was focused on southern europe. others pended on the newfound weakness in the u.s. economy of which for the record there was not really any. the benefits of trading on crash monday. i recommend exactly what it was. another situation where the machines were breaking and the futures overwhelmed the stocks. it was not the fundamentals. it spread like wild fire. many buyers just disappeared. they walked away. we do not want to find out what was causing landslides. right? they wanted to get out as fast as possible. lightning. on air, i quoted a phony selloff because the decline had no basis in economic reality which made for a tremendous by opportunity. >> that is not a real place. it is to buy the system obviously broke down. there was a glitch.

>> let's talk about what happened. >> obviously it is grotesque! no! the markets did not work. the machines broke down! that is what happened! >> that is exactly what happened. none of the fundamentals. just more of this nonsense. many people do not believe that equities could be that fragile and they left. it was shocking. in all the years i have been doing the show, i hope i taught you that stocks are susceptible to all sort of whims in a heartbeat, including the mechanical issues we saw during those 36 minutes. it is just not erfect enough and people think they are. anyway, the market quickly regained its equilibrium. not before another round of investors left entirely and they never came back. how about when the dow fell 1000 points right at the opening? related to fears that the federal reserve would raise interest rates.

one more story about the china market collapsing. hey, china has been collapsing for ages. right? back then, the china market was most dominant out there. it has always been out there. but the whole economic edifice from the prc could collapse from too much economic emphasis at any given time. all the right times to witness these events. it had been a ugly day. i suggested it was time to raise rates despite the chinese selloff. it demonstrated a cobble your attitude towards the market's ugly but also fragile mood. now, when we came in on monday, august 24th, we heard there were some very large sell orders for major stocks. we were not ready. large capitalization stocks were shutting hundreds of billions of dollars of value. many down 20% as the market opened, and we had no ability to tell why. like the crash of '87, initial talk to tell what the prices war. it was real horrific.

yes. the fog of war. the fog of creating. it was down 50%. it was indeed crazy town. as the market rolled open, a decline of 1000 points at 10:00 a.m. i was pretty stymied at that time. i remember hearing david faber shouting about the selloff. his reaction, i thought it was priceless! >> i -- i -- i have got to make some phone calls. >> these are somewhat bossy. >> these are enormous moves. >> i have got to make some phone calls. i remember when he said it. that is it. i have got to make some phone calls. we cannot just go out and say it is wrong. we figured it had to be something very bad in the economy. somebody knew something we did not. something mysterious. something nefarious. maybe china had actually collapsed. maybe there was more somewhere. there had to be a good reason for that kind of decline. i was skeptical because some of the hardest hit stocks for the

bio text. that really made no sense. those are the stocks that people buy when the market collapses. they are safe havens. i suggested it was the machines that had caused the problem. just like 2010. just like the flash crash. that was exactly the case then. a beautiful metaphor. a furious rally jumping 500 points from the bottom. strong buyers came in and took advantage of the opportunity. and a thoughtful federal reserve is not about to tighten it with china tearing. it was now time to buy stocks. why was there such fury and confusion at the time in 2010 and 2015? why was such crashes so frightening? i do not think investors were ready for each crash because in post 1987 the government had put in circuit breakers. they were supposed to call these declines by stopping trading momentarily but they

created an odd sense of security that failed to work even today. there is very little to stop the destruction of your nest egg. so please when you hear talk of circuit breakers detecting you from fast declines, no. do not believe it. fair cannot be legislated or put out of the market. it will always be there. even if that event is mechanical and not truly substantial in nature or any shape or form. there have been many worse than the flash crash as of 2010 and 2015. i can think of three days during the covid crash when we were down almost 7.8% to almost 13% in a single session. but we know exactly where the problem was. the government shut down the whole economy to fight a deadly plague. by the way, if you thought my on-air commentary was useful in 2010 and 2015, and it was, that is all more the reason to join the cnbc investing club. we show you how to run a

portfolio in real time. in fact, these customers are never going to go away. i always suspected the next one. what is the bottom line here? if you can figure out when a selloff is caused by the mechanic taking down, then you have an incredible buying opportunity. first of all, you have out of the selloff related to the fundamentals of the economy are not. stay tuned anyway. no one ever made a dime panicking but boy, oh, boy, did a coin money taking the other side. (aaron) i own a lot of businesses... so i wear a lot of hats.

