serious about it this time, we're wagging our finger more vigorously. but in terms of the market impact, watch the grain markets. i bought wheat today, jjg is the trade. >> thanks for watching. see you tomorrow at >> 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 a little money. my job is not just to entertain you, but educate you so call me at 1-800-743-cnbc. this could be an incredibly confusing time to be an investors and we have facts and figures from the individual governments, news agencies and every single piece of data is billed as crazy.

♪ ♪ >> of course, you know that can't be true. not every headline matters to the stock market. no matter how official and full of gravitas it might sound, but how the heck are you supposed to tell the difference between what matters and what doesn't? in this world of of information overload, how do you know what truly deserves your attention and what you can pass on? we have so much time to spend doing your portfolio each week so you have to use your time wisely and i have on sift through "squawk on the street," you never really have time to ask, does that even matter? you just presume it has import. that's why for my new book, get rich carefully, i will through five years of actionable orders plus.com and that's the charitable trust i talk about to see which pieces of data were worth paying attention to and which were hyped and unimportant. because i think this is a really crucial subject, so now i want to share with you my findings so

you could be a more media savvy investor in the environment where the press' misperceptions and i'm not talking about tv, radio, web, and paper are going do real damage to your portfolio if you're not savvy. let me start with the big one. looking back at my charitable trust trading bulletins, the only data that seems to have a lasting impact on the stock market is indeed and this one's right, the labor department non-farm payroll report. that's the big employment report that we get every month and it is worth every bit of focus. upon there are a ton of different employment numbers that come out in this market and every thursday they are important tales of what will happen with the big picture monthly labor report and i am telling you, forget about the weekly claims. they're meaningless in the grand emskoo of things and even then these claims can be fatal to trade off of as you get closer to the monthly labor department numbers. sometimes by the government's own admission these weekly figures aren't even tallied

right. how's that for credibility? also on the jobs front, the day before the big labor department fon farm payroll report we have the automatic data processing the largest payroll processing firm in the country. i'm telling you, ignore that adp number, too. it's meaningless, people. the employment figures have no reliability as the predictor of the big daddy, non-farm payroll report will actually be and remember, that's the only employment report that i'm telling you you need to predict and be worried about. you do need to predict and worry about it, though. the weekly monthly claims you cannot ignore this non-farm payroll number. >> as i look back at the actionable orders, ooh -- i have five years worth of data and i was astonished how this could really be. any disappointing employment number leaves a lasting impact

that can take weeks of declines in its wake, really. and if it's followed by another bad number, you get a further decline and even if the market had fallen behind the precipitous farm and the payroll employment numbers, you need to see three months of stability and no further job losses before the market will stop drifting or plunging lower. i can't believe this. i did this work. and nothing can stoke a bull market or frustrate a bear market, more than an unemployment that shows a job gain in excess of the previous month and the job gain that's higher than expected and a big number that's better han expected coupled with the previous response numbers, that's the ultimate triple whammy for the bears and can produce a spectacular performance for the bulls! when these payroll numbers come out there are always pundits who want you to see through them and they'll pick apart some figure to make it less important. i'm telling you, these people

are charlatans. ignore them and hope that others don't so you can take advantage of any weakness to do some buying at lower levels than you deserve to get. these cynics are simply crafting arguments to justify their own existence or excuse their incorrect predictions or they just don't understand and maybe they've learned the recession too well and can't believe good news when they hear it. and as sexy as the unemployment rate can sound, that piece of the puzzle simply isn't as important as the sheer number of hires in the statement. that's what really matters. if you are negative on stocks and underinvested after a strong increase in the number of of hires in a row and not a drop in the unemployment rate then you're going to miss a terrific opportunity to make money and that's what the records say, that's what i found from examining it from my charitable trust. if you want to see a second good payroll number in a row and that's simple prudence. however, a really good report coming in the wake of several flat ones can be be enough to justify careful buying even if

