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 want to make friends, i'm just trying to make you some money. my job is not just to entertain you but to educate. so why don't you call me at 1-800-743-cnbc. in recent years, i have to tell you, i think stocks have become the most hated commodity in existence! [ boos ] they're certainly hated -- well, let's say any time more than i can remember in my career.

i still believe anyone can turn a profit in the stock market. as long as you're willing to put in the time and effort to keep track of what you owe. i wouldn't come out here every night and try to educate you if i didn't think this was more than just a theoretical possibility. but it's feasible. for the vast majority of people watching the show. you can succeed at managing your own money. if that's the case, why is it so darn difficult? how come so many people struggle to make money in the market? how can i believe that it's possible for to you beat the averages. the s&p, the dow jones average when so many people so regularly fail to do so? simple, you can do it. but you've got to do it the right way. one of the biggest obstacles to successful investing is the lack of clarity about what is the right way to do it. what is investing supposed to mean? i've seen countless people try to follow conventional wisdom about money management only to have their investments wiped out because conventional wisdom is wrong. and the worst part is these

people had no idea they were making a mistake. they thought they were being responsibility. in other words, to borrow a phrase from "cool hand luke," failure to communicate. and that's why tonight we're going to spend some time demystifying the concept of -- wow, here's a code word, long-term investing. it's been misinterpreted in so many ways it's become a hindrance more than a help for most of you. listen up. here we're all about longtime investment. too often people let the term long-term get in the way of successful investing. if you think it's about making boat loads of money over years and decades, lifetimes, hey, consider me onboard and that's something i think i can teach you how to do using the disciplines that allowed me to make fortunes for my already rich partners back in my old hedge fund who ran about $500 million. however, there's a darker side to this concept. all too often, i've seen people

invoke -- [ the house of pain ] >> -- long-term investing as an excuse, an alibi either for poor performance or not paying attention to what they own. you often hear you shouldn't worry about your losses or the profits that you're missing in the present. it's okay to take short-term pain because you'll make back the money. you're losing with long-term gains. hey, look, okay. sometimes that's true. it's not just all a big joke. but most of the time, most of the time losing money month after month after month or year after year isn't a good recipe for making money over the long-term horizon. but a lot of them don't transfer into long-term gains if you wait long enough like so many people think they do. yes, money making over the long haul is the ultimate goal in this game. but it's also become the ultimate excuse for short-term losses, for short-term thinking. and believe me, that kind of thinking will only make you a worse investor. before i can teach you how to invest for the long-term, i've got to disabuse you of the allegedly long-term alibis that

you've been fed for all these years. where do these sirens lead you astray? at what point do you need to cover your ears so you won't listen to the conventional wisdom and end up steering your portfolio on to the shoals. first and foremost, long-term investing is not the same as owning stocks for the long term. in other words, please don't confuse being a good investor with the idiotic ideology of buy and hold. or as i skeptically dub it buy and forget. buy and hold has been the conventional wisdom for decades. this bad idea has lost more money for people than the last two crises in finance combined. that doesn't mean you can afford to take loss after loss after loss in the short term. and just because they're unrealized, believe me, that doesn't make them into gains or potential gains. losses are losses. realized or otherwise. and the notion of being in something for the long term does not justify owning damaged goods. the stocks of companies that are in bad shape in the misguided hope, well, hey, come on, man, it's got to come back if you

hold it for the long term. the idea behind buy and hold that once you purchase your stocks, you just wait. me, i've never liked waiting and it also happens to be a terrible strategy if you think it is a strategy. that's why i'm saying you have to keep track of your investments after you buy them, doing the homework i talk about on the show. you've got to do it all the time, going over the quarterly report, listening to the s.e.c. filings, listen to the conference calls, reading the transcripts. much of the research that used to be available only to those paying millions in commissions can be found on the web like yahoo! finance and that's worth reading. hey, it's your money! invest the time in it. the advocates of buy and hold act like you have a license not to pay attention, you don't have to worry. wrong! you always have to pay attention. the moment you stop is the moment you start losing money. and you will never be able to recover from those losses until you get engaged with your portfolio again. sometimes companies can go in secular decline and their stocks never really recover. in that case, you can't afford to wait for a turnaround. you have to get out before the