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(intercom) t minus 10... (janet) so much space! that open kitchen! (tanya) ...definitely the one! (ethan) but how can you sell your house when we're stuck on a space station for months???!!! (brian) opendoor gives you the flexibility to sell and buy on your timeline. (janet) nice! (intercom) flightdeck, see you at the house warming.

>> not all days are winners in the market. and you have to know how to handle the down days. that is key. there are lessons in the really bad days that can help. let us set the stage. back in october of 2007, the dow peaked at more than 14,000 and the fed raised rates over and over and over. 17 times. on the economy fell off the cliff and took the stock market with it. you could have seen it coming if you paid attention. specifically, if you paid attention to me back on august 3rd of 2007. the fed raised rates so much, oblivious to the damage it was doing to the real economy. >> i have talked to the heads

of almost every single one of these firms and last 72 hours and he has no idea what it is like out there. none. and bill poole has no idea what it is like out there! my people have been in this game for 25 years and they are losing these jobs and the firms are going to go out of business and he is nuts! they are nuts! they know nothing! >> what did i mean by that? i sat down with my old friend erin brunet. i had been talking to the head of a major wall street firm about problems. pretty much everyone involved in the mortgage market was incredibly helpful to the economy but knew there was a lot of unsound crisis is occurring. he cannot believe how many people were beginning to fail on their mortgages. yeah. here are the keys. how many mortgages of the 2005 vintage, a term i usually only associate with fine wine. they just were not good. it only happened once in our country's history and that was never supposed to happen again. obviously chaos. i have a lot of friends at

firms and started making a lot of calls. i started seeing if it was trouble. the problem seemed to be spreading like wild fire. i called guys at firms. like i said, my people. everybody said the same thing. we are in big trouble. and that is why i went off so strong on my rant. sadly, the fed did not listen. bill poole who at the time was a incredibly important fed official. i had to single him out in the rant. years later, i found out my rant was put out but only as a joke. soon after my "they know nothing" rant, we had a horrendous default of banks and loans. summer too big to be able to fail anyway including two of the biggest brokerage houses. i urged anyone who needed money in the near term to take it out of the stock market before it was all lost.

>> for investors, what is your advice today? >> 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 it all weekend. i do not want to say these things on tv. >> sure enough, the market fell another 40% before it bottomed. it was a good call. it was cut more than in half by march 9th of 2009 and you lost a fortune. probably never came back in stocks and gave up. how do know to avoid buying this kind of dip? how do you notice the lead up to the financial crisis like black monday of 1987? first of all you have to ask yourself about the state of the economy.'s business falling off and pulling off hard? are they raising rates for signs of cracks? like major firms going under? are there actual runs of multiple financial institutions around the country and not just my area? if the answer is yes, then you have a decline that could be

joined at the hip what the real country. systemic risk. that is the term. meaning the entire country could collapse. that is how it was with the financial crisis. i get angry every time. oh, it is going to be as bad as 2007 and 2009. there is nothing like that occurring. like i said, only twice in 80 years has not occurred. even the covid pandemic was not as bad because the moment we got a vaccine everything went back to normal. within a few months, we were worried about it. if you are worried about systemic risk, you are wearing too much. our elected leaders did very little to the financial crisis but brought the market out of the funk with a statement by then-chair been bernaki. he was going left and right. we had watched in the fed was

just sitting on his hands but the moment that bernaki decided something needed to be done, the stock market bottomed. further waste used doc the bottom. it was very heavy for the cnbc investing club. when you have a -5, that in any case is most likely too much selling. hey, when you have a -10 you have to do some selling even if everything seems horrible. we were getting signals that everything was much worse at the bottom in 2009. i have got one. i would like to see who is pessimistic or concerned about stocks. but then changes his tune. the best example of that kind, that big switch, it came from the late, great markings who had this to say back then. >> i am going to step out on a limb here. >> hold on, everybody. >> i think we are going to have a rally. >> there we go. a man unafraid to make a call.