you have to pay off your positions. just to be sure i am quite conscious of the fear of the fed as represented by the labor number. i don't care. a strong number is a good number when interest rates are as low as they have been. now if you're trying to buy stocks after an excellent employment report, here is a tip also gleened from the last five years of action. if you wait until after 10:00 a.m. on the day the strong jobs report comes out you will almost always get a better praise than you would at the opening. the reason? because after a good payroll report there's often a huge amount of short covering in the first half hour of trading as the negative hedge funds who bet wrong have to close out the short positions by buying stock. once that buying is done you tend to get a vacuum and the market begins to decline. wait for that moment before you do your buy. don't be picked up by a huge up opening even the best non-farm payroll reports that were mind you at 9:00 don't be picked off i'll be on the floor of the exchange. if history is any judge that won't last through the session and you'll get better prices later that morning if you just

wait for the panicked short sellers to finish closing out the wrong head of positions and those who fear the fed tightening dump their holdings. >> the house of pain! >> don't be worried that you've missed the move as the market still has plenty of room to run once the juggernaut gets rolling. i just want you to get the best cost basis possible after a great monthly report. here's the bottom line, not every piece of government dataen to in your face really matters, but the nob farm payroll department that is krubl, so please don't ever ignore these numbers. they are the most impactful ones you'll ever come across. so when your ice are glazing over from various inputs, take solace. the only one that really matters comes out at 8:30 a.m. on the first friday of every month. john in florida. john? >> hi, jim. john in florida. >> long time no hear. what's up? >> jim, i'm uncertain of the

following question. if. i purchased a thousand shares of a company, let's say at $10 today and three months later i purchase another thousand shares of the same company at $5, now if the stock goes up a dollar can i take the profit on the second thousand shares or must i sell the first thousand shares and take a loss of a dollar? i'm uncertain of the answer. >> i want you to talk to your tack guy on that. you can elect the lot, but you've got to talk to your tax guy because i want to know what he says and i don't think that specific advice will will be helpful to you. can i go to jim in arizona, please? jim. >> thanks for taking my call. >> of course. >> my question is about secular and cyclical stocks. >> okay. >> you're always telling us to make sure we're diversified in our stock portfolio, and i'm just wondering how should i

diversify these two types of stocks in my portfolio? >> get rich carefully goes over this because i think the most confusing thing i may have done for a lot of people is saying i like secular growth not cyclical. you need gdp growth and secular means you've got a long runway of product that will be in demand no matter what. that's celgene. what you have to do is you have to plot how your stocks have done against a market in good times and bad times, when there's growth and no growth. that's what i do. i actually have looked back using charts, 1989, 1991, 19 the 6, 1998, 2000 and 2002 and see how they've done. you have to do that history if you want to feel confident that you have a secular grower whose numbers doeb get cut, and a whole schapter about that in "get rich carefully." sunny in illinois, please. sunny? >> jim cramer, a big chicago windy city boo-yah to you.

>> sweet. >> hey, jim, always taking your advice, long time fan and i enjoy your show and your books. >> thank you. >> i have a general question for you. i'm taking your advice on reading up on the the companies, going in and listening in on the quarterly conference calls. so my question pertains to the -- the company that reports solid numbers and they have strong fundamentals, what would your definition of the pullback be? >> i've always used 5% to 7%. something lee cooperman when he was the research director at goldman said listen, the first 5% to 7%, take a hard look and that may be where you want to start doing some buying and i know it's easy to get overwhelmed by the slew of data numbers thrown away every day. let me help you filter out what does matter. 8:30 a.m. on the first friday of every month, that's the most important number to pay attention to, the others don't

let them con puz you. don't think otherwise, "mad money" will will be right back. don't miss a second of "mad money." follow @jimcramer on twitter. have a question? tweet cramer, #madtweets. send jim an email to madmoney@cnbc.com or give us a call at 1-800-743-cnbc. miss something? head to madmoney.cnbc.com.

