it will be a volatile game i think with everybody getting into home control, apple, google. this is the one to pick. >> alcoa is still higher on the after sessions in an earnings boat. 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. 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 trying to make you a little money. my job isn't just to entertain but to teach you. call me at 1-800-743-cnbc. >>. >> tonight i'm using my bully pulpit here on "mad money" to preach against one of the excesses when investing.

it's the sin of arrogance. when you own stocks you have to be humble. you have to recognize you are going to be wrong perhaps often. as the past few years taught you painfully, your portfolio will get hit with things you never saw coming. things you never imagined never thought were possible. who would have thought we had to worry about cipriat bank? or a sequester abonomics? one thing you can be sure of when putting a portfolio together, at some point something is going to 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 less than the other guy because sometimes thinks aren't going to go that smoothly. how the heck do you get ready for a calamity you don't know what will look like?

how do you expect the unexpected as an investor? it's not hallelujah, diversification. it's the single most important concept to investing. make sure you can stay in the game for when things finally get better. lots of people when they see me they shout, boo-yah! i'm down with that. i think that means like i'm okay, i'm okay with it. if you say skee-daddy, am i diversified? then reel off five stocks, it would be more constructive and productive use of our town. yes, there is a reason we play "am i diversified" every wednesday. i talk about this concept ad nauseum and call it the only free lunch in the original invest i investing. even when i was a squash buckling hedge fund manager i believed in the goodness of diversification. my charitable trust is nothing if not diversified. i monitor it intensely to be sure it stays that way.

if your portfolio is properly diversified, you can handle any setback. more importantly, you can come back from any setback. you will lose money but less than the other guy. that's all you need to be able to do to stay in the game, frankly. the real purpose of "mad money," to stay in the game for better times. usually when i talk about diversification, i mean making sure all your stocks are not like eggs in one sector bacteribacterisket. no one somethingment of the economy should account for more than 20% of your portfolio. you own five stocks, only one can be a tech, one health care, only one energy, only one can be industrial, only one can be a food beverage maker. err on the side of caution. if two stocks trade together and succeed and fail on the same factors, you are not

diversified. a software company and hardware company are both tech stocks. you want to be tough about it? the food stocks do trade with the drug stocks. if you have a huge barnburner of industrial rally, you will be left behind by both. i'm not doing this to be capricious. the moment something bad happens to it, you are going to want to throw yourself off a bridge what you the losses will be enormous. i'm trying to prevent this from happening. imagine if you own too many health care stocks before they got whacked by congress. or how about too many banks before the financial crisis or regulatory reform in response to the crisis? and this soured a whole generation of people, too many tech stocks going to the dot-com bust. when something happens that makes one of them go down hard,

the rest remain relatively unscathed. or can go higher. that's the traditional view in diversification. it is mandatory. if you are going to prepare for anything, it's not enough to make sure stocks don't overlap. you want a portfolio that works in all kinds of market. i want to explain what i call the new diversification. protect your wealth and own something that works in chaotic, difficult and unforgiving environment where diversifying by sector alone is not enough. we've got benign moments. any time we believe the new normal is big up, small down, we end up being kicked to the curb and we wish we had been diversified against our own complacency because interest rates go higher, next thing everyone is losing money. you need a dividend-paying stock with a high yield. you need a growth stock. you need something speculative. you need something foreign. you need some gold.