damage becomes too horrific. hey, just ask the people who rode down research in motion or nokia or radioshack. or even supervalue. at least that's bounced a bit. these things have really come down. or in other words, being a long-term investor doesn't give you a license to be a lazy investor. as anyone who witnessed the crash in 2008 and the beginning of 2000 knows, that doesn't work. investing for the long term does not mean owning stocks forever, no matter the cost. if there's one good thing the crash did was disabuse people of the notion you can buy and hold stockses for eternity. go ahead, buy and hold bank of america at 50. go ahead. and magically they will somehow make you money. they'll be back at 50 in no time. as long as you don't try too hard to game short-term moves. from the stories i read in some pundits i hear, the lessons are already being forgotten. i can't have that happen. not on my watch. i've always been one of the loudest opponents of buy and hold. and this brave new world of flash crashes, euro meltdowns, many other crazy things, many people who foolishly espouse this philosophy have tried to change their tune. they've been so discredited, no one listens to them anymore.

however, that doesn't mean you should write off the idea of long-term investing too. it doesn't mean stocks can't make you money over an extended period of time. although that's what many of you think if you confuse long-term investing with buy and hold investing. buy and hold was always close. stockses are still the best way to make money for retirement, 529 plan to pay the kids, put the kids through college or just to build up savings to afford big ticket items like a house or a car, especially stocks, with consistently growing dividends. compound your wealth by investing. the kind of dividend payers that i highlight, excuse me, in my of my books. that said, you will never get any of those things if you use the concept of a long-term horizon as an excuse or alibi for bad performance. and holding stocks that can't even afford to pay their debts let alone some of their dividends. something you won't even know

about if you buy and forget. so here's the bottom line. long-term investing has gotten mixed up with a lot of bad ideas over the years, but that doesn't mean it's impossible or that it's not worth trying. i can, on this show, teach you the disciplines and strategies that will allow you to build long-term wealth by investing in stocks just as long as you remember that i'm a long-term investor, in quotes, is no excuse for not doing the homework or following the rules i lay down. if anything, being in stocks in the long-term requires more diligence, more patience if you're in them for the short-term. don't throw away all the lessons i teach you. you're going to need them. to paraphrase that fabulous poetic amateur investor gertrude stein, a loss is a loss is a loss, unrealized or otherwise. and don't you ever forget it. bill in pennsylvania, bill?

>> caller: hey. >> speak up, bill. the floor is yours. >> caller: hey, i thought i was a rock star, made a couple of great trades. i made about seven points in a week on one stock, another couple points on another, only to have the stock continue to run up another 10, 12, 14 points. wondering if you have any advice on how i can realize the full potential and become more of an investor rather than a trader. >> okay. you have to label your stocks. you have to say this is a core position. when it's a core position, that means you can sell some. but you must own the rest. that's what i do for actionsalertplus.com. if it's a core position i can sell some on a ramp but not all of it, period. anoint your stocks, decide with your homework what should be core and then hold on to that core position! kim in california, kim? >> caller: hi, jim. >> yo, what's shaking? >> caller: i wanted to give you and your staff major props for recommending u.s. airways. >> i've got the smartest staff in the world. they make me look great every day.

they're some swell people here. sports fans, most of them. >> caller: i'm a new investor off the sidelines and that stock's up over 10% for me. >> well done. >> caller: my question is, what's the difference between buying on a dip and buying on a pullback? and can you give us an idea of the percentage that fits? >> sure, that's a great question. i think 3% to 5% is a dip, pullback is 5% to 8%. that's how i look at it. little dip, down intraday, down 3, down 5 over a couple of days. but 5% to 8% is a classic bull market correction. one is a dip and the other is a correction. and in the correction, i say give it wide berth. the stock's at 12, put in a bid to buy some at 10. but i think if it's a correction -- 11, if it's a correction, it's going to be under ten. so 12 to 11 and change on a dip then a real correction, sure you have to give it some room. and if you get 10% down, that's fine. get 20% down, you've got to leave room. what can i tell you? correction can be that deep for some stocks.

i don't know when long-term investing became a bad thing. it's the right thing if it's done with homework and discipline but not just with some label that says i don't have to worry about it. you see, i labeled it long term. "mad money" will be right back. keep up with cramer all week long. follow @jimcramer on twitter. tweet cramer #madtweets. have a question? tweet cramer, hsht madtweets. madmoney@cnbc.com. or give us a call at 1-800-743-cnbc. miss something? head to madmoney.cnbc.com.