in this era of information overload, how do you tell what really matters to your portfolio? i think the filtering out the kruter and being able to focus like a laser on what's generally impactful is so important that i

devoted an entire chapter in my latest book "get rich carefully" to show you what does matter and what doesn't. tonight i'm sharing insights with you gratis although the cynics may point out that i'm being shamelessly self-promot n self-promotional to which i say, of course. in an e port to cut through all the bull, the bad kind of bull, let me tell you when you should stop carrying about it immediately. i know that we want to pursue every piece of data, every single piece released by the government whether it be the commerce department that it will have terrific trades or impact your investments, i say hold it! we listen to this stuff. we read it it. we wait for analysis from people who are supposed to know what they're talking about and we make decisions off these bits of data and we pick stocks off of them and we sell the stocks off of them and when crowe do this you think you know when you're doing. let me tell you, it's a mistake.

the last five years of public trades to my charitable trust where you can follow along on charitable trust.com, i can tell you that the nonparm payroll report i mentioned before the break emphasizing most of the data points have been just plain wrong. i know, that may sound inconceivable. how can they not mean anything? a lot of that has on do with the day book phenomena. every news editor has a list of data that comes out on any given day and it has decided that a big story must be done without that information. when i started in journalism it was a hand-printed ledger and it was all-important and that is what i call hyperbole. unfortunately, hyperbole is simply the gist of this business. it comes from the need to have something to say day in and day out. how do you think that all those blogs get filled? so with that in mind, let me warn you about one of the most

overhyped day bookstores out there. the monthly release of month-old minutes from the federal reserve. these minutes are considered by many to be the holy grail from investment decision making, i kid you not. in reality they mean nothing, nothing at all. the minutes are almost a total sideshow and i should know it, considering that my most famous tv moment of all time came because i knew that the fed knew nothing. first let me explain the fixation of the fed minutes and the non-elected entity releases a summary of its thinking that took place at the previous meeting and they wait with bated breath. it's viewed as incredibly important and perhaps the single most actionable pieces of paper. remember the word, actionable meaning they want to take action on it it, but the truth is it's not actionable at all even if so many take uninformed action, i might add. forget that many circumstances may have changed since the last meeting. a spike in oil, decline in employment and a cliff jump or

two in washington. it was dated with reverence, and plain inaccurate versus the current set of facts and don't i know it it? in the first week of august 2007, in the beginning of the period that generated into the great recession, was beginning to get feedback from within major investment firms that things had gone seriously awry. over my 30 of-plus years of wall street i managed to meet people early who later graduated to senior positions at major financial institutions and they're people who i trust for the most part and they trust me. at the time in august 2007 i was getting an earful who thought i wasn't doing much to bring the real problems of the financial world to light in this network and in my writings on the street and one friday as i listened to the conference call from the lambed bear stearns. i was shocked by how defensive they seem to be that they were having difficulties, but they were prepared for them, however,

the way for them to prepare for difficulties on wall street is to say nothing on wall street. and we saw it from the firm's collapse when it came not long after. at the same time the bears management was yammering on about how we were holding things together. i was getting calls from several senior pem saying if the federal reserve didn't start cutting rates right then and there there would be a huge amount of trouble and not just for the mortgage industry, but for the entire u.s. economy. so when i showed up at 2:43 p.m. that day i was steamed so badly that i violated my rule about trying to be considered and not hot hotted. i went balist being, and i talked about how i began to rant as erin burnett gingerly tried to calm me down being i went on a tear about how it was oblivious. >> i have talked to the hads of almost every single one of these firms over the last 72 hours and he has no idea what it's like out there.

none! and bill poole has no idea what it's like out well! my people have been in this game for 25 years, and they are losing their jobs and these firms are going to go out of business ask he's nuts! they're nuts! they know nothing! >> we now know how everything turned out. the fed really did know nothing. the economy collapsed as the fed held tight to the view that there was nothing at all and it was the work economic policy blunder since the hoover administration. the fed ultimately reversed itself in a better late than never affair. here's something i didn't know at the time and it cuts to the core of how useless the monthly fed minutes are. the fed releases full transcripts and five years after their meeting so i later learned that the fed met soon after my stock trading appearance and as the five-year-old transcripts my reen action came up in the conversation and it came up as a laugh line. they actually made a plan to ridicule my prognostication. it was a very dark comedy.

