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 want to make friends, i'm just trying to make you money. my job is not just to entertain but to educate, to teach. call me at 1-800-743-cnbc. i'm using my bully pulpit here

on "mad money" to preach to all excesses when it comes to investing. it's the sin, the sin of arrogance. when you own stocks, you got to be humble. although, people recognize that humility doesn't come naturally to everyone. you have to recognize you will be wrong, perhaps often. as the past few years have taught you, painfully, your portfolio will get hit with things you never saw coming. things you never imagined, let alone thought were possible. who would have thought we had to worry about cypriot banks? who would have thought about sequester or about abenomics? and one thing to be sure when you put a portfolio together is that at some point something will go wrong and it will hit you totally out of left field. that's why it's so important to prepare yourself and your stocks for the next unexpected catastrophe, so you can make money in any market, or not lose as much as the other guy, because sometimes things don't go that smoothly.

how do you get ready for a calamity that we don't know what it will look like? one word. it is not hallelujah. but i always play it when i say it. diversification. it's the single most important concept. lot's of people see me, they shout boo-yah, and i'm okay with it. but you if you say, am i diversified and there are five stocks, it would be more constructive and productive use of our time. yes, there's a reason why we "am i diversified" every wednesday. why i talk about this concept ad nauseam. why i call it the only free lunch jim cramer's investing world. even a hand book for employees. even when i was a hedge fund manager, i believed in diversification.

and my charitable trust is nothing if not diversified and i monitor it intensely to be sure it stays that way. if your portfolio is properly diversified, you can handle any setback. but you can come back from any setback. you will just lose less than the other guy. that's all you need to do to stay in the game, frankly, which i said over and over, which is the real purpose of "mad money." to stay in the game for better times. usually when i talk about diversification, i mean making sure that all of your stocks are not like eggs in one sector basket. and just to go over this again, because i can never say it many times, it means that no one sector, one segment of the economy should account for more than 20% of your portfolio. let's say you own five stocks. only one can be a tech stock or healthcare or energy company. and only one can be an industrial. only one can be a food or beverage maker. what if you're not sure? err on the side of caution. if a company fails on the same customers, same economic scenario, then you are not diversified.

an oil driller and an oil producer are part of the same sector or whatever, the phylum. hey, you want to be really tough about it, the food stocks are doing tricks over stocks. i'm not doing this to be arbitrary or capricious or make it more difficult for you to invest. these aren't vague technicalities. when you are too concentrated in one area and the moment something bad happens to it, you want to throw yourself off a bridge because losses will be enormous. i'm trying to prevent this from happening. imagine if you own too many healthcare stocks right before they got whacked by congress. take president obama's healthcare reform, you know that worked out for them. how about too many banks before the final crisis or the reform in washington produced in response to the crisis. or, and this is something that soured a whole generation of people in the stock market, too many tech stocks going to the dot com bust. the goal of diversification is to spread your money across

unrelated stocks, so when something happens that makes one of them go down hard, the rest remain relatively unscathed. they can even go higher. that's the view of the diversification, and it is mandatory. but you know what? if you're going to prepare for anything, it is not enough to make sure your stocks don't overlap. you want all kind of markets. so tonight i want to explain the new diversification. how to make sure you own something that is an increasingly chaotic, difficult and unforgiving investing environment where diversified by sector alone is not enough. sure we got benign moments but at any time we know it is a big up, small down, we end up being kicked to the curb as everyone knows, and we wish we are diversified as a hedge against our own complacency and the fed loose loses control of the situation. there are five different areas you need have covered for maximum protection and maximum upside. you need a dividend paying stock with high yield.