an etf that holds gold. i'll explain what makes all five areas essential. let's go over gold first. you need some gold because gold has a special property. one that makes this precious metal precious to any diversified portfolio. gold tends to go up when everything else goes down. not always. i regard gold as your insurance against economic or geopolitical chaos. your insurance against uncertainty in inflation. also because the price of gold does go up in many calamities. i like to think of the gold position as stock insurance. would you own a home without homeowner's insurance or a car without car insurance? you shouldn't invest without gold exposure. gold pays off when everything else fails. this is not about upside, by the

way. when gold went down big, it wasn't like i said you've got to get out of it. you don't cancel your insurance because your house went down. you can't. this is about minimizing your risks to your down side. any begin moment there will be a whole host of sectors poised to outdo goal. the laziest way is to own the etf, but mostly known by glty which owns the metal. it's been known to go down harder than the physical metal. this is something new. 2013 showed you that. a new one because in the time since gold etf became popular, we had almost no breakdowns in gold. when we finally got one gld didn't track the metal as well as we thought. 1800 to 1300 didn't track the way i thought it would. best thing is call your broker

and see if you can buy bouillon, the physical bars of golds. that only makes sense for investors with lots of money and can afford to buy gold in bulk and pay the depository bank. there is a big mark-up and you might want to go to the dealer, but gold coins. easily stored. sure they are marked up, absolutely. they hold their value and always held their value. that's why i like them. what about the gold miners? they picked the right company one with low cost and growing production. remember those have become hard to find and they are not going to trade lock step with the economy. i want the price of gold to be correlated with my stocks. gold miners can screw things up in countless different ways. they have debts, management teams that can and do make mistakes. take one of the best managed. take aem which goldcorp gg, these are two gold stocks i got behind in the show first started and did for many years.

in the third quarter of 2009, you saw everything that can go wrong with a gold mine. all cost the stock to get hammered and stay hammered. all are systemic of what made it attractive. it was developing new mines to rapidly grow production but couldn't pull it off. i gravitated to recommending goldcorp gg. everything that could go with the business, fires, floods, expenses, all happened for gg and that too ended up disappointing. companies like banks for gold companies, betting they would have less risk. when gold went down hard, they stumbled, too, in many cases. like the miners far more than the metal itself. disappointing. the lesson. if you are going to take a chance on a gold mine, you've come to the wrong place. that does not mean i don't want you to own gold. the real way to play gold is with alas gold. the cost of getting the metal

out of the ground has gone sky high the same time the metals have come down in price. that's reverse leverage. nothing could be worse than rising costs of making the goods at a time of falling selling prices. do your homework and find a gold stock you are comfortable with, but do not expect me to bless it or endorse it if you shout it at me when i go over to the street.com. don't feel compelled to pick a gold miner. it's insurance policy against inflation and economic chaos. maybe you need etf for junior gold miners. i'll bless that. that's not protection against anything. don't confuse it with bouillon, coins or etf. make sure your portfolio works in any market. you need to own gold as insurance. don't outthink this. you weren't buying it for

appreciation. if gold goes down, don't sweat the program. you are buying for protection against everything else. you will buy more because when insurance is cheap, you want to get all that you can. matt in texas. >> caller: jim, thanks for taking my call. i need you to help me make money to send my twin daughters to texas a&m. >> done. >> caller: you advise listeners to diversify. how does a beginning investor do that if they only have a few thousand dollars to start with? >> i say at the beginning buy the index fund. first $10,000 is the index fund. then get over the idea you need to have thousands of shares. read "confessions of a street addict." i bought seven shares, nine shares, odd lots. that's how you get started. don't feel like you've got to put hundreds of dollars in one stock. just a couple in. commissions low, that's the way to play it. get your feet wet, you'll get

comfortable then get bigger. lou in texas. >> caller: boo-yah from texas. appreciate what you do. is it possible on a trading day to know if a run-up was caused just by wall street 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 decision? >> i'm going to say no unless you are trying to buy a huge amount. the big institutional traders pick up their phones and ask who is buying. you are not allowed to reveal the name of the company but can say it's a mutual fund or hedge fund. that is not important for a couple of hundred or 1,000 shares. only for 50,000 to 100,000 shares. then you need that information. >> kiss of death? i think not, mr. gold finger. get gold in your portfolio. i like bouillon, if not bouillon

or coins, if not etf then i bless the stock. >> announcer: 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. at every ford dealership, you'll find the works! it's a complete checkup of the services your vehicle needs. so prepare your car for any road trip by taking it to an expert ford technician. because no matter your destination good maintenance helps you save at the pump. get our multi-point inspection with a synthetic blend oil change, tire rotation,

