thanks for watching. we'll see you back here at 5:00 for more "fast." keep it tuned here. you'll want to hear jim cramer, especially after today's selloff. "mad money" starts right now. my mission is simple, on make you money. i'm here on 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 try to make friends and i'm here to educate you. up day down day, flat day. investing can be a lot like comedy in both disciplines, timing is everything. ♪ >> the similarity is why people

call me a clown or even a joker, as long as it's not a midnight taker. maybe they're complimenting my keen sense of timing when they compare me to soupy, bozo, crusty. anyway, the joke's on them, because knowing the right moment to buy. >> buy, buy, buy! >> sell, sell, sell! >> among the most important and frustrating parts of managing your money, you tell me so many times when i see you and i'm solving it tonight, it is demanding. precision is tough to get right that's why you hear commentators it's impossible for individuals to on time the market. there is a whole the cottage industry of naysayers. >> the house of pain! >> who make a living telling you that well's no way a regular investor can do it so you may give up on trying to trade, give up on picking your own stocks and just put all of your money in an index fund and performance as a whole and leave it well for all eternity. i have nothing against index funds per se.

they could be a decent way to manage a portfolio of individual stocks and many people don't. i've been saying that since the show began, but the argument that it's the only way to go, that's totally bogus as we have all made good money buying individual stocks or know people who have or you would not be watching a show devoted to trying to help you invest yourself and that success is denigrated by all who pros feddize, and even with the index fund time is crucial. if you bought it at the peak of 2007, you got annihilated whereas. you bought the generation in 2009 when the s&p traded below 700 you made out like a bandit. how important is timing? you ended up losing more than half your mono p/e in about 18 months. sure, eventually you made a decent chunk of it back and that brutal loss can take you ages to recover from. you doubled the money in less than three years and of course,

put the dow jones average before europe ruled the roost and panicked, and you saw 20% of your capital erased. these are all extreme examples, but they've happened enough recently and they certainly get my point across. timing is everything if you want to make money and last i looked that is a very worthwhile objective and not trumped by the demand that you're going to an index fund. timing or at least how to better time investments is something that can be taught and that's what i do. so, it is my mission in life on make a better investor, you know that or if that's a better client which i also like instead of being self-directioned. i'm going to teach you to do a better job of timing your moves to avoid common mistakes and crucial lessons that i've picked up in over three decades of trading. let's get right to if. one of the reasons timing the market is so tough is at the moment of opportunity when you should be putting money to work,

switching from bonds to stocks are often also the moments of the greatest terror and angst. ♪ >> they tend to be the exact hours or even minutes when everyone is telling you to get out. >> sell, sell, sell! >> and all of your instincts are telling you you should panic. [ screaming ] >> i understand their concern. it's a heck of a lot easier to say i should sell something here rather than say no, wait a second. it's time to buy. no one's going to remember you as a hero pt market reverses and goes back up. you will always be recombaled as a goat. it keeps going down especially when twitter and youtube can keep anything live in context or out of it and you can say sell and the market will go up the next day and people won't realize if the rest of the sentence is up and you have a triple and maybe you should go. the most frightening moments and the days when you're freaking out, those days are almost never the right time on sell. there will come a better time. a time when the market lifts a

bit. you still want to dump stocks. why not try this strategy for change. i'm serious. just reverse all your thinking. pick something on buy, not sell. do it small. crowe don't have to be heroic, but you don't have to break down the doors on the way out. nobody ever made a dime on panicking and if one can call panicking a strategy, i know i don't believe this one. let me put it it another way for you, often because you don't like a market that doesn't necessarily mean it's the right move to sell and only once in my 30-plus years, and the sell program of that with good proportions while others are panicking left and right. every other time selling was wrong and buying was right and the sell-off because of the sequestration scare and the u.s. bond downgrade, ooh, scary. the debt ceiling debacle and the japanese nuclear crisis and take market got it it then. 9/11, for that matter, panicked selling has not been the smart thing to do in all those cases.