you need a growth stock. you need something speculative. you need something foreign and you need gold, preferably bullion or coins or an etf that holds gold. you have a portfolio that can win in any market with all five bases. i will explain what makes all five areas essential and teach you to analyze stocks that fill each one so you can fill each position with the best possible names. let's go over gold first. you need some gold because gold is a special property other ones don't have. one that makes this precious metal precious to any diversified portfolio. gold tends to go up when everything else goes down. i regard gold as your insurance against economic or geo-political chaos. your insurance against uncertainty and inflation. all things that cause most stocks to decline. but also because the price of gold does go up in many calamities. i like to think of the gold position as a kind of stock insurance. would you own a home without homeowner's insurance? you wouldn't own a car without car insurance. you shouldn't invest without

some gold exposure, because gold pays off when everything fails. this is not about upside, by the way. when gold went down big, it wasn't like oh, my, you have to get out of it. you don't cancel your insurance because your house went down big. this is about minimizing risk to your down side. then at any given moment there is a whole host of sectors poised to outperform gold. but none work like an insurance policy, so how do you own this precious metal? easiest way i know, and i'm not the laziest man, the laziest way is to own the etf. the spdr gold shares, but mostly known by its symbol gld which owns the metal and it does a fairly good job of tracking its price, but it's been known to go down harder than the actual physical metal in times of real stress. that's become a genuine caveat for me. this is something new. 2013 showed you that. in the time since the gold etf became popular, we had almost no breakdowns in gold. when we got one that didn't track the metal as well as we thought, that's right, 1800 to 1300 didn't track the way i thought it would.

that's why the best thing you can do is call your broker and see if can you can buy bullion, actual physical bars of gold as opposed to the bouillion cubes i like in my soup. that's for investors who like lots of money and pay to store it in the depository bag. i know there is a big mark-up and i know you may want to go to the dealer but gold coins, easily stored. sure they are marked up by dealers, but they hold their value and have always held their value and that's why i like them. what about the gold miners? you pick the right company. one with low-cost with growing production. it can outperform the commodity now and then. those have become very hard to find and they are not trading in lockstep with the commodity and i want the price of them. i actually want the price of gold to be correlated with stocks. gold miners can screw things up in countless different ways. they have management teams that can and do make mistakes. listen, take out one of the best matters.

take agnico eagle along with gold corps, gg, these are two of the stocks i got behind the show when the show first start and it did for many years. agnico eagle showed you everything that could go wrong. it had shut downs at its mines. shut downs, delays, high expected catch cost. it got hammered and stayed hammered. all of these issues -- it rapidly grew production but couldn't pull it off. then i recommend goal corps, gg. but then everything that could go wrong with the business, fires, floods, expenses, that too ended up disappointing. i then tried the gold royalty trust in the show, companies that are like banks for gold companies. they were worse than the ggs. when gold went down hard, they stumbled too, in many cases. like the miners far more than the metal itself, disappointing. take a chance on a gold miner, you have come to the wrong place. i'm at a loss to recommend any.

that does not mean, however, that i don't want you to own gold. it just means the real way to play gold is with, alas, gold. cost of getting the metal out of ground has gone sky high at the exact same time the metal has gone down in price. nothing could be worse for a company than rising costs of making the goods at a time of falling selling prices. you can do your homework and find a gold stock you are comfortable with, but don't expect me to bless it on this show in lightning round and don't expect me to endorse it if you shout it at me. when i come out of the exchange when i come out of the exchange and go over to street.com, don't pick a gold miner if you agree none of them inspire confidence. sure you want to take a flier and trade gold, that's fine. maybe etf for junior gold miners. again, i'll bless that. but that's not protection against anything. don't confuse it with the insurance role of bullion or coins or the etf that i have in mind for your portfolio. here is bottom line. you need to own some gold as insurance. gold coins are preferable.

you aren't buying it for appreciation. if gold goes down, don't sweat the program. that way, you won't panic if gold is on sale, you will buy more. when insurance is cheap you want to get all that you can. matt in texas. matt? >> hey, jim, thanks for taking my call. i need you to help me make some money so i can send my twin daughters to texas a&m, boo-yah. how does a beginning investor trade when they only have so much to start with to begin with. >> i say the first $10,000 is an index fund. i have that in all my books. then you have to go in and get over the idea that you need to have thousands of shares. read confessions of a street addict. first thing is buy seven shares. buy nine shares. i bought these odd lots. you got to get into it. don't feel like you got to put hundreds of dollars in one stock.