let's talk the price is right. not that game show, i mean the stock show. if you want to actually make money from your stocks, which i know you do, then it's absolutely critical that you buy them at the right price, not the wrong price. [ buzzer ] and that's true whether you're making short-term trade or

purchasing something that if everything goes right you expect to hold for years and years and years. most people don't think that. they think it doesn't matter. you're wrong. when you pay too much for a stock at the very beginning, you make it vastly more difficult to rack up the kind of big gains we can't get enough of here on "mad money." a fantastic idea, but if you get the price wrong, you may not make any money at all. i think price is dramatically underrated by you as a determinant of successful investing. which is why i'm giving you the power of price its due. it is incredible how unimportant people think that first buy is. so how do you find the best price to pull the trigger? [ gunshot ] when you're investing for the long haul, you have one advantage over people using a shorter term horizon. a resource traders don't have the luxury of exploiting. i'm talking about time. as a long-term investor, you've got all the time in the world. now, when you want to buy a stock because you like the underlying company's prospects and when there are no near-term catalysts to drive up the stock any time soon, you can afford to be patient. you don't have to pay the price the market's giving you at that moment. you can be patient and wait for the stock to come down to your

price. that's right. what you can do is keep your bat on your shoulder and wait for your pitch. of course, you're never going to get an all-clear signal telling you it's time to buy. maybe a 3-0 pitch comes in and you have to keep your bat on your shoulder. how are you supposed to know how long you should wait before you pull that trigger? [ gunshots ] simple, you don't know, okay. this is one of those areas where you have to embrace the fact of your ignorance. that's why i tell you to buy your stocks in increments. loading up gently and over time. if you buy at one level, the stock goes down further, you're going to feel like an idiot for losing money so quickly. most likely you'll get frustrated and you'll dump the whole position a point or two down. i hear people in the "lightning round" saying oh, i'm down 2 bucks, jim, i want to sell. no, you want to use the weakness to buy more. if you build up your position in small increments, patiently picking up more shares over weeks and months, you can avoid paying the wrong price which is what matters. that's why currently for my charitable trust which you can

follow along at actionalert.com. i play with an open hand. not a lady gaga style poker face. i like to buy with wide scales on the way down. and that is some authentic wall street gibberish. allow me to translate into cramerica english. buying with wide scales on the way down describes the way you should purchase a declining stock when you think it's approaching the bottom. you want the right entry point for your long-term investment and this is the way to do it. now, it's practically impossible to call a perfect bottom in an individual stock. people tell me they caught the bottom. i think they're probably lying. that's why we don't try to time the bottom while buying all at once. no one's that good. the odds of being wrong are too great. instead the smart move, the way the pros do it and the way you should do it is buy incrementally on the way down. consider it your insurance against the potential bad judgment of thinking you know the stock's done going down and you want to be all in. because you're so sure you're getting in on the ground floor. in this game, i've got to presume that there is a basement if not several subbasements.

this notion of scaling in to a position on the way down is a trick that helps you get around the difficulty of timing the market exactly. hey, let's pick an example. let's say you want 400 shares of caterpillar and it's trading at say, let's call it 90. if you buy all 400 shares at once and cat dips down to 85, you'll feel like a stooge. not even mo, not curly, you'll feel like shemp. $2,000 in a blink of an eye. i don't know if shemp was that stupid. that's why we don't want to do that. you want 400 shares of caterpillar, the cramerica approach is start small. buy no more than 100 shares at 90, then if it comes down to 85, rather than contemplating suicide, you're at a better entry point. you're rooting against the stock so you can buy 100 shares at a lower price. buy the next, cat drops to 81, put in the final 100. if it sinks below 80, well, you had an amazing price here. the worst-case scenario, goes higher on the initial buy and you make some money. even if you don't have as many shares as you wanted.

that's a high-quality problem where i'm from. if you decide to sell a stock, unload it incrementally into strength. calls all the time, guy says i sold the stock at 10, it went to 15, what do i do? you should have scaled. you know about buying incrementally. let's talk about scales if you're buying a stock that's sinking lower and lower and lower every day. you can buy it with the strict scales or what's known as wide scales. what's the difference? stick with the caterpillar example. if you're using strict scales, buy 1,000 shares. every time the stock loses a point, you buy another 1,000. you buy more. the essence of strict scales is you buy the same increments every time cat goes down a point or three points, whatever size decline makes sense. you purchase the same amount of stocks. sometimes it can hurt you. that's why i often like to use wider scales when i'm buying a stock that's falling. particularly a vol ta lyle cyclical stock like caterpillar. the trick with wide scales, you buy larger and larger positions. as the stock goes lower. at 90, that was a strict scale. this one was a strict scale. let's talk about a wider scale. i used to think of them as a pyramid.