at these times the maximum fear what worked of the prudent buying and in many cases it worked big. the only time that panic made sense was to sell the in the 2008 because the financial system was indeed on the brink of the collapse and that's when you had to take it off the table and that was a systemic crisis, people, not a temporary crisis. panic even in the sell-off made plenty of sense which is why i old you to sell and then i went on "the "today" show. >> what is your advice today. >> whatever money you may need for the next five years, please, take it it out of the stock market right now. when the whole system was in jeopardy, buying hurt you because it kept pauling and falling and falling. you never knot a chance to unload the merchandise on the dip at a higher price. that is the only time. that one instance, just once in 80 years. i don't expect that to repeat itself. in 2008 i was heavily criticized

for what i said on that "today" show, telling people to sell in a sell-off. i was accused of yelling fire in a theater. and even. you know others might not be able to make it. in 2008 and 2008 only, selling was the right move. the theater was on fire and the market was headed down huge almost in a straight line. it was smart to sell even though it was several hundred points down because basically the market kept falling. getting back in was tough and you managed to sidestep the decline if you took action when i told you to get out now. it was better to heed the 2008 call, but that was done in a less dire moment. they are among the proudest hours i have had in my many years of "mad money kwot "though they get forgotten in the day to day investing and i get that. maybe that's good because that kind of selling is not an appropriate takeaway unless the whole system is in jeopardy and as i ticked down all of the a proximate causes for the sell-offs, you can tell they

ended up being moments to buy, not sell. yet every other time, every other correction or sell-off, you either could afford to wait or you should have bought within the panic. how about the timing in the sell-off, hold your horses, please. stand pat. you have to be patient and you have to recognize that wait it out, preferably until you have declined 5% to 7% and that's when i like to do some buying and that's been my rule of thumb and it's been a prudent place to begin your purchases and what happened after the the decline some i've seen what you proclaim sell, sell, sell and get it wrong. the hedge fund was collapsing in 199 threatening to bring down several institutions. i wrote a column for the online publication i had just found called the street.com and titled get out now. i wish i remembered the headline, get out now.

i was advising people to sell into an intraday down turn because the fed was ignoring the potential crisis that could spin out of con roll and a systemic risk and what happened some within one hour the fed held an emergency meeting to cut rates and the market rallied in my face. it was a it terrible moment for my hedge fund, magnified in the article. in the perils of panicking. in 1998 i was dead wrong. go read it. people still pen about that chapter of jam cramer on twitter and the lessons learned from. if you look the the other side of my panic you made porch uns and i'm pointing it out not to say i'm an idiot, but it happens. i reverted my stance after the same day and it was too late and i had to pay up huge for the same stocks and i still feel the scrambled eggs in my face from that call. do not sell in the midst of a decline no matter how much you want to. that's just bad timing and keep

your head and you will get a better time on sell. in all my years, it was only right once, systemic problems and every other time, the right move was to buy into weakness and remember that, and my story about getting it wrong the next time we get a horrible pullback, believe me, it it will not be systemic like it was in 2008. may i go to paul in california, please? paul. >> this is paul from rancho santa margarita, california. first of all, i want to thank you very much for all your help and research. >> thank you. you've really helped my family, and i appreciate it it. >> thank you. >> you always say it use limit orders. >> right. >> but if i've been watching a stock and tracking it constantly and it finally hits the buy price that i want wouldn't it be smart for me to use a market order if i feel it's gone down or do you think i should wait for a limit order price? ? you have to wait. let me tell you why because some

of the big declines we've had had have been so fast and breathtaking that you'll get a report that you bought a stock at 20 and the stock will be at 15 because the machines went amok and until the government rules that the financial engineering that cost these big downturns has to be banned. let's go to mark in florida, please. mark? >> hi, jim. thank you. boo-yah to on you and thank you to you and your crew they are pan taft sniek they are good. they are good. >> jim, my call today is on options. i hear all of the time on cnbc and sometimes even on your show that options are a particular stock are expensive right now and they're reasonably priced right now. how would i know that options are reasonably priced or expensive? i'm a national subscriber. i've read all of your books but i don't remember that being discussed. >> i addressed it in "real money and" and getting back to even,