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♪ my mom works at ge. ♪ oh i knew i forgot something... i'll just do it now.ge. well, we're boarding. no, i'll use citi mobile. takes two seconds, better safe than sorry right? yeah who knows if we'll even get service on the islands? what! no service? seriously? no electricity, we're going to make our own candles, we're going to churn our own butter. oh, we lost one. can't leave a bag unattended.

bank from almost anywhere with the citi mobile app. to learn more visit citi.com/easierbanking what types of stocks should you own to help you ensure you can make money in any environment? what strategies will work regardless of the state of the economy or whether the market is bull or bear mode? i always tell you that unless you are a professional money manager, you should own know more than ten, maybe no fewer than five stocks in your portfolio. any more than ten you'll spend too much time on the homework and lose focus. any less than five and you won't be diversified. that is an unsafe position you never want to find yourself in. you always want to own something speculative. even the speculation being the dirtiest word in the business lexicon except here at

cramerica. it's part of investing orthodox. not only is it okay to own those tempting broken risky seamy stocks that trade in single digits, i regard it as a necessity as long as you speculate correctly and wisely. this is the exact opposite anything you've been told. those who tell you to focus on the stock like the dow jones industrial average because it's filled with allegedly blue chip names, being blue chip didn't help lehman brothers or general motors when they were nearly annihilated. stick with the s&p 500 because the professionals who give you this advice presume regular investor home gamers like you are brain dead and incapable of analyzing the prospects of the publically-traded companies you might want to own. they don't think you can pick your own stocks. they'll assume you do less damage to your wealth if you only play around in big household names.

stay away from tiny speculative stocks in many cases you probably never heard of. that's the smug conventional wisdom on wall street. you are talking about a veteran here. i've been in the to being game more than 30 years. i'm telling you it's completely and totally bogus view without imperic empirical backing. they are ignoring the emotional component of investing. the fact is a lot of people investing poorly because they aren't engaged with their stocks. they find the process boring and don't stay on top of what they own. if you neglect your stocks, if you don't have the motivation to do the homework, you probably won't do too well either because buying stocks without homework is no better than gambling. it's worse because gambling is more fun, losses are more limited. bad investing is like drinking. just like you need exposure to gold as insurance against

inflation economic chaos, you also need something speculative in your portfolio which is one position as a tonic against boredom. high risk/high reward speculative stocks are compelling. there is an undeniable mystique owning something that trades in the single digits. i respect that. these allow you to keep your head in the game as long as you keep a small amount in it will not hurt the rest of you. i say portfolio without speculation without a long shot is a portfolio that won't capture your fancy, one you will be bored with and not focus on and surrender to people who only care about taking your fees. a portfolio without speculation is never open on the pc or never inputted into the hand-held. that is unacceptable to me. you are just going to be fodder for all those superstar theertations who accuse you of being too dumb to manage your money. speculation doesn't keep you interested. when you do it wisely with the right rules and disciplines i explain, these stocks can generate enormous gains.

massive returns almost unheard of in stocks that are larger, more well-known companies 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 lead to you gut-wrenching losses. "confessions of a street addict" i have a bunch that cost me a lot. how to identify the winners and avoid losers? the hated broken stocks of troubled companies abandoned and left for dead by the big institutional money manager. then the relatively unknown stocks of undiscovered companies. you can get an edge that is impossible to have in the heavily researched stocks of household names because big boys won't touch anything that trades under $5. you are benefitting from the mispricing created by overly pessimistic money managers. the large institutions don't want to own single digit stocks. they think they are too

dangerous. they are afraid they'll be questioned about why they own this junk, why they risk money foolishly when there were so many safer stocks out there. the board of directors will ask them that. they fear the downside from stocks that look broken. so when the fundamentals start to turn, you can buy their stock at terrific prices because so many of the big boys won't go near them until they climb higher. that's what happened with ford. it was pushed down to $4 and change 2009. bank of america went to $3. sallie mae $6 in 2009. pier one which we started liking in the single digits not long after it traded for pennies or sprint which we got behind at $2 because we believed correctly in dan hessy's turnaround plans.