if a stock lost a point, i would put on 1,000 shares, another point, 1,500 shares. it's so low you can hardly believe how poor the stock is. then you double down. see what i mean about the pyramid structure buying? the lower the stock goes, the larger your buy should become. both work. you've got to get comfortable. the great thing about wide scales, they leave you with lots of room to maneuver. when that stock eventually bottoms out, you're going to want to pour your money in. using wide scales allows you to buy at the lowest price. the best thing about long-term investing is you can afford to be patient and build a wide pyramid. when you like the fundamentals, you can wait for a market wide pullback or a sector wide sell-off to accumulate a big position as the company goes down. make sure the story's still intact, please. if it's broken and that's why it's going down, it's never going to be a bargain no matter how far it falls. in that case, you need to abandon ship and find another one to travel on. and it does happen. and i'm sorry it happens, but it happens every day. in this game, few things are more important than price. as a long-term investor, you have the luxury of being able to wait for a good one. be patient, keep your bat on your shoulder, wait for the

right pitch. remember, don't buy all at once. and when you're trying to catch the stock on the way down, be sure to buy it with strict scales or hold yourself or even better wide scales and build that pyramid to get the best possible price. bill in connecticut. bill? >> caller: boo-yah, jim. >> boo-yah. >> caller: i own some stock and some dividend reinvestments for over ten years. now i'm trying to determine how i get a cost basis. >> well, you should get -- you can get your cost basis. you have to look at average number of shares you bought. and then i think your broker's going to have to help you on the cost basis. because i'm not sure when they awarded -- you know, that's a great question. i'm not sure exactly. but my broker has -- well, i can't own individual stocks now, but it always had an average price for me whenever i wanted it. anyway, price matters. put on that poker face and be patient. you have the luxury. institutional investors don't. after the break, i'll try to make you more money.

i'm jim cramer and welcome to my world. welcome to the 2,000th episode of "mad money." >> boo-yah, jim cramer. i watch "mad money" so i can afford body building. >> you've changed my future forever. thank you for being here every night. >> we're talking to duncan niederauer, the owner of the new york stock exchange. >> i'm going to hijack your program. okay. you've got to come with us. >> oh, my gosh. my fairmont. >> anybody who knows your story knows this was basically the bottom for you. you can come back from anything and look at you today, it's your 2,000th show, baby. >> thank you. >> i know you're going to close the market remotely tomorrow. >> cramer ringing the closing bell from the studio. >> 2,000 episodes of "mad money," unbelievable. good for you, jim. >> jim cramer mm2k. congratulations, buddy. >> remember, this car, my old home is testament you can come back from anything.

thank you, cramerica. the best audience in the world. thank you for letting me be your guide, your coach. here's to 2,000 more.

every stock you buy comes with what i call an expiration date. knowing when to sell those stocks, especially your winners, holy cow, this is heresy, huh? >> sell, sell, sell. >> is every bit as important as knowing when to -- >> buy, buy, buy! >> look, in fact, it's actually more critical. because so many people make such a huge number of selling related mistakes by panicking and selling into weakness -- >> no, no, ah! >> or by getting greedy and not selling at all. if you pick the right stocks, the ones with fabulous long-term stories and get in at the right prices, then eventually you're going to have winners up big. the point is not to go all gordon gekko on me. greed is not good in this story. it's dangerous. bulls make money, bears make money, but pigs get slaughtered. even if you think it has many years of gains left in it, you've got pick some profits off it, even those core positions. got to take some profits. no discussion. i know you'll be tempted to let your winners ride, but that's a

mistake, you have to ring the register on some of your positions otherwise your winners could become losers. it's best to lock in profits while you still have them by selling incrementally. believe me, you haven't really won until you've taken something off the table. [ cash register ] i know this is totally antithetical to anything you've probably heard about stocks. after what we lived through the dot com bust, the great recession, the destruction of so much old tech, the flash crashes, just sitting on all your big gains and letting them ride does seem a little foolish, doesn't it? if you can take something off the table, make sure you never turn a huge win into a gargantuan loss. why am i putting stress on the need to unload some of your best performing stocks? for starters, you don't need me to tell you to sell the losers. when you own a stock and the company lets you down, maybe management isn't executing, maybe the economy takes a turn for the worst and the stock belongs to a sector out of favor. don't get sentimental on me, will ya? don't give them the benefit of the doubt. these are pieces of paper.