here's where the fed minutes come in, the fed released the minutes of the previous meeting. . the minutes emphasized that the fed would cut rates if needed and things were nowhere near that dire. when i read that i was like the people now who think these are all important. when i read i actually believed that i and my sources were too negative. maybe i was being too bearish and things were more in control they thought and the minutes were more reassuring and i sent out a bull 10 onning a awing 17, 2007 saying, quote, at last i believe the worst is behind us. even though i had been right about the systemic risk of the crisis to come and did change my mind soon after after that bulletin i ended up putting too utsch in faith in the fed and the minutes. the fed was way late in cutting rates and took its time about it so the damage occurred as i predicted. i did believe the fed's statements were paramount. that's right. i violated the most important

tenet, i put my faith on month-old minutes from the fed instead of actions taken by the secretive commity. since then i learned not to put too much trust from the out of date notes and you shouldn't either. the bottom line, i need you to do something that i think is very difficult. i need you to ignore the fed minutes and don't make any serious decisions. given the furious and volatile action that occurs after the release it seems ridiculous that these minutes could be that irrell vent, but they are, people. the suppose lead all-important releases are dodges that throw you off the set and cause you to make bone headed decisions. if anything what they're good for is giving you buying opportunities some of your favorite stocks by creating unwarranted and, yes, undeserved pullbacks. after the break i'll try to make you more money.

oh my god! look. you need to see this. show 'em the curve. ♪ do you know what this means? the greater the curvature, the bigger the difference. [sci-fi tractor beam sound] ...sucked me right in... it's beautiful. gotta admit one thing... ...can't beat the view. ♪ introducing the world's first curved ultra high definition television from samsung. where the reward was that what if tnew car smelledit card and the freedom of the open road?

a card that gave you that "i'm 16 and just got my first car" feeling. presenting the buypower card from capital one. redeem earnings toward part or even all of a new chevrolet, buick, gmc or cadillac - with no limits. so every time you use it, you're not just shopping for goods. you're shopping for something great. learn more at buypowercard.com cozy or cool? exactly the way you want it ... until boom, it's bedtime! your mattress is a battleground of thwarted desire. enter the sleep number bed. right now, all beds are on sale. he's the softy. his sleep number setting is 35. you're the rock, at 60. and snoring? sleep number's even got an adjustment for that. you can only find sleep number at a sleep number store. right now save 50% on the labor day limited edition bed, plus 24-month special financing. hurry ends monday! know better sleep with sleep number.

>> the stock market, like everything else these days is now hostage to the 20/7 media cycle and that means if you'll make a token effort to follow your investments you will be bombarded by all sort of overhyped information that can easily led you a stray or cause you to make nasty, money-losing mistakes. as your investing coach, it's my job to keep you from being misled into making those mistakes which is why i devote

an entire chapt tore what matters and what doesn't in my latest book get rich carefully and let me give you the the story the kind of madia loves to promote. once a month we get reports from the hedge funds about the positions, specifically what they decide to buy or cut back on. we here in the media pore over at 13/f forms that these pusheds file with the sec traying to figure out what stocks or carl icahn or any other investing icahn might be getting into or may be getting sick of and then a lot of people make the mistake that they might be wrong if. they happen to own the stocks of any of the big boys might be selling. >> what do they do? they sell them. they dump these stocks even after they've done an enormous amount of home, wo it. no matter in how much you know, these iconic money managers have to know more, right some the most closely poloed trail is the one laid by the greatest investor of our time, warren

buffett. i am telling you right here, right now this is a mug skin. you find out that some famous money manager is selling. selling is not like buying. we have no idea why some hedge fund might be selling something. maybe the portfolio manager who specifically followed that stock has left the firm. maybe it's in a sector of the economy that's fallen out of favor with the money manager in question. maybe some hotshot investor thought he had insight and bought the stock in a trade and turned around and sold it when the insight proved wrong. maybe the money manager is trying to free up cash for an even better investment that he's knot up his sleeve or maybe he does have real reasons for selling that we'll never know. the point, though, is that you don't know. you can't know and basing your investment decisions on something so unknowable is always a badded why, people, even if you're trying to follow in the footsteps of a genuine giant warren buffett and selling