the complete and ugerly left for dead mortgage insurer. if you went dumpster diving you caught doubles and triples. doles like these don't come around every day. more often we speculate in stocks with tiny companies most people never heard of. we are looking for sectors that seem like they can capture the imagination of the crowd. yes, we are gunning for the next hot fad. sometimes the fad will be backed up by general wine earnings power which we saw with little companies that make smart phone components in 2009 and first half of 2010. you know i aggressively recommended these. the smart phone revolution names represent one of the rare cases the reality far outpaced the actual hype. these speculative usually have a life cycle of the mayfly. the trick is to lock in your

profits. when you have them. don't get burned when interest in these suddenly red-hot stocks wanes. cut your losses. before they become too large. when a spec you thought would work isn't panning out. you are not trying to find a stock you can buy and hold forever. that doesn't work like this. you want something that's going higher. as long as you are disciplined to ring the register, it doesn't matter if that stock comes back down later. it's not a license to own the stocks of companies with bad or distributing fundamentals. that's the essence of irresponsible speculation. do just as much work examining a company's ability to stay alive let alone thrive when you speculate. it's not an excuse for no homework, though many people think you've he got that license to do that. it means you have to accept that the near-term fundamentals aren't up to snuff. if things could go right, it might play out positively as the case with ford. i dreamed a little ford. you need to own something

speculative that is a key part of the new diversification, help you stave off boredom and rack up huge gains. just because the stock trades at $3, doesn't mean it's three card monti. it could be a triple waiting to happen. don't skip on the homework. you have to dream about what could go right. i bless that dreaming what you it has 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. >> caller: hi, jim. you are my rock star. >> thank you, donna. >> caller: you're welcome. my husband and i manage our own portfolio. 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 i want to

sell? bragging rights are on the line. i've got to win this. >> you're not up enough. down 3% doesn't bother me. up 11%, that's not enough. when we do spec, we are going for broke. the rest of the portfolio would be terrific and you want to lock in something, but speculation? no. hold out for bigger gains. this is what we do with those. they are not supposed to be a big part of your portfolio. ever have a dream come true? consider buying a spec stock. it's got excitement and risk but only for a small part of your portfolio. after the break, i'll try to make you more money. yim cramer, you are one of my heroes. >> i look forward to your show every week night. >> thank you so much for helping beginning investors like me. >> when you talk about the markets, i believe you are spot on. >> i love it. thank you so much. every night we watch you. i have learned and earned. [ both ] when we arrived at our hotel in new york,

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we all know the stock market is an endless capacity to surprise and befuddle even the most grizzled stock veteran like myself. we recognize whenever we buy a stock there is a good chance the investment won't work out. could be a [ barking ]

tonight i'm putting on my negative nancy hat with the glass half empty mode and focusing on the fact of "some like it hot," nobody's perfect. not when it comes onto vesting. why? am i some sort of a misanthrope here? no. i want you to compensate for your fallability as an investor. caused by the whips and scorns of the bears. to paraphrase the bard out of context, while also being in position to maximize your profits with he things go well. we want to keep you in the game while things are bad and get it so you're ready when things are good. you need a good old-fashioned growth stock. i want you to have what is known as a secular growth stock. on wall street secular no,

siring to to do with public versus parochial schools or establishment clauses in the first amendment. when a company has secular growth, unlike secular smoke stack growers, they'll keep on expanding even during a slowdown. when you get your hands on a grower, that stock can keep lifting higher and higher, a la jackie wilson, going on to new highs after new highs as long as the growth lasts. what about chipotle, old apple, starbucks. these are prime stocks. how do you analyze growth? remember, when we buy a stock we are paying for expected earnings per share. the basic valuation algebra. earnings per share times the multiple. me times m equals p.