just sell. better to act quickly and have a small loss than give a second chance to burn you and take a much larger loss. >> the house of pain! >> lots of people hang on to the losers often because they were once big winners or because they're waiting for them to get back to even before selling. and that is the worst kind of amateur mistake. even then, these people know the losers deserve to be sold. they want to sell. they're just waiting too long for an unrealistic price that's too high. hey, it'll get back. i know if i just wait. it's like some plant, water it and it'll eventually bloom. selling your losers makes sense, but selling your winners, that's counterintuitive. you have to trim your biggest gainers. the first reason is simple. diversification. when you let your winners ride, your positions can get so big. let's say you own a stock that's doubled, maybe doubled again. apple, charitable trust bought apple in the 200s. okay? that stock initially represented 15% in the portfolio, it's now going to represent a much larger piece of the pie even if the other stocks you own have also

gone up a decent amount. at that point, you have too much exposure to a single stock and too much exposure to whatever sector that is in. and that's why my charitable trust sold apple, doubled, tripled its price of where we bought it. totally because of discipline. we weren't clairvoyant about what was going to happen at apple. we believed in apple passionately, but discipline trumps conviction in cramerica. you know my rules. you never want more than 20% of your portfolio in any individual sector. keeping all your eggs in one basket is downright dopey. apple at the high got too big of a position for actionsalertplus.com. we did trim it by necessity. as is often the case, necessity was the mother of invention and the mother of profits. that's why you need to trim your winners as they go higher so they don't become too large piece of your portfolio and get you in trouble. if you're investing for the long-term, you've got time to do this gradually. as your winners go higher, you should sell off parts of your position. scaling out slowly over time. like i told you earlier, never sell at once just like you should never buy at once. try to wait for moments of strength so you can get better prices. but don't wait too long.

you don't want your portfolio to become too heavily weighted toward one group. there's one more concept you should be aware of if you sell your best performers. that's the idea of playing with the house's money. ♪ hallelujah >> which i explain in "stay mad for life" a couple of books ago. when you own a stock with a huge run, you want to trim your position where all the money in that stock comes from profits you've already made. and not a penny comes from your original investment. once you pare back your winners so you're playing with the house's money, you can afford to take far more risks with what's left. you can let that run forever, i don't care. that's the holy grail of investing, people, because you can't lose. you can ride it all you want and never let it go if that's what you'd like. it's bought and paid for by the house's money. oh, and one last thing, younger investors can afford to let their gains run for longer than older investors. why is that? the those of us closer to retirement cannot risk turning big investment gains into

losses. we're too late in the game! when you're young, it's less important to preserve your capital because you've got your whole working life to make it up in your regular job! those of us in the older demographic, even if you're extraordinarily well preserved like myself, who would've guessed i'm a limber 60-something. you've got to be more careful. trimming your winners more aggressively and ringing the register more regularly than any young investor might do. here's the bottom line. when you're investing for the long term, you can't just hold stocks forever, you've got to remember to take profits, trim back your winners so your portfolio stays diversified. and when you can, take all your invested capital out and play with the house's money. >> house of pleasure. >> i need to see skip in texas. please, skip? >> caller: this is skip. >> hey, what's up? >> caller: hey, jim, love you. i've noticed whenever callers ask about your advice for buying gold, you always state your preference for gold coins followed by bullion and stocks. why do you favor coins the most?

and two, which coins are best? and does it matter? >> no, doesn't matter which. i prefer coins because you can store them easily in your safe deposit box. they're very easy to have. the gold stocks have been horrendous. they're terrible. they're not correlating with gold at all. they're a huge mistake. let's go to samantha in new york. samantha? >> caller: hi, jim, so excited to talk to you. love your show. have a big brooklyn boo-yah for you. so here's my question. i'm 22, but my job doesn't offer any 401(k) or any type of retirement account so i want to start with investing myself. >> i think that sounds great. >> caller: do i start investing with risky speculative stocks because i'm young enough to lose it -- >> you're only 22, which, first of all is a terrific time to start investing and i want you to mix it up. speculative stocks but i want you to for 20% of your capital. but for 80% of your capital, i want a dividend, i want some just bulwark names. i'll bless 20%. if you tell me you've got great specs, i'm willing to take up to 30%.