off the 13f filings tends to be a huge mistake. yesterday, we decided to sell a terrific railroad, union pacific and sold it in the '70s and think about where the stock is now. that's the disclosure firm and showed at that moment that he exited his position in the stock. he blew it out. we should blow it out. isn't that what people think somewhat a regret. not only did union pacific go into double, but buffett went out and bought union pacific's competitor, burlington northern because he loved the rails so much. there was no reason for him to hold stock in one railroad when he was about to buy another one, lock, stock and barrel and it was a huge mistake to assume something was wrong with union pacific just because buffett sold it it. the truth is his selling was a symptom of his love for the sector and he sold ump ahead of an outright acquiring another

railroad. yeah! he bought burlington northern any sold union pacific and don't jump to negative conclusions and you've done your own homework and stick to your guns and it should be large, in your mind when you take action off these bullets. this was a valuable lesson and one that the charitable rust managed on to profit from. by deciding to exit his position in the company after he had a spat with its ceo irene rosenfeld. if you bought after the news broke that buffett had sold which was a well-covered eshth vent, called what to be a terrific bargain in order to create value for shareholders and thattic braup resulted in plentiful gains. so you really need to take those 13f filings and now widely talked about and accounted upon with a grain of salt. if you like a stock that a big name investor is selling and

you've done your homework and you might use that weakness to buy more of the stock. by the same token, you should never buy the the stock just because some money manager you respect surfaces in having taken the position. the filings are a-month-old by the time you see them and they're a snapshot of what the fund manager could have done at that very moment and you have no idea. case in point, right before the recession, a fund i admired to be a monster stake in freeport-mcmoran. i knew it did superb work. i knew they had annel anient track record and i decided to piggyback off their effort and buy freeport, a stock whether or not i would purchase it it, and it was a disaster. >> the house of pain! >> this hedge fund had taken a emfrom endous position in it, and not long after the recession hit and guess what in the stock went down to $8 yes. 87-8, all the work may -- the

firm pay or may not have done didn't matter and of course, shortly after that, the firm closed. i was able to escape my position with freeport because -- before it did too much damage to my charitable trust because i did my own homework which showed that the company's profits were decelerating rapidly and it was the tailspining hedge fund in the first place that got the trust into trouble. way too often i hear things like so and so bought it, and i know that manager is terrific. believe me, you have no idea why he bought it or even if he'll be right. even the best money managers make mistakes. if the idea goes awry, the manager won't be there to tell you whether things will get better. he doesn't care about you and you shouldn't care about him, end of story. in all of the years i've been running my charitiable trust, and that's nelson pelz and his

partners. once he takeses a position in the stock he tries to get management to make changes in order to on unlock value. he's giving you huge returns if you piggyback on his investments even after they become public knowledge. peltz is the exception and not the rule. you try to piggyback on the activists that you think they're doing the heavy lifting for you. however, again, my research is showing that by the time the 13f filings become public it's too late as the bump from the news that the activist has gotten involved pretty much ruins the potential upside. of all of the activists i can can find, pelt was the only one with whom you can outperform the averages by piggybacking on his positions after they became public knowledge. for all of the rest, you've done better investing in the fund. never blindly follow money managers based on the 13f filings. if you want to be a good investor you need to stick to your own convictions. we've done the research and the

simple fact is that piggybacking off the big boys will not let you beat the averages. in short, never sell just because an iconic money manager is selling and never buy just because some respected hedge fund is buying and that's the opposite of careful investing. it's lazy and worse, it it doesn't work. danielle in kansas. danielle? >> boo-yah, jim. >> how are you? >> i'm well, thanks. i'm wondering how investors would be given banks to increase lending. >> i saw you use the producer price index which is a pretty decent sign of inflation. if interest rates start going higher that will be a tale of inflation if we do not have strong economic growth. i'm giving you the scenarios that i've historically looked at. i am not concerned about inflation right now. i'm still more concerned about deflati deflation. i'll go to paul in texas. >> boo-yah, jim. >> boo-yah, paul.