just put a couple hundred dollars in. commissions are low. that's the way to play it. get your feet wet. you will get comfortable, then get bigger. lou in texas, lou? >> caller: jim, boo-yah from texas. appreciate what you do. >> i do my best. >> caller: is it possible to know on trading day that a run-up is from traders or institutional buyers or foreign buyers or hedge fund buyers or whether the retail participated, and is that a big secret, and is it important to me in my trading decisions? >> i say no unless you are buying a huge amount. and so supply so to speak. big institutional traders can pick up their phones and ask who's buying. but you're not allowed to reveal the name of the company, but can you say if it is a mutual fund or a hedge fund. but that information is not important if you are buying a couple hundred shares. only if you are buying a thousand to 1500 shares. then it does really matter, you need that information. the kiss of death, i think not mr. gold finger. get some gold in your portfolio. what's the first one? i like bullion. if not bullion i like coins.

if not coins, i like etf. if not etf then i bless the stock. >> don't miss a second of "mad money," follow @jimcramer on twitter. have a question? tweet cramer #madtweets. send jim an e-mail to madmoney@cnbc.com or give us a call at 1-800-743-cnbc. miss something? head to madmoney.cnbc.com. ♪ [ male announcer ] you wait all year for summer. ♪ this summer was definitely worth the wait. ♪ summer's best event from cadillac.

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what types of stocks should you own to help you insure that you can make money in any environment? what strategy will work regardless of the state of the economy or whether the market's in bear or bull mode? you should own no more than ten or fewer than five stocks in your portfolio. any more that ten you will spend too much time on the homework. you will lose focus. any less than five, and you won't be diversified, and that is an unsafe position that you

never want to find yourself in. you always want to own something heretical, something speculative, even though it's the dirtiest word in the business lexicon, here at cramerica, and orthodoxy. not only is it okay to own the tempting broken risky seeming stocks, that trade in single digits. i regard it as down right necessity as long as you follow my rules and speculate correctly and wisely. i know this is the opposite of anything you've been told. you have been told to focus on the stocks in big indices like the dow jones industrial average because it is filled with blue chip names. blue chip didn't help the lehman brothers or washington mutual or general motors when they were annihilated during the financial crisis. they say stick with the s&p 500 because the professionals who give you this advice presume the home-gamers like you, are brain dead and incapable of analyzing prospects of publicly traded companies you might want to own.

they don't think can you pick your own stocks. they don't even think can you pick your own nose. so they assume you will do less damage to your wealth if you only play around in big household names. stay away from tiny speculative stocks that you probably never heard of. that's the smug conventional wisdom on wall street and among the intelligentsia. but you're talking to a grizzled veteran right here, i've been in the stock game for more than 30 years, and i'm telling you it is a completely and totally bogus view without empirical backing. these pros who dismiss speculation are completely ignoring the human element of this business, the emotional component of investing. the fact is, a lot of people end up investing poorly because they aren't engaged in their stocks. they find the whole process boring and don't stay on top of what they own. if you neglect your stocks and don't do the homework then you probably won't do too well either. buying stocks without homework

is no better than gambling. actually it is worse. i don't want you trading in gin futures. that's where speculation comes in. just like you need gold and insurance to speculation chaos, you need speculation in your portfolio, like tonic against boredom. high risk, high reward speculative stocks are compelling. there is an undeniable mystique to owning something that trades in the single digits. i respect that. these allow to you stay engaged, keep your head in the game, as long as you keep a small amount in it. i say a portfolio without speculation, without a long shot won't keep your fancy. one you will get bored with it. one for people who only care about taking your fees. a portfolio without speculation is a portfolio never open on the pc or never input into the handheld. that's unacceptable to me. you will just be fodder for

those superstar theoreticians who think you are too dumb to manage your money. if you use the rules and disciplines that i give you, there will be truly massive exchange in the more well capitalized companies that are deemed safe. some of the biggest wins in my investing career came from speculation, which is why i come at it like this. when done wrong, swimming in under $10 stocks will also lead to truly gut-wrenching losses. confessions of a street addict. i have a bunch that cost me a lot. how do you identify the winners and avoid losers? okay. there are two stocks that trade in single digit territory. there are companies abandoned and left for dead by money managers and unknown stocks of undiscovered companies. in both cases can you get an enormous edge here. the kind that is impossible to have in the heavily researched intensely stocks of household names. some of the big boys won't trade