because you got your whole life to make it back. congratulations for being 22 and wanting to invest. that's how you get really wealthy. we take lessons wherever we can find them even from stock seer kenny rogers. when it comes to long-term investing, you've got to know when to fold 'em, when to hold 'em and when to -- >> sell, sell, sell -- >> stay with cramer. >> i'm jim cramer and welcome to my world. >> one man, one mission. >> i want to make you money. >> eight years. >> you need to get in the game. >> tens of thousands of miles traveled. >> this new black gold rush is just getting started. >> it's the sound of american industry roaring back to life. >> hundreds of ceos. >> my life story can be your life story. >> thousands of callers. >> boo-yah, jimbo! >> millions of your e-mails and tweets. "mad money" thanks cramerica for being with us for over 2,000 episodes.

if you want to invest for

the long term, then like it or not, it means planning for retirement. to misquote, in the long run, we all retire. i know it may not sound sexy, but believe me, trying to put together enough money to become financially independent, that's what this game is all about. i'm sure you've heard the basics of retirement a gazillion times. you've got contribute to your 401(k) plan if you have one and you have to contribute to your individual retirement account or i.r.a. and that is conventional wisdom and this time it's actually right, it's helpful. tonight, instead of just telling you to park some money in your i.r.a., i'm going to give you advice on what to buy with your retirement cash. you need to know why everybody says to take advantage of your 401(k) and fund your i.r.a. they are tax-blessed vehicles. the money in a 401(k) or i.r.a. comes from your pretax and you don't pay taxes on the money you contribute. while your money stays in these accounts you pay no taxes on your profits. no capital gains taxes, no dividend taxes.

that's compound for free for years. tax-free gives you much larger returns over decades and decades. you only pay taxes when the money's withdrawn and then it's taxed as regular income just the once. that's a sweet deal especially if you're worried about tax rates on dividends or capital gains going higher. a lot of people trying to front run the change in tax law at the end of the fiscal cliff thing at 2012. turned out you didn't have to but many people were worried about it. as much as i like the tax favored status of 401(k) plans and i.r.a.s, i've got to tell you something heretical almost nobody else is going to say. most company plans, most 401(k) plans, they stink. they have high management fees, administrative costs, eating your returns, particularly when the returns are low. and worst of all typically offer you lousy choices and not nearly enough control over them. the 401(k) business is a racket for the managers who get to charge you these fees. i can't believe i said that because it's true. ideally when you manage your own money, you want a diversified portfolio pick up five to ten stocks, most 401(k) plans don't let you do that, mine doesn't. often they only let you choose

between no more than a couple dozen mutual funds. individual funds. that's fine for me. but i'd like to have a little more variety. some stock funds, some bond funds, that's all they offer. best you can normally do is find a decent low-cost index fund, put your 401(k) money in there. given that the whole premise of "mad money" is so you can do better than an index fund by picking your own stocks and managing your own portfolio on your own, that makes a 401(k) pretty poorly designed vehicle for "mad money." sometimes it feels like the whole 401(k) system was set up to benefit the financial service industry, not you. and given the way washington works, i wouldn't be surprised if that was the case. hey, you know, come on, call them as i see it. nevertheless, as much as most 401(k) plans stink, you should still contribute to your 401(k) if you have one. in order to take advantage of the tax blessed nature. these tax-favored vehicles are just too good to pass up. plus, many employers will match your 401(k) contributions. and i'm a big believer in never turning down free money. so when you're saving for retirement, the first thing you should do is put enough money in your 401(k) to max out the

company match, if you have one, and then stop. and the rest of your retirement investment should happen in your i.r.a. until you hit the upper limit of what you're allowed to contribute in a given year. unlike most 401(k) plans, i.r.a. gives you the freedom to invest your money whichever way you want. yes, you can do both, you're allowed to. what should you buy in your i.r.a.? like i tell you in "getting back to even," your best bet is to own high-yielding dividend stocks that provide protection and squlen rate income. there are a couple of wrinkles that make investing different. as much as we like high yielders, you don't want to buy master limited partners. think the pipeline stocks, kinder morgan. the reason they're already tax advantaged as their distributions are considered return of capital. which means you don't pay any taxes on them until you sell the stock. but thanks to an arcane tax rule, if you buy too many of these stocks within a retirement account, you could actually end up giving that -- giving up that tax favored status and paying the irs taxes that you wouldn't have paid if you'd simply bought the mlps in a regular brokerage