>> i have a question. my wife is retiring, i read your book "stay mad for life "qwest. >> thank you. >> you list about 20 stocks and 10 to 15 funds and i'm wondering because of the housing, real estate bubble burst and the financial meltdown, would you consider revising that list and adding any companies? >> it's one of the reasons frankly why i wrote "get rich carefully" because there are a lot of new themes that didn't exist. that book was written a long time ago and not to say you have to buy the new book and there are market changes and the market changed rather rapidly and rather dramatically and i've addressed that in "get rich carefully." i go to sid in texas. sid? >> big, burly boo-yah from corpus christi, texas, where the good winds are for sailing and the red fin are for baiting. >> what should the baby boomers

do about the percent in gold in our portfolios. >> i want you to think of it as a currency. we're in america. all we ever think about is the dollar unless we go overseas and i regard gold as a hedge against the dollar. you could have 10% of your mono no gold. up to 20%, it's pretty high, but it's a great hedge against everything else that you own in life. follow the leader? how about doing your own homework. i don't want you to ever follow the big guys based on the 13f filings because that is just the height of laziness and it doesn't work. stay with cramer. don't just visit new york. visit tripadvisor new york.

with millions of reviews, tripadvisor makes any destination better.

having a perfectly nice day, when out of nowhere a pick-up truck slams into your brand new car. one second it wasn't there and the next second... boom! you've had your first accident. now you have to make your first claim. so you talk to your insurance company and... boom! you're blindsided for a second time. they won't give you enough money to replace your brand new car. don't those people know you're already shaken up? liberty mutual's new car replacement will pay for the entire value of your car plus depreciation. call and for drivers with accident forgiveness, liberty mutual won't raise your rates

due to your first accident. switch to liberty mutual insurance and you could save up to $423 dollars. call liberty mutual for a free quote today at see car insurance in a whole new light. liberty mutual insurance. >> tonight i'm teaching you how to navigate your way through an environment where you're constantly inundated with information about the the economy and individual companies that's often overhyped, overblown and just plain not as important as it seems. >> boo! >> there are so many things you need to keep track of as part of your investing homework that you can't seem to get sidetracked or derailed by data points that

don't really matter. of course this isn't a needle mover, but we're telling you anyway, it sounds much more important than it is now especially to the people on the blogs that are desperate for information to write about. that's why i'm doing my best to sort out the weak from the chaff when it comes to processing information about the market both here and my book "get rich careful leigh." don't get caught up in giant contract wins when we get these all of the time in the lightning round. big win, whether they be engineering construction firms or technology companies. don't get caught up in con rakt wins and i've been way too enthusiastic myself about companies that have multiple-year contracts that in reality barely mattered and failed to move. the earnings needle, take transocean, the world's largest offshore driller. transocean experienced a sickening slide from $140 down to $40. all through this dlient company kept receiving giant contract

win after giant contract win. in the end the huge contracts didn't matter because the price of oil kept falling. when the price of crude drops dramatically you have to presume that the drilling projects will ultimately get canceled or at the very least a company like transocean will have to give its customers major on discounts if it wants to keep doing business. that's why with all of these wins, transocean's stock ended up being a gigantic loser. we saw it it with flr whose stock sank from $95 to $50 during the greatest streak of contract wins during the company's history. when all things energy were getting crushed and the company had huge losses from older contracts that went over budget. nullifying the new business that i mistakenly thought was so important and you know what? the exact same thing happens in tech all of the time. you will see an enterprise software company like sap and get a huge contract win from oracle or sales force.com and we'll take a contract from

hewlett-packard and when the stock does nothing and it flat lines or sales force doesn't run, you might think wow! you've been given a wonderful chance to buy. nope. the stocks are right not to react and you're wrong if you think it's an opportunity. yes, some companies report lots of good-sounding views that don't matter at all. i know that because you're looking at them and you're thinking it should. that's because sometimes the only thing that does move a stock is the quarterly earnings report itself. i learned this the real hard way when i got super frustrated with the stock of deere, de, the agricultural equipmentmaker and it put out press release after press release and including lots of new equipment purchases. we got crop report after crop report saying it was having an amazing quarter. i can't believe the stock hadn't moved yet, what a great moment to buy. when the company reported, the quarter was terrific. but deere is a famously cautious company or maybe i should say,