anything under 5 bucks. you're benefitting from the what i called the classic price increase for the money managers. large institutions, big safe mutual funds, they don't want to own single-digit stocks. they think they are too dangerous. they are afraid they will be questioned about why they own this junk. about why they risk money foolishly when there are so many safer stocks out there. the board of directors will ask them that. these money managers fear the downside from stocks that look broken. so when the fundamentals of one of these companies starts to turn, you can buy their stock. buy, buy, buy. at terrific prices. so many big boys won't go near them. ford was pushed down to 4 bucks and change in 2009, courtesy of the financial crisis. bank of america went to three bucks during the generational bottom in 2009. sally may at six bucks in 2009 or pier 1 which we started liking in single digits not long

after trading for pennies. and sprint behind at 2 bucks because we believe correctly and there are turnaround plans with the softbank bid that give you a triple. or most recently, rdn, completely and utterly left for dead. mortgage insurer. all were supposed to be trash. if you went dumpster diving you caught doubles and triples. these deals don't come along either everyday. we're looking for sectors that look like they can catch the imagination of the crowd. yes, we're gunning for the next hot fad to sweep through wall street fashion show. sometimes the fad will be backed up by genuine earnings power, which is what we saw with little companies that make smart phone components in 2009 and first half of 2010. now you know i aggressively recommended mobile internet tsunami plays, like sky work

solutions, to name some of the winners. but rare cases, the reality outpaces the actual hype. these speculative facts have a liufe cycle of the may fly. so remember to lock in your profits. sell, sell, sell. when you have them. so you don't get burned when interest in the suddenly red-hot stocks wanes. second, cut your losses before they became too large, when a spec you thought would work isn't panning out. when you speculate, you're not trying to find a stock to buy and hold forever. it doesn't work like this. you just want something that goes higher. when you ring the register, it doesn't matter if that stock comes back down later. it is not a license to own the stocks of companies with bad or deteriorating fundamentals. far from it. that's the essence of irresponsible speculation. you have to do just as much work examining a company's ability to stay alive, let alone thrive when you speculate. it is not an excuse for no homework, though many think you have the license to do that. it is just that mere fundamentals aren't up to snuff. but if you dream a little here

it might play out positively. cirrus logic, so many that people thought once were road kill. do something speculative that is a key part of the diversification. stave off boredom and rack up huge gains. and just because the stock trades at 3 bucks doesn't mean it is three card monty. could be a triple waiting to happen. don't skimp on the homework. you have to dream a little bit what could go right. and just like everything else on earth i bless that dreaming because it worked for me many times in my more than 30 years of investing, and i know it can work for you, too. donna in texas. donna? >> caller: hi, jim. you're my rock star. >> thank you, donna. > caller: you're welcome. my husband and i manage our own portfolio and to make it fun, we each choose two spec stocks. i'm up 11.3% in one of them and

down 3% in the other. they have similar dollar values. how do i know when and what to sell? bragging rights are on the line. i got to win this. >> you're not up enough. you got to let them run. down 3% doesn't bother me. i think that's okay. up 11%, look, that's not enough. when we do speculative stocks we are really going tore broke, okay? the rest of the portfolio, that would be terrific. for speculation, no. let's hold out for bigger gains. this is what we do with those. remember, not a big part of your portfolio. ever had a dream come true? consider buying a spec stock. it has excitement and risk, and i'm blessing it. but only, of course, for a small part of your portfolio. after the break, i will try to make you more money.

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but you had to leave right now, would you go? man: 'oh i can't go tonight' woman: 'i can't.' hero : that's what expedia asked me. host: book the flight but you have to go right now. hero: (laughs) and i just go? this is for real right? this is for real? i always said one day i'd go to china, just never thought it'd be today. anncr: we're giving away a trip every day. download the expedia app and your next trip could be on us. expedia, find yours. we all know the stock market has an endless capacity to befuddle even the most grizzled stock veteran like myself. there is a good chance the stock

investment doesn't work out. today i put a on my negative nelly hat and say nobody's perfect, at least in investing. why? a stock sadist with the license to despair? make people like you miserable? no. because i want to help you compensate for your own fallibility as an investor. yes. because i know you're fallible. because i am too. i want to make sure you are as prepared as possible to help losses in the outrageous market or whips and squirms of the bears. to paraphrase the bard entirely out of context. but also while being positioned to maximize profits when things go well. we want to keep you in the game when things are bad and get you ready when things are good. next up, you need a good old-fashioned growth stock.