account. i always try to figure out how much you could buy, the mlps not worth it. too hard, too many people say it's too hard. same rule, by the way, can hit you with certain real estate investment trusts. but in general reits are won't earning in your i.r.a. and the reits for your retirement accounts, that's all up to the individual. beyond that, you need to use same metrics to apply to any other dividend-paying stocks. looking for high yielding stocks but the dividend needs to be safe. meaning the company better have enough earnings to cover the payout. we also like companies with consistent track record of raising the dividends. these can be powerful contributors over time even though they might see sleevy versus the go go stocks that pay no div ends because those can flame out. they can cause a hole in your long-term investing plans. don't be afraid of owning utilities, they've made you an awful lot of money over the long-term if you took those dividends and reinvested them right back into the same stocks that paid them. so here's the bottom line. a huge part of long-term investing is retirement investing. and the best way to prepare is

putting money in a tax-favored vehicle like an i.r.a. account and investing it in high-yielding dividend stocks. the goal here is able to reinvest your dividends, let them compound year after year after year without paying any taxes until you withdraw your money at the very end. that's a terrific recipe for producing huge long-term returns. i cannot believe people don't have an i.r.a., a 401(k), that's plain wrong. stick with cramer. never in history have there been more doubts about this market. >> feel like the odds are stacked against you. some feel the game is not worth playing. i know together we can win. >> jim cramer leveling the playing field for all. >> i'm not walking away from this market and you shouldn't either. huddle up, cramerica.

mad about "mad money"? immerse yourself into cramer's world when you watch the show with z-box. on your phone, tablet or on the web, get sneak peek, go behind the scenes and join the conversation. download the app today from the ultimate cray merrick can

adventure. here's a serious conundrum. how on earth are you supposed to pick stocks for the long hall when they're going in and out of fashion in the show? when in reality that's simply not the way the game works most of the time. there's few stocks that you can keep riding higher and higher year after year but when you find them they're the holy grail of investing. they almost never go out of vogue. just stick with that fashion show analogy. like i told you before, there's no such thing as a stock you can hold forever. that's the essence of the kind of buy and hold thinking that has lost so many people so many huge sums over so long. >> the house of pain. but some winners are more lasting than others. and there are certain types of stocks that can produce gains and they can be owned much longer than ordinary stocks.

i'm talking about secular growth stocks, a rare breed that you should always be on the lookout for. these companies are driven by powerful long-term stories that transcend the strength or weakness of the underlying economy. most companies need a healthy economy in order to thrive, right. we call those cyclical stocks. but a true secular growth story can deliver fantastic numbers even in a lousy economy. numbers so consistently good they can keep powering the stock higher, quarter after quarter after quarter, even a slowdown. how do you spot a genuine secular growth name? when you have a company that's a play on a much broader trend. take the move toward healthy eating in this country and the embrace of natural and organic foods. this organic theme has made whole foods the go-to supermarket for all things healthy and organic and a powerhouse stock that will go for years. hey, same thing goes for hain celestial. also companies that harness the internet like netflix, amazon, of course, google. of these i think google has the most staying power because it has the most earnings power. that in the end is the driver of

stocks. never forget that. google's got social, mobile, it's got cloud. that's the holy trinity of secular growth. and i don't see that diminishing any time soon. however, while these stories can last for years, even secular growth trends do -- well at one point limited shelf life. as these age, there are fewer and fewer plays to make you money. years ago, back when the smartphone was a relatively recent invention, i started talking about the power of the internet in, remember this, the mobile internet tsunami. and for a while there was a lot of money to be made all over the smartphone food chain, you can buy best of breed, second and third best because a rising tide lifted everything. but in the end, not even the best of the best, apple can thrive when the theme runs out of gas. the fact that apple could go down and go down hard is a reminder that nothing lasts forever. you've got to monitor the most beloved of stocks for possible chinks and a recognition for mg that was once a secular grower has become much more hostile to worldwide economies. pcs used to be secular growers.

it's not just tech. in my former years as a hedge fund manager, nothing could compare to merck, pfizer and lilly. they were capital gains machines. all right, fast forward 20 years and with innovation dwindling, they've become almost like utilities in the growth characteristics. they are con ed. they would likely not be owned by those seeking income not capital appreciation. they've become bond market equity equivalents. monday market equivalents, a rising tide does not lift all ships. the ones with holes in them still sink. here's the bottom line, most of the time you can't just hang on to stocks for years and years and years. but if you find a growth stock, something driven by the same kind of theme, there's nothing wrong with owning the super high quality stocks for as long as the story intact and that can be a long time. but just like life, secular growth doesn't last forever. and while you may want to go for the greatest secular surf ride of all time, remember, even the biggest wave like the wave of apple ends up crashing on the shore eventually. only homework will keep you from crashing along with it. jason in maryland. jason? >> caller: hello. how are you?