>> in other words, i think today this is for real. >> and what a call. look at that. march 10th of 2009. the day after bernanke was on 60 minutes. just a huge call from someone who had not been willing to make one until that moment. best call i have ever seen. it certainly made a ton of sense to selleck in october of 2008. what happens if no one wants you again the next time? i have got some good news for you. if you waited long enough, six years to be exact, you actually did get to where you were before the bear market began. all right. six years. if you sit tight in living memory you eventually get back to even. wanted it have been better to take something off the table in 2008 like i told you do but a lot of people got burned out. they did worse than the ones who simply sat tight. so here's the bottom line. the financial crisis gave us a

once-in-a-lifetime bear market with true systemic risk, but that is the exception and not the rule. let us take questions. >> boo yah, jim. >> i am having a cup of water right now. what is going on with you? >> i am trying to have a cup of water. i can definitely say i want to give a shout out to the great northwest. >> dunn. thank you. i will take that shout out. >> we tend to get a lot of advice from all around the world. i went to go and say to you, man, is i am curious if you feel like using high dividend stocks is a form of investable's. is it too risky or will the dividends be down? and if you do agree, is it a barbell approach or can you take a bounce in our portfolios? >> stackwell, i love it . i love it. i do not want to reach

dividends that are so high- yielding that something is fishy. the pay dividends that we reinvest constantly. that is nirvana for me and that is the way i would love to invest if i could own individual stocks. the 2008 gave us a true bear market with risk but that is the exception and not the rule. i will give you a fast crash survival guide with takeaways from the crashes in 2010 and 2015. then i am answering all your burning questions with my colleague jeff marx, so stay with kramer! were you worried the wedding would be too much? nahhhh... (inner monologue) another destination wedding?? we just got back from her sister's in napa. who gets married in napa? my daughter. who gets married someplace more expensive? my other daughter. cancun! jamaica!! why can't they use my backyard!! with empower,

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>> in tonight special survival guide addition, we are discussing how to deal with

brutal selloffs. specifically, how defend against them. how to take advantage of them even because you know i like to be opportunistic. and the systemic risk selloffs and the collapse of the u.s. economy. but those are easy to spot because it will seem like the world is falling apart like in 2008. you do not need me for that. but now i want to help you game out the less dangerous kind of crash caused by a broken market in a healthy economy. the best way to deal with the sudden declines is to realize there is a bottoming process that you can spot. what should you do? i have a solution for even the toughest of times. i like to look at something called the accidental high yielders. i actually called them hiy's on this show.

they are falling so low that there dividends are starting to give you a unbelievable return. that is right. when you look at these historical good yields, i also want to look at the treasury. if it was 2% and suddenly is paying double that because of a market wide decline, you're probably looking at an accidentally high yield. that is why we are hunting for these dividend stocks, you should focus on these companies that have very good boundaries. second, if yield levels not giving you opportunities, i would use mechanical level to pick stocks you like. you can begin with what is called wide scales. during the 2010 flash hikes, i told people to cough up flash scales. and by and limit orders only. do not use market orders because you may end up getting terrible prices. you should never use market orders. it is especially stupid during a crash. if the market does come back,

you have picked up terrific merchandise at amazing prices and you can flip the stock for big profits or hold onto them for the long haul but take a look. i accidentally demonstrate how this works during an appearance on tv when the flash crash happened in 2010. >> png is now down 25%. >> if that is true the stock is there and you go and buy it. that is not a real price. when i walked out, it was 61. is it 47? well, that is a different security entirely. you what you have to do is use limit orders. i like it it 39. >> the market was down 900 points. >> i ow flip it at 59. i just made 500 cheese. >> yes. that is the craziest. by the way, a lot of people ended up doing that. like a dozen times, people thanked me. remember, the limit order price