i want you to have a secular growth stock. this is nothing to do with parochial versus public schools or the first amendment, which you know can i live without. in secular growth, unlike cyclical smoke stack industrial growers, earnings aren't hostage to the health of the economy and it will expand even during slow down. that stock can lift higher and higher like jackie wilson going on new highs after new highs for as long as the stocks last. what do you think about chipotle, old apple, intuitive surgical, panera bread, starbucks. yeah. these are -- well, were and are prime growth stocks. how do you analyze growth? remember when we buy stock we are paying for a company's expected earnings per share. basic algebra. the share price is symbol p,

equals e times the multiple. b, m, e times m calls p. okay? the multiple is the key. so right, the multiple times the earnings should figure out what the price of the stock is. that's why we call it the pe multiple. it tells us what earnings. and the price earnings multiple and effect of the size evaluation special sauce is the company's growth rate. the m, remember, figure out the price of a stock by looking at earnings times the m. m is heavily dependent on the growth of the company. we will pay a bigger m or multiple for businesses with higher growth because that growth means earnings get larger and larger in the years ahead. remember with growth investing, it is all about the out years. that's in quotes. the out years. years well behind the next year that so many focus on. projecting a high growth rate is nirvana for a high stock investor. as a general rule of thumb, when

it comes to high octane secular grower, stock can trade it up a multiple twice as high before it gets too expensive for the vast majority of growth oriented money managers. and earnings per share at 20% clip, stock could fly as high as 40 times earnings. though it is too rich for me to recommend on this show and stock won't trade down to a multiple of one times the growth rate. or a nasty market that is just sour or growth or even secular growth possibility because of higher interest rates which makes stocks shrink because their larger earnings in the future become less attractive relative to the increased yield that people can get from cash or treasuries. by the same token, lower rates make growth stocks more attractive and cause the multiples to expand. even more important when you own a high growth stock you need to be expressly sensitive to whether the estimates are increasing at a faster or slower pace. they can soar to new high after new high but remain cheap as

long as analysts are raising their earnings per share estimates each quarter. now a stock like apple in the old days, when it could double over the course of 12 months and multiple is starter and increase even faster than the share price, that's what drove apple to 700. a constant and relentless beating of the estimates. once that stopped, the stock u-turned and u-turned hard. and a company no matter how special must beat the estimates or a stock will go lower. just a fact of life that many in the cult of apple don't want to admit. it resists even the downward pull of the economy. have you to be careful when you play a fast grower. especially after it is rising for a while. as soon as the company misses a step, the second quarter is merely good enough and not better than expected, the moment we learn that the growth might be slowing, even just slightly, that stock will start getting pounded mercilessly. and i got to tell you something,

that pain can last for years and years. as it goes through a painful process of george costanza multiple shrinkage. years of momentum. it can last years as momentum seekers pay less and less for gradually slower earnings growth. all of the managers get shaken out and it is value oriented investors become interested or enticed. please don't hang on for the full ride down. it lasts too long. sell, sell, sell. you can circle back at a lower level if growth restores to levels where it was once a market darling and something that happened very rarely, not maybe on one hand. bottom line, to have a portfolio that works in every market you need a secular growth stock that

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all right. what have we done here? so far we talked about gold. we talked about speculation and growth. now time to talk about the fourth piece of the puzzle. yield. you need at least one stock with a high yielding dividend. owning multiple high yielders, i will bless that. it might not be high octane names, but who needs sex appeal? buying high yielders and reinvesting dividends in those stocks is still, even with interest rates going higher, one of the greatest ways to make money out there plain and simple. it allows your investment to compound over time. money from dividends compounds dividends.