infamously cautious and it frequently throws cold water on anything positive and it refuses to acknowledge the positives and it simply stress the theg tiffs and it is amazing how this just happens over and over. deere failed to turn that good news into the profits it expected and it gave a down beat outlook saying the good news might not continue and if it can't translate into a good earnings report over the positive conference call, the stock is not going higher and don't get confused about this, it doesn't work. there is an important corollary. even. i don't like buying stocks in contract that loses a big contract that's been on the books. may charitable trust, cbi, a large engineering construction company, when it announced a huge oil and gas customer had cancelled. it wanted to build a liquefied natural gas project in

australia. when we saw the news we hesitated. we thought perhaps the market would see how there were other major projects in the books so c box i could make up the loss, but the market didn't hesitate. the stock got hammered because analysts felt compared to cut their estimates as they built the uft raelian project into their models already so the models had to change to the worst to reflect the cancellation. here's the bottom line, do not get bamboozled by the engineering construction firms or tech companies or oil plays or machinery companies. at the end of the day what matters for most stocks are earnings and not orders. by the same token if a company has a major contract on the books that gets canceled you probably need to skedaddle because the analysts will cut numbers and that will punish the stock even if ultimately as was the case with cbi, when the giant contract was canceled. stick with cramer. over 20 million kids everyday in our country

lack access to healthy food. for the first time american kids are slated to live a shorter life span than their parents. it's a problem that we can turn around and change. revolution foods is a company we started to provide access to healthy, affordable, kid-inspired, chef-crafted food. we looked at what are the aspects of food that will help set up kids for success? making sure foods are made with high quality ingredients and prepared fresh everyday. our collaboration with citi has helped us really accelerate the expansion of our business in terms of how many communities we can serve. working with citi has also helped to fuel our innovation process and the speed at which we can bring new products into the grocery stores. we are employing 1,000 people across 27 urban areas

and today, serve over 1 million meals a week. until every kid has built those life-long eating habits, we'll keep working. >> when you're picking stocks, there are so many ways you can find yourself being led off course which is why tonight i'm helping you sort out the things that should matter to investors from the things that don't matter. >> and the ones you simply shouldn't care about at all. something i devoted a whole chapter to in "get rich

carefully" my latest book. as much as i love the way the internet has made information available to everyone, it's also made it possible for pretty much any opinion to get itself hurt and even when that is based on faulty logic and it will lose you money! so here's the concept that i've seen here being waved around all of the time to buy stocks and even though it is a serious money loser. i call it the relative valuation rationalization, bear with me. i want you never, ever to buy a stock just because it's relatively cheaper than the rest of the cohort or the market as a whole. all stocks are not created equal. some deserve to be worth less than others. this is a mistake i've made myself with my charitable rust. back when the trust owned cisco, we were super frustrated with the underperformance as it seemed to tick down every day. so we noted in the bulletin that cisco had a higher growth rate

than the average sock in the s&p 500, but somehow strangely it sold at a lower price on earnings multiple than the average sock. in short, cisco looked cheaper than the market on both the pure earnings basis and growth basis and this is the complicated jargon that money managers use all of the time and it doesn't always work. theoretically yes, when you're trying to figure out when a stock should be valued and you look at the growth rate and it's overall index and it should pay a higher price to earnings multiple than you would for the s&p as a whole. a company that rolls 20% faster than the s&p 500 should not be trading at a discount to theup is's price to earnings multiple which was the case when the charitable trust was loading up on cisco. however, was there one fatal through in our analysis. cisco's growth rate, sure, it was better, but it was slowing. in other words, when you make a bet, meaning that one stock seems cheaper than another based on a particular function you have to be sure that the reason

for the cheapness isn't going away, making the stock more expensive down the road and not cheaper and that's exactly what happened with cisco and the stock's cheapness didn't matter at all after the company horted a shortfall soon after the and the stock was hammered mercilessly, leaving the charitable trust holding the bag. so here is the bottom line,s why, you should always be on the lookout for bargains, but just because the stock is cheaper than the peers or a whole market on the relative basis doesn't mean it's necessarily worth buying. often inexpensive stocks are inexpensive for a reason and if you buy something merely because it's cheap it it may simply end up getting even cheaper down the line. "mad money" is back after the break. ♪