does ring true. we talked about gut churning moves that are untethered from the economy. what causes these declines? there are usually a bunch of different varieties. first, you have the sales caused by the federal reserve. then is the most frequent reason. there is a reason that businesses usually talk about the fed. it is the federal reserve's job to try to restore growth when covid shut down the economy in 2020. as long as the fed has money, almost every one is a viable one. but when the economy is strengthening, then the fed has a different mandate. stamping out inflation. when the war declared war on inflation the market started turning over with the highest risk groups getting obliterated. no one wants persistently high inflation. those of you who missed the '70s and '80s, you now know from the covid experience.

how about going into the great recession? it caused the great recession. there are plenty of time to fed is tightening but there are plenty of times when the economy did not get crushed and that is how it got incredible bull market in the first half of 2023. however, some will come out of the woodwork to tell you that the market will crash or at least take a very big header so that is inevitable. please do not panic. in fact, i have een plans to do next to nothing but there are rational reasons why the stock market deserve to come down. first, stocks are one of the only -- they are only one of the assets available. for instance, golden bonds. i like gold as a safe haven. i think every person should hold some gold. if not, then the economic chaos. real estate. actual real estate can be a good hedge but most people do not have the money to invest in that kind of real real estate that the big institutions can buy. they are not approximate as a

whole. finally, we have bonds. bonds are the source of the problem and the fed titans. you have seen it yourself. when they give more than 5% risk free, a lot of people cash out of the stock market. listen, it is not a bad return. these become more competitive with stocks. you will notice that the fed jack separates. high-yielding dividend stocks will be among the worst performers. they have got competition with fixed income. so please be careful with these dividend stocks and safe havens when you're dealing with a selloff called by the fed. they are very different from accidental high elders. the second reason why stocks seem to go down legitimately is because the fed is not perfect. they have raised rates when they should not have or have even been cutting rates fast. though in recent years, j. powell has been close to not

pushing us off a cliff compared to previous chiefs. they can be gained as long as there is no systemic risk involved. but those are trickier and 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 may just give you bounce when the fed titans. your shipping manager left to “find themself.” leaving you lost. you need to hire. i need indeed. indeed you do. indeed instant match instantly delivers quality candidates matching your job description. visit indeed.com/hire

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walmart and drinkcirkul.com. >> tonight, we are talking selloffs. specifically during this block, what causes garden-variety

selloffs? many times the problem is the fed as i mentioned before the break that sometimes there are other issues. for starters, there is the issue of margin. as a former hedge fund guy, i am aware that there are times with more cash than they should so when the stock it goes down, these kind of declines have repeatedly happen including safer break 2018. that was a good one when funds have borrowed money to bet against stock market volatility. they were shortcutting the market would remain calm. stupid. at the same time, they that bet the s&p 500 using their own money. there were so many managers doing this at once that their selling ended up causing some severe market-wide loss. these margin breakdowns do 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 because there are always big margins against these managers who buy stock with borrowed money and it does not happen immediately. they have to keep shopping. how do spot these margin called declines? you know what? i use the clock. for overstretched individuals or for head funds, they want to get out before the night. so they demand it be put up. they put up the clash or sell you out of your positions without your say-so. i always considered the margin clerk the lecture and the butchering occurs between 1:00 and 2:00. at the selling wants its course by to: 45 p.m. -- and i find it is that specific -- then you have a chance to start buying safety clocks. like the health care. you may also want to buy the secular workplace. 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?

selloffs from overseas. i cannot tell you how often i have heard commentators who scare the jesus out of us. turkey. i always tell you to ask yourself, do any of these woes truly impact the american companies in your portfolio? do they make you want to pay less for individual u.s. stock? usually the answer is no. unfortunately, you cannot just start buying stocks hand over fist. you should always assume there are people who do not understand how unimportant these worries are in the best scheme of things and those people are going to panic and sell. after you would have thought they would have known better. that is why these international declines often last for three days. the best ways to watch the clock as the sellers usually need to be marchand out against their will but there has got to be a bottom. another type of selloff. the ipo related decline.