the multiple is the key. multiple times the earnings should figure out what the price of the stock is. that's why we call it the pe multiple. what investors are willing to fork over for the company's future earnings. the vital ingredient is the size of the valuation, special sauce, is the growth rate. the "m" you figure out the price of the stock, look at earnings times the "m." "m" is dependent on the growth of the company. we'll pay a bigger multiple for businesses with higher growth because earnings will get larger and larger in years ahead. it's all about what's known as the app years, years well beyond the next year that so many focus on. projecting a high growth rate, we should be thinking about 2016. as a general rule of thumb when it come to a high octane secular grower, the stock can trade up to a multiple twice as high as

the long-term growth rate before it gets too expensive. if a company is growing earnings per share 20%, it can fly as high as 40 times earnings. that's too rich for me to recommend on this show. typically a growth stock won't trade down to a multiple less than one times its growth race unless there is something seriously wrong with fundamentals. higher interest rates makes the growth stocks shrink because earnings become less attractive to relative yield people can get from cash or treasuries. lower rates make growth stocks more attractive and cause price-to-earnings multiples to expand. you need to be especially sensitive to which direction the earnings are growing. these stocks can soar to new high after new high but remain chief as long as analysts are raising earnings per share

estimates each quarter, quickly enough when they have momentum. apple in the old days when it could double over the course of 12 months and the multiple would be lower because earnings estimates increased 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 hard. no matter how special a company is still must beat estimates when reports or stock will go lower. a fact of life many in the cult of apple don't want to admit. this earnings momentum loss, even the downward gravitational pull of the ugly economy. be careful when playing with a gast grower. soon as the company misses a step, the second it reports a quarter good enough but not better than expected, the stock will start getting pounded mercilessly. that pain can last for years and

years as it goes through a painful process of george castanza-like shrinkage. it can last for years as momentum seeking investors pay less and less for progressively slower earnings growth. until all the growth money managers get shaken out and value-oriented investors become interested. when you see multiple compression, just sell. you can always circle back to it at a lower level if its growth is ever restored to levels where it was once a market darling and something that happened rarely. maybe on one hand. to build a portfolio that can work never market, you need a fast grower, preferably a secular growth stock where earnings estimates are trending higher and higher. stay with cramer.

boo-yah, skee-daddy. >> let me tell you how i see it. >> hey, cramer, where's the bull market today? >> look, it's jim cramer. >> cramer, boo-yah. >> cramer, boo-yah. >> see the world through the eyes of jim cramer. "mad money" week nights on cnbc. >> there's nothing like it. in a world that's changing faster than ever, we believe outshining the competition tomorrow requires challenging your business inside and out today. at cognizant, we help forward-looking companies run better and run different - to give your customers every reason to keep looking for you. so if you're ready to see opportunities and see them through, we say: let's get to work.

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today. liberty mutual insurance -- responsibility. what's your policy? all right. what have we done here? we talked about gold, right? speculation. growth. now it's time for the fourth piece of the puzzle, yield. you need to own a stock with a big, high yielding dividend. at least one. unlike when we diversified by sector, i'm going to bless that. dividend-paying stocks may not be sexy as high octane growth names, but who needs sex appeal? dividends work. buying high yielders and reinvesting your dividends in those stocks is still with interest rates going higher, one of the greatiest ways to make money out there the money from

your dividends pays dividends. people think high yield is only about generating income in your retirement. if you go to january 1926, about 40% of return from the s&p 500, 40% has come from reinvested dividends. that's how essential they are to the capital appreciation stream which is wall street gibberish for growing your money. they do represent a fabulous safe haven if the yields are high enough. they are not just for retirees who care about capital preservation. they do a terrific job on the front providing yields are high enough. it is one of the smartest strategies for making money and one of the safest. since dividend stocks have a cushion called yield support that helps them hang in there he else is getting annihilated. it's attractive for investors too hard to ignore. that's why i devote time on my