and it's a great question and my charitable trust publication, how many points over -- you take the option, and you look at what's known as a premium and how much it is over if you just backed out the price of the stock and if it's very high and the expiration of the -- of the put or the call is happening in a very near time you know it's expensi expensive. so you have to measure the premium. the premium could be too big and that's when you have to avoid it. you've heard it it before. timing is everything and it's especially true when it comes to investing. in the face of a sell-off, please, please, don't panic. time is on your side. take a breath. relax. keep your head and maybe buy. time is money. i've knot a lot more coming up. stay with us. don't miss a second of "mad money." follow @jim cramer on twitter. have a question? tweet cramer #madtweets. send jim an email to on

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when to buy some when to sell? all about time. that's right. you can have the best stock picks in the world and it won't mean a big thing for the portfolio. youio didn't have a big sense of timing. i'm a believer of non-professionals can manage well money as well as the pros and sometimes better and that's why i come out every night to coach and teach. despite what you have heard from the naysayers and intelligencia, it's entirely possible for someone with no knowledge at all on beat the market as long as you know what you're doing and you think like a disciplined investor rather than a gambler. if you're willing to spend that time, as long as you're devoted to learn about stocks, you will most likely beat money managers and take taxable gains and losses when they suit you, know the manager, a very important issue considering the importance of taxes and long-term performance. ♪ ♪ right?

a huge part of knowing what you're doing is knowing enough not to make bone-headed mistakes about knowing when to buy and sell. that's why tonight i'm going over some of the most frequenter rors investors make so i can steer you on the right track. when the market turns south, when everything looks like it's falling apart. when the pressure is on, that's when people tend on screw up! for example, say your portfolio gets caught with its pants down, many of you were caught owning too much stock into a hideous sell-off, versus how much cash you have, something experts call too much expoeb you are. i've been there and it's horrible and not knowing what to do and not knowing whether you should blow out your stocks or hold tight. the brutal decline is almost always super ugly. the propensity to take sweeping, drastic action all at once. when it seems like everything is going wrong ask you just know that the economy and the market

are going worse and dead set on that nothing good can happen. here's my advice. take a breath, hold it. don't do anything crazy. i would say meditate or do yoga, but i'm one of the down dogs that khum mates on how bad things are instead of concentrating on my breathing like i'm supposed to. what's crazy? selling everything is crazy. even. you own too much stock and you want to lighten up in an incredibly bearish moment, you want to resist everything and that's bad timing. >> i always tell you never on buy or sell all at once, and it's arrogant to on time your trades that well. . the stock you bought goes down, you can buy more at a lower price and if it it goes higher you can sell more to take quantage of the higher price rather than feeling like a chump. that rule applies to more than just individual stocks and your portfolio, no matter how bad it looks you should never sell everything more than once. what's the right move? here's the crisis playbook for dealing with an awful moment in the market when they're deteriorating in front of you

and you want to get out. you have to sell something. not everything is equally good and some of it it could be pretty darn bad. got big profits in the stock in don't give them back, that's when you have to remember this sound. you have something where the fundamentals have changed and the story is now going against it it it, blow out of that stock, people some. >> do you have something in the short term? >> schnitzel it, that's fine. you can always buy it it back lower or when the risk/reward is in your favor, but do not sell it all. that is just plain stupid and don't ever blow out on everything and don't give up on stocks entirely or cds with puny yields. instead, when things look dire, get ready to redeploy in the stocks even though they don't deserve to. use that money to buy something you really like. this is why not in the heat of battle and in the end of the week i raid all of my stocks in my charitable trust. you can follow on from one to

four and the one is being the best and the four is the worst. i pioneered it and it is on display in every bulletin we play out all day. it's a proven game plan that i've used for three decades and it has never steered me wrong. the ones, what are thai? they're the top flight stocks and they're the names who begin to buy more of in moments of pure chaos. you've been ready and you've done the work. you know they are right for the occasion. the fours are the expendables that you sell when things turn awful. you dump them. don't get attached. the three stocks you wish were higher before you sell them, they'll be sacrificed if you need to raise cash through ones. if you can own something else that's likely to go up more and quicker during the same period of time. the twos, those are the ones who would like to wait for a 5% to 10% pullback. why not sell it all when it seems that the market is turning against you?