markets are controlled by supply and demand. so if the bankers start rolling out lots of new ipos and then these companies sell more shares during secondary offerings, you can end up in a situation where there is just much too much supply and not enough demand. we saw this at the end of 2021. 600 ipos and spec deals. oh, man. >> house of pain. >> don't buy. don't buy. >> my suggestion, focus on the stocks that are down due to collateral damage. especially the ones with the old protection. sometimes they are triggered by multiple simultaneous earning shortfalls. if you want to buy stocks after an earnings-induced pullback, look where they are occurring and avoid them like the plague. there is no reason to stick

your neck out here. instead, by the much broader stocks those in the s&p futures. then there are political risks. i also find this politically overblown. whether it is strife between political parties or all-out war risks. i am not a political guy and hate talking about the stuff on air and off air. but does this company have a direct earnings risk when it comes to washington? if not, then you have got nothing to worry about. however, if you own something directly impacted by a trade dispute with china, then i know it is negative. there are so many pundits everywhere waiting to give you their two cents. i think these guys want to scare you. instead, look for companies that have nothing to do with the political fray, even if their stocks may be brought down by it. even when we have a debt ceiling standoff. i have not told you how many times i have seen this as a

reason to sell stocks. i say it has been a wish to sell some stocks but not to sell everything. unless they involve systemic risk, which is increasingly rare like in 2007-2009, there will be buying opportunities long term. you just need to recognize what is driving the decline. then take action to buy, not cell. and never to panic. stick with kramer.

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

marks, also my partner in crime. he will help with the most burning questions. for those of you who are part of the investing club, he will need no introduction. for those of you who are not members though, i hope you will be soon. help me do a great job for all my mad money viewers and more importantly members of the club. so if you like this, be sure to join the club. first up, we are taking a russian from peter who asks, as a younger investor he is able to add funds the wiki is paid. how do you recommend putting your new money to work. frankly, it does not matter if you have a set number of funds. frankly, my late father would look at the list and say i'm not going to pick all these. i will pick my favorites. stick with your six if you want to but invest, invest, invest. and if it is down invest. if it is up, invest. do not miss it. next we have a question from

michelle from california. how do you know how to break out of your cost basis? discipline always persists. say the magnificent 7 stocks. that is what we call them. those are really the only one who can do it because they come down a lot and when they come down you want to buy it. we have had stocks that come down and then come up and wendy market got oversold we feel tempted but do it very rarely. >> general rule of thumb, if the stock is down then do it. but the stock is down just due to market forces, that would be a good time. >> you want to be able to be in there. that is true. that is something you can do. now, we are going over to one of your mad mentions. jim, are you sure you're not a full italian? the best sauce, not gravy, starch with those tomato chores. let us eat. you know, my family has got some

irish in it but not some italian. i do know my saucing came out because my tomato yield was so great and i had note choice but to sauce. next up we are taking questions from jeff in florida. at the stock has been in the red for a couple of years, what is a good time to sell some of that stock? when it finally gets back to even or do i risk it? this is a really important question because what you find is that at the same time that you see when it gets back to even and you want to sell it is precisely when a lot of people start getting interested in it. 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. the stock is out of the mud. people want to buy. so the answer is hold on. >> we do not care about where stocks came from.

we care about where they are going. if the outlook is still strong, hold on definitely. >> i know i have got to end the questions. i want to say thank you to our very good mark marks . i am happy to have you on the show. i promise to find new ideas that are good for you on our show "mad money." see you next time. that's eating. [excruciating] you can ride it to and from the train station. "i want to be the next scrub daddy." stop the madness. there's more madness! uh-oh. what are you sales? 20 bucks a month. 20 bucks a month? oh! big merchants are going to love this. that's crazy. you are going to get crushed. ♪♪ first into the tank is a business that hopes to be a popular holiday tradition. [ laughs ] ♪♪