show and books. it does work provided stocks come well off their highs and represent bargains on earnings and earnings growth not just because they have a big number attached to them. these are stocks that typically yield more than 4% but not because of dividend increases, but because their share prices have fallen so hard. causing the yield to skyrocket even though they didn't change the dividend. it's why i like the stocks of companies that recently raised their dividend as a dividend hike is the clearest message a management can send about the strength of the business. one that can raise has steady, reliable growth and won't be cutting the dividend it just raised. i've only seen that happen a handful of times in my years of investing. companies do not raise dividends when they might be ready to fall apart. one of the few truisms that holds up scrutiny in this business. better are the dividend

increases for 20, 30 or 40 more years. these are the dividend aristocrats. 3m. how do you analyze a high-yielding dividend stock. think safety first. high yields are attractive, but a very high yield can be a signal that the dividend is unsustainable. that's a red flag and means the dividend could be cut, as we saw from so many of the mortgage real estate investment trusts. if the dividend is sound maybe the company can raise it, but if it seems in danger, not worth it. stay away. what do you look for to tell if the dividend is safe? we look at earnings per share. in a company has earnings greater than twice its dividend payout, it can sustain the dividend even in lean teams when the earnings shrink. in that case you're home free.

if not, go to step two. look at the cash flow. especially important dealing with companies with a lot of machinery or heavy capital investments which cause them to have to report high depreciation and amortization costs. as communications networks don't come cheaply, these costs don't come out of a company's actual cash. they skew the earnings lower. 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 field lightning round questions why i like verizon even though it sells at a high multiple and is not a growth stock. you've got to resort to analyzing cash flow and income statement and financial reports the company filed. let's put this caveat in. if you cannot understand how to monitor cash flow, don't invest in any company where it's super important to understand that

cash flow. it isn't worth it for you risk being wrong if i'm not around to help you. look at the balance sheet to make sure there isn't a lot of debt coming due in the near future. that could necessity a dividend cut. finally, you need to know how to collect the dividend. forget all the jargon. we care about the must-own date. the last day you have to buy a stock in order to claim its next dividend pay out. that is from the dividend stock adviser put out by the street.com, which i am owner. embrace the new diversification on top of the mandatory old sector kind, if you want to be prepared for every market, you must own a high yielder dividends to protect your stocks. they are a terrific way to make money. the stock's got to come down first to make it a high yielder. what's not to like?

scott in pennsylvania. >> caller: jim, big penn state boo-yah. >> nittany lion boo-yah. >> caller: speculating on small stocks that have rumored and unconfirmed reports on product win can make for gains. if they are found to be wrong, you can expect the stock to drop more quickly. i'm in that situation with a stock, but before the big run-up it was trading at a very low pe multiple. i've done my profit taking but the stock is at a market multiple. if rumors are not true will valuation on earnings help support the stock from rising too much? >> that may not be enough. in a rising interest rate environment, we find out normalized earnings will not pay out for them because rates are so high we want to be in a bond. that sounds weird, but there is that competition being pilt into the stock market. ron in new york. >> caller: hi, jim. i want to thank you for everything you've done for me.