why not? american stores. don't know it? don't remember it? it is the old acme, my favorite sewer market where my mom was friendly with all of the checkers. i had it it in my hedge fund always betting that one day, one day it would be taken over and it was worth so much more than it was selling for and time would be on my side and one day we got a really brutal sell-off and i couldn't stand the pain. you know that feeling. i knot goldman sachs and put them on the phone and said buy my whole book meaning they took me out of all of my positions. they stopped me out down 2% from where they were. in other words, they agreed that i would get the proceeds that were only down 2% and no more than that and you could do that then. you could literally offer everything you had and they would buy it on the line and i was only 400 at the time. it was so ugly, i didn't want to own anything including a stock i had owned forever and a big institutional trader as i was could get a huge firm like

goldman sachs was knowing that if you just sold them you could crush your own stocks and do more damage than goldman or on any of the big firms could do than by going at it piecemeal. two weeks later, wo weeks later, albertson's bought american stores. it was a huge premium. gigantic. i couldn't believe it it. i held on to american stores and like a chump i sold it because i couldn't take the pain. if i had added to my position i could have made my year. i always remember that moment because it caused me how to rethink how to blow out my portfolio, and that goldman sachs con vininged me to any down 2%. i didn't have the stocks to go back in because i was so adamant that we were going down 4% or 5%. sell something wasn't a bad idea. i know that when they're all in, meaning you have little to no cash on the side lines and selling anything, massive

mistake and it's always good to use a top notch s&p 500 futures sell-off to pick at and not load up at ask pick at your ones that's your favorite stocks after your sell-off ends and they always end at some point. not all of the stocks will bottom at the same time, but if you rank them they probably won't care that they bottom because the best ones will get put on sale along with the merchandise and the good and the the bad and the draws for that matter, but selling everything, getting out all at the same time, that doesn't leave room for the possibility that things can and they might get better and get better quickly. it doesn't leave room for the american stores and it's awful timing. here's the bottom line. time warps, and not every big decline is in the end of the world and never trade like it's the apocalypse and instead, go to the supermarket of stocks and buy on weakness and always remember, i checked out of the most important stock i liked in my zeal to get into that ten

items or less line and because of my haste, my overwhelming bearishness, i had the american stores buyout along the magnificent buyout on soon out after i left the store. do not repeat my mistake. after the break i'll save you more money.

with apologies to the great

carol king, it's never too late not to know what you own, anyway. knowing what you own is more important than ever now because we live in a world where too many people never met a disasa r they didn't like. you can bet that the press will go into total disaster financial mode. hurricane disaster life, day after day, the more sensationistic and frightening, unfortunately the better. everyone is addicted. it's a way of ever geopolitical issue and crime and punishment gets whipped into panic and fans the flames of panic. even the genuine catastrophes are treated like they're the end of the world like it's an apocalypse now. every negative story will be exaggerated to make it seem that it was the end of the world as we know it or if we're on the eve of destruction, like mcgwire, targeting the older demographic, older than carol king, and it's a sea change that

the media and it doesn't mean sports media. you can't shake, and it's almost like they want to shake you out of just about everything you want to own or might want to buy. at times we seem to be unable to steer ourselves effectively and unable to think opportu opportunistically over all outcomes. upon how many times have we seen this happen. with egypt and civil war and libya and cypress. tragic earthquake and tsunami in japan and prompted a full-on nuclear crisis and the sovereign debt crisis in europe which now mercifully is over. what should you do during these types of scares? what's the right way to react to this kind of crisis? i think this terrific non-systemic risk meaning the banking system is about to go under. these moments can make terrific buying opportunities and you have to get it in your head how? let's figure this out mad money style using what i employ in my