people think high yield is about safety or generating income in your retirement. if you go back to january of 1996, that's the way back machine. about 40% of the return from s&p is from dividends. this is wall street gibberish for growing your money. dividend stocks do represent a fabulous safe haven in difficult markets if the yields are high enough. not just for retirees that only care about capital preservation. though they did a great job on the front providing yields are high enough. investing in high yielders is first and foremost one of the smartest strategies for making money. it's also one of the safest since dividend stocks have a cushion called yield support that helps them hang in there when everything else is getting annihilated. they eventually get to a level that is attractive for investors, too hard for them to ignore. that's why i devote so much time on the show in books to dividend investing. it does work in a higher interest rate environment

provided that the stocks have come well off their highs and represent bargains on earnings and earnings growth, not just because they have a big number attached to them. why i like accidental high yielders. they yield more than 4%, but not because of dividend increases. their share prices fall so hard. >> sell, sell, sell. >> causing the yield to skyrocket even though they didn't change the dividend. why i like stocks of companies that raise their dividend. one of the clearest management can send. one with steady reliable growth and a company that we are pretty darn sure won't cut the dividend it just raised any time soon. i have seen that happen but only a handful of times in all my years of investing. this is a bankable supposition. companies don't raise dividends when they are ready to fall apart. even better are the outfits put through dividend increases for

20, 30 or 40 more consecutive years. we call these dividend aristocrats. think about 3m, emerson. now that's stability. other than accidental high yielders and dividend boosts, how do you analyze a high dividend stock? just like when learning to drive, think safety first, please. a very high yield can be a signal that dividend is unsustainable. that's a red flag and means that the dividend could be cut. as we saw from so many mortgage real estate investment trusts when interest rates went kerflooey. that's why we put the stocks through a rigorous. if it seems in danger, stay away. what do you look for? first and above all, everything else, we look at earnings per share. my rule of thumb is that if a company has earnings greater than twice its dividend pay out we know it can sustain the dividend even in lean times when earnings shrink is what happened in the great recession. in that case, you're home free. if not, go to step two.

look at what is known as cash flow. especially important when dealing with companies with a lot of machinery or other heavy capital investments which cause them to report high depreciation and amortization costs. think high yielding telco players like verizon and at&t as communication that doesn't come cheaply. these amortization costs don't come out of the actual cash though. the cash flow can give you a better idea about whether or not the dividend is sound. i know this can be confusing. many times i feel the lightning round questions, like verizon with a big multiple and it's not a big growth stock, it is then that i remind people some people can't be healed for earnings pure creations. you have to organize cash flow in the income statement, financial reports that companies file. let's get this caveat. if you cannot understand how to monitor cash flow, don't invest in any company where it is super important to understand that cash flow. as much as i like them, it isn't work risking being wrong about

calculations if i'm not around to help you. you also have to look at the balance sheet to make sure there isn't a lot of debt coming due in the near future. that too could necessitate a dividend cut. finally, action collected dividend. forget the ex date, record date, on "mad money" we only care about one thing, one date with dividend and that called the must-own date. the last day you have to buy a stock in order to have the next dividend pay out. that is put out by thestreet.com where i'm on the board. the must own date is the day before the x date. that's all you need to know. here is the bottom line. if you want to embrace new diversification with the old sector kind, be prepared for every market out there you absolutely must own a high yielder dividend to protect your stocks. they are also a terrific way to make money. remember, stocks got to come down first to make it a high yielder. what's not to like? scott in pennsylvania. scott?

>> caller: jim, big penn state boo-yah. >> nittany lion boo-yah. >> caller: thanks. so jim, speculating on small stocks with rumors of unconfirmed reports like a big product win can make for big gains. however if these reports are wrong you expect the stock to drop even more quickly. i'm in that situation with a stock. before the big run up it was trading on a very low pe multiple. i've done my profit taking but the stock is now in a near market multiple. if rumors are not true will the valuation on earnings help support the stock from dropping too much? >> in a rising interest rate environment that may not be enough. in a rising interest rate environment, we won't pay up for them because rates are so high we want to be in a bond. i know that sounds weird but there is that competition being built right now into the stock market. ron, hello, ron. >> caller: hi. i want to thank you for everything you've done for me. i've read all your books. >> thank you.