>> thank you. >> reporter: i read all your books. >> thank you. >> i'm a 56-year-old disabled person. i supplement my disability with high yielding stocks, preferred stocks and closed-end mutual funds. judge, okay. >> caller: lately, mostly in the preferred category. lately they've been going down. the bond market going down and high yielding stocks 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? >> why don't you wait -- 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. you want the income, but you've got to take something off the table 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, 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. [ both ] we checked into our hotel in paris,

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trying to show you how to build a portfolio stock that can work in virtually any and every type of market from a picnic for the marauding bears to a running of the bulls. you will always own something right for the moment following what i call the new diversification like the old school diversification sector i push endlessly ensures your stocks won't key off the same bad news and get beaten to bits at the same time. the new diversification strategy means whatever the market is doing, you'll always have at least one approach to investing that should be paying off big time if you do it right. let's go over the first four again. then i'll explain the afifth an final group. first start with gold, bouillon

and gold coins. i no longer trust any gold miner. we are not gold bugs. you do need gold for insurance. it's the one thing that usually goes up when virtually every other stock or currency declines in response to inflationary economic chaos. you need a speculative stock. something that trades less than $10. either company left for dead by money managers or one they never heard of. speculation against boredom should keep you engaged enough in the business to motivate you to an hour of homework a week. remember, i need you to stay focused on all your stocks. put a little money in speculation to stay focused on them. third, you need a way to profit on a whole lot when the market's in good shape and potentially delivering gains. why you must have so much exposure to growth. fourth you need yield.

gains that come from reinvesting. that it's keyword. one more to be fully diversified. you have to have foreign exposure. not just a u.s. company that does a lot of business overseas but an actual genuine international company based in another country that may be doing better than the united states. why? simple. because the united states is often the caboose of the love train. even if we were leading the rest of the world, as we have been of late, you still want to have something foreign for the sake of international diversification. owning a foreign stock is compelling when you consider the inability to create jobs domestically. you don't need anything exotic, though those are the countries where growth has been. the middle class propels spend

i ing. perhaps you should buy a canadian stock. canada is one of the healthest economies in the world. handled the great recession better than in the u.s. i like mexico. it's along the lowest inflationary countries on earth. or vgk, a basket of european stocks by then down. i like nestle, siemens. just as long as not every dollar is invested in u.s. security. that is just a hazard to your financial health. 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 going to build a portfolio to work in any market, a foreign stock is a must. you simply can't afford to keep all your stocks in one government basket. it's too easy for them all to get crushed.

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i get up between 3:00 and 4:00 every morning to see what you insomniacs are tweeting about. let's take 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?" have the charts delivered to your house. it will be like a mini-me. >> how much do you use economic indicator reports? very little because i build a model from the ground up. i listen to all the companies and make my own mosaic of an analysis from that. next we have a nice tweet. jim, you are a great person and role model. i admire you very much. from another philly guy, best of luck. let's have a cheesesteak and celebrate our greatness. our next tweet, he wants to know what would be your strategy if you are sitting on a 25% profit, cash in, 100%, 50%, double up? if it's a core position and you're done after that. leave the other half. this next tweeter wants to know, jim, what other industry conferences carry weights

similar to jpm biotech conference in your opinion? >> we just look at the website and look what they have to say and that will do it. stick with cramer. (horn, ding, ding) how long have i had my car insurance? i don't know, eight, ten years. i couldn't tell you but things were a lot less expensive back then. if you're 50 or over you should take a new look at your auto insurance. you may be overpaying. actually that makes a lot of sense.

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>> i like to say there's a bull market somewhere i promise to find it for you right here on "mad money." i'm jim cramer. i will see you >> tonight on the profit... good morning, i'm marcus. >> nice to meet you. >> i go inside planet popcorn, a multimillion-dollar popcorn business with a huge disney contract. the problem is they don't have any real profits to show for it. you guys are in trouble. the balance sheet is hundreds of thousands of dollars wrong. mismanagement and sloppy accounting have forced the owner to ask her mother to take out a second mortgage on her home just to keep the doors open. obviously, you used the petty cash to buy lottery tickets. >> i did. >> the product is great, and if i can get sharla to listen long enough, i'll turn this unfocused organization into a national brand. my name is marcus lemonis, and i fix failing businesses. if you think that i can launch you in a direction to make you a profit, then you should do a deal with me. i make tough decisions...