>> i'm fine, jason, how about you? >> caller: i'm hanging in there. i was just wondering about small, mid and large cap investments. what are the benefits and cons of each one? >> large cap might include a big balance sheet, big dividend, that means it's got cushion and you can reinvest dividends over time. mid cap may mean more hit or miss in the sense it may not be able to withstand the vicissitudes of the larger economic issues. large cap companies have great benefits over midcaps because they have such. small caps are speculative, they may hit the ball out of the park or strikeout. diamonds may be forever but stocks are not. you must stay disciplined and you've got to do homework to survive. stay with cramer. jim cramer, you're one of my heroes. >> i look forward to your show every weeknight. >> thank you so much for helping beginning investors like me. >> when you talk about the market, i believe you're spot on. >> oh, i love it. thank you so much.

every night we watch you, i have learned and earned.

it's a brutal full contact sport. >> from the time the whistle blows -- >> traders bracing for what could turn out to be a wild session. >> the last play of the game. >> markets absolutely getting hammered today. >> i know it's not easy, but i promise to keep fighting for

you. >> jim cramer, leveling the playing field for all. >> the road is a tough one, but the payoff can be your greatest win of all. >> join "mad money's" training camp weeknights. all night i've been trying to walk you through what it does and doesn't mean to be a good long-term investor. so while we're on the subject, i've got one last point to make. there's nothing inherently virtuous about long-term investing. in other words, don't get too hung up on the nomenclature. the notion of trading has become a really loaded and dirty word and it shouldn't be. [ boos ] it's a lot of negativity. it's somehow immoral to flit in and out of stocks for short-term gains. that's silly. we're here to make money. i happen to think picking long-term winners is more lucrative and it's an easier strategy for home gamers like you to duplicate at home because you're busy working all day. if you find your portfolio does better when you're managing your money more actively, meaning more trading in and out of stocks more frequently, more

power to you. i'm not judging you. but never forget you don't have the horses to compete with the high-frequency bandits or the hedge funds with multimillion dollar research budgets to support their trading operations. at the end of the day, when you go to the bank, they don't care if you made your money in short-term trades or long-term investments. they don't ask. we've seen them take money from mexican drug cartels or iran and international sanctions, despite them. they're not going to draw the line at money you made from trading stocks. the teller, presuming you can find a human, isn't going to say, look, i can't accept this deposit. but, no, not that way. this money, no. it's dirty money from trading. take it somewhere else. that conversation has never occurred. money's money. but here's some of the buy and hold the only money worth making is the kind that comes from stayed, boring investing. the only difference between trading and investing is your time horizons. trades are positions you want to hold for a shorter period of time, weeks or months, even the day. and investments are positions you plan on being in for the longer, say a year, year and a half counts as long on this show. don't be fooled by the false

dichotomy between trading and investing. you don't have to choose between passively sitting on your holdings even when you think you should be taking action. or flitting in and out of your holdings on a daily basis. you can do both or either. no matter which path you choose or both, be true to your disciplines, do your homework, stay on top of things and i bet you'll do better than just about any mutual fund, etf, or hedge fund you could that's possibly at your disposal. only those trying to manage money for themselves and their many minions would vociferously disagree. stick with cramer. >> i'm jim cramer and welcome to my world. >> one man, one mission. >> i want to make you money. >> eight years. >> you need to get in the game! >> tens of thousands of miles traveled. >> this new black gold rush is getting started. it's the sound of american industry roaring back to life.

>> hundreds of ceos. >> my life story can be your life story. >> thousands of callers. >> boo-yah, jimbo! >> millions of your e-mails and tweets. "mad money" thanks cramerica for being with us for over 2,000 episodes.

long-term investing, no, no, no. it's not a way to be able to say i don't have to care. you should care even more. i'd like to say there's a bull market somewhere, i promise to try to find it for you here on "mad money." i'm jim cramer and i'll see you next time. >> coming up on "the suze orman show"... why i think every single one of you out there needs a living revocable trust. also, a "suze follow up." what was the hardest thing for you to do, of all the things that i asked you to do? >> well, no doubt was discussing this with the kids, in terms of their activities. it was difficult. >> and you ask me, "can i afford it?" >> i want to buy a tesla model s electric luxury car for $85,000. >> hi, everybody. i'm suze orman, and you are watching "the suze orman show." tonight...