>> caller: i'm a 56-year-old disabled person. i supplement my disability with high yielding stocks, preferred stocks and mutual funds. >> okay. >> caller: lately in the preferred category they've been going down as well. what do i do? i can't reinvest the dividends. i need the income. do i scale in at lower levels or do i -- >> why don't you wait until -- here is what i like to do. in that situation, i literally like to have some cash. i would take something off the table. i know you don't want that. i know you want the income. you got to take something off the table in order to be able to put it back on the table when the interest rate rise goes further along. take some off, put it in lower. if you get through the thick and thin markets, i want you to shoot high. sky high. go for the higher yielders.

particularly the ones that are accidentally high because the stocks come down, not because the dividend is abnormally high. stick with cramer. ♪ [ male announcer ] you wait all year for summer. ♪ this summer was definitely worth the wait. ♪ summer's best event from cadillac. let summer try and pass you by. lease this cadillac srx for around $369 per month or purchase for 0% apr

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hey, all night i've been preaching and teaching, trying to show you how to build a portfolio of stocks that can work in any type of market. from the nasty picnic for the marauding bears to a pamplona style running of the bulls. you will always have something by filing what i call a new diversification. by a sector that i push endlessly ensures won't key off the same bad news and get beaten to bits at the same time. the new diversification strategy means that whatever the market is doing you will always have at least one approach to investing that should pay off big time, if you do it right. let's go over it again. first you have to start off with

gold, either through an etf like gold that follows the performance of precious metal or in my favorite bullion or gold coins. i know no longer trust any gold miner to deliver what you need for your portfolio. we have nothing to say for the infomercials that pushes it nonstop. you do need gold for insurance. it goes up when virtually every other stock or currency declines in economic chaos. you need a speculative stock. something trading for less than $10. either one that was left for dead on wall street or that they never heard of. boredom in a short period of time. it should keep you engaged enough in business to motivate you to an hour of homework per week. that would be optimal. remember, i need you to stay focused on all your stocks and you put a little money in speculation to stay focused on them. third, you need to profit a whole lot and deliver gains when things get worse which is why you must have some exposure to growth, a high secular growth

stock with powerful momentum. big payer in the massive multiyear gains that come from reinvesting. that the keyword, reinvesting dividends. that's four positions. now we need one more to be diversified either by sector or strategy. last piece, you have to have some foreign exposure, as painful as that might be. not just a u.s. company that does business overseas, but a genuine international company in another country that may be doing better than the united states. it is often the caboose of the economic train. we sometimes go from china, locomotive worldwide, from india, germany. you still want to have something foreign, purely for the sake of international diversification. you don't even have to bet on anything that's exotic like a chinese company, brazilian company, indian company,

although those countries is where growth has been and maybe will be again, with the maturity of the middle class. the middle class brings with it financial stability with spending. canada is one of the healthiest economies in the world. one that handled the financial crisis and recession bet are than we did in the u.s. you might want to go south of the border. the mexican etf. it is one of the lowest inflationary countries of on earth. there's a basket of european stocks all beaten down or think of one of the european conglomerates. just as long as not every dollar is invested in the u.s. security. that is a hazard to your financial health because we want to be diversified away from the security of the currency. bottom line, the country doesn't matter as long as it isn't here for this last position in your diversified portfolio. if you are building a portfolio that can work in any market, one diversified by strategy, not

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i get up between 3:00 and 4:00 every morning just to peruse what some of you insomniacs are tweeting about. as out there as your tweets may be at times, i love answering them. so let's take some time tonight to answer a few of your twitter questions. our first tweet says, is it bad

i get upset on weekends because i can't watch new episodes of "mad money." it is very bad. but the solution is how have the charts delivered to your house. it is like a mini-me. let's take another tweet. this one comes from @daviesj2. how much do you use economic indicator reports? i use them very little because i build a model from the ground up. i listen to companies and make my own mosaic of an analysis from that, not from the top down like other people. they are lazy. next, jim, you're a great person and a role model. i admire you very much. best of luck in everything you do. let's go have a cheese steak with at geno's and celebrate our greatness. next from @sultanspeaks. he wants to know the strategy if you are sit on 25% profit, cash in? 100%? 50%? double up? boo-yah. you are done after the half.

this tweeter wants to know, jim, what is similar to jpm? morgan stanley, goldman sachs. those are the ones i'm focused on, otherwise we just look at the website and look up what they have to say and that will do it. stick with cramer.

i like to say there's always a bull market somewhere. i promise to try to find it just for you here at "mad money." i'm jim cramer, and i will see you next time. [soft piano music] ♪ [snapping photos] ♪ (female #1) wanna do one on his lap? ♪