[ radio chatter ] ♪ [ male announcer ] andrew. rita. sandy. ♪ meet chris jackie joe. minor damage, or major disaster, when you need us most, we're there. state farm. we're a force of nature, too. ♪ we're a force of nature, too. where the reward was that what if tnew car smelledit card and the freedom of the open road? a card that gave you that "i'm 16 and just got my first car" feeling. presenting the buypower card from capital one. redeem earnings toward part or even all of a new chevrolet, buick, gmc or cadillac - with no limits.

so every time you use it, you're not just shopping for goods. you're shopping for something great. learn more at buypowercard.com having a perfectly nice day, when out of nowhere a pick-up truck slams into your brand new car. one second it wasn't there and the next second... boom! you've had your first accident. now you have to make your first claim. so you talk to your insurance company and... boom! you're blindsided for a second time. they won't give you enough money to replace your brand new car. don't those people know you're already shaken up? liberty mutual's new car replacement will pay for the entire value of your car plus depreciation. call and for drivers with accident forgiveness, liberty mutual won't raise your rates due to your first accident. switch to liberty mutual insurance and you could save up to $423 dollars. call liberty mutual for a free quote today at

see car insurance in a whole new light. liberty mutual insurance.

we've got to get to some of the tweets you've been sending me @jim cramer #madtweets. we have a tweet from jeffrey. should a young investor worry about the market leveling out to fair values as mentioned by buffett and icahn. i don't even want you worried about the market. that's the big misnomer. worry about the can company's stocks that you own. do the homework, get conviction and then stop worry budget fair value of the market and that's not what this show is about. it's not what you should be about. now let's go to on @soapboxwire. these companies that get dropped from the dow doesn't hurt them. there's no imperical evidence whatsoever that it will hurt them and i think they're dropped near the bottom and hewlett-packard and alcoa being two that i'm thinking could have been that case.

and if the real dustin 24 is opposed to the fake dustin 24. selling the strength, thanks, boss, one of my mant ras, sell on the strength, buy weakness. i care about the price i buy a stock at. . you chase you won't get a good price and therefore the odds dramatically go against you when it comes to making both long-term and short-term money. a tweet from @scottunderscore, jubajc. you're kid friendly and need a place to stay when visiting mountainside. room 14 in particular. we love kids at the place. we don't like dogs. we like kids and i'll serve break past on the weekends for you and by the way, i can make poached eggs, martha stewart style. a little vinegar. let's go ita i tweet at office dr. one. what would you -- it was a book written as a handbook for people who came to work at my old hedge

fund? otherwise "get rich carefully" is more in sync with the current markety to the market has changed. now to samurai rouge. louis c.k. with jim cramer again. it's a heck of a lot better to be confused with louis c.k. than it is with vladimir lenon. #mad tweets, i want to invest in big name companies and entirely so. remember, we don't like to buy stocks that are selling at two times or more of the growth rate because if they screw up the stock gets eviscerated and that's one of our rules. here's one fro from @matunderscorecat. what is your secret to having so much energy in the morn something i have to tell you, i get almost no sleep, but it's a hereditary thing and maybe the secret is i love my job. don't tell the bosses. "mad money" is back after the break.

>> i like to say that there's always a bull market somewhere, and i promise to find it just and i promise to find it just for you right her >> narrator: in this episode of "american greed"... it's called "operation get rich, or die tryin'". >> the biggest i.d. theft in u.s. history. >> narrator: a mysterious ring of social outcasts with an insatiable appetite for sex, drugs, and your encrypted information. >> it was a very fine line between exploiting a system to check it out or exploiting a system for gain. >> they were looking for data any way they could get it. >> narrator: they steal credit-card numbers and make a fortune by selling them on the black market. >> it just kept building upon itself -- 500,000 numbers, then a million numbers, up to 130 million numbers. >> you or i might be a victim of this crime, and we would never