hedge fund whenever events occurred which would then overwhelm the whole market. first, we had to put the event in perspective and we have to ask ourselves okay. can't make fun of it and it's not something to make light of, potentially terrifying, but what effect does it have on the numbers? what about the numbers in cramerica? >> in the 20 years i've invested other people's money, the bristol-myers theory name aftered the company that had the most consistent earnings imaginable and nothing's changed. at the hedge fund we used to have meeting at 6:00 a.m. what was the point? get the heck out. might as well go home, sense much of the opportunity to make money had passed and that's why i sent you home if you were a minute late and they were lucky i didn't there water bottles or electric appliances and i hit the guy, every time we got one

of those nasty, vents at the morning meeting, what are we going to do now? the nuclear power plant in chernobyl. jim, what do we do some call your mommy and i would scream back dripping with sarcasm and arrogance, what the fact does that have to do the price-to-earnings ratio of bristol-myers? of course, nothing. whenever i heard or saw one of those events was to that the companies wouldn't be hurt by that event since it turned out to be worse than expected. given that the 24-hour news cycle seems to throw everything out of proportion and it seems like we get a terrifying new crisis every week and you need the bristol-myers names and maybe it's a high-yielding food stock and think about the pinnacle foods and maybe it's verizon and another steady eddie company. just be ready and find something you like and based on an

exaggerated crisis like southern and duke and general mills, for instance and step two, ask yourself, is it really bad for the earnings out there? for example, when the egyptians were demonstrating in the streets in early 2011 and trying to kick out a dictator, was there a moment when even the oil stocks which benefited from high oil prices got knocked out along with everything else. doesn't that make no sense whatsoev whatsoever? that was tremendous buying opportunity if you bought the oils and that's what you had to do same with the overthrow of the leader in er ier i er ier . it means when oil comes down as part of a worldwide decline in commodities because of unrest. if it's in an area that threatens the oil price to go higher you have to act and you have to buy. sure, there are some big, scary crisis somewhere in the globe that threatens to knock down the whole market like the requester,

unrest in brazil and unrest in egypt. what the heck does this have to do with the earnings of my stock and put it in perspective and maybe you feel like buying when one of the areas is actually an opportunity that's being brought down by the particular event. the bottom line, there will never be any shortage of terrifying event around the world to bring from around the world. there may be an opportunity for you to make a very, very big profit. vince in maine. vince? >> yes. thank you professor cramer, for all you do for us. quick question on stock split and what do we do when they do? >> this is such an interesting question because people always get it wrong. it's up to the ceo and the board. there is no rule. some companies go to -- berkshire hathaway and 150,000, 100,000. it's up to warren buffett. companies have to decide whether they think it it makes the stock

more attractive to individuals or it it makes it more attractive to hedge funds which they typically don't want. i am in favor of stock splits because so many of our viewers don't want to buy stocks in the high dollar amount even as i know the truth which is if you take a pencil and youio snap it in half you don't have two long pence ils. it's cosmetic, but in this market it's working. patrick in arizona, please. patrick? >> hi, jim. >> hi, patrick. >> we've had a stock that's had a good won. we, of course, took some off the table. >> right. >> it's one of the stocks that we really like long term, what is the plan to get back in when there are no pullbacks? >> well, you know, i have an answer for you, patrick, you're not coming to like. that happened and you missed it. one of the great things about the market. >> all aboard! >> it's one of the things people don't want to do, anybody is to say, you know what? i missed that one. or i blew it. sometimes you have to own it and

my charitable trust, we can't buy that one back. it moved too far. that's what happens. john in new york, john! >> jim, good evening. this is john from new york. i have a quick question for you. i own a stock and made some money with it and i'm looking to take my money and put it in something else. is it it best to take one stock with that money or two good stocks? >> it depends on how much time you have. >> split it. >> it depends on how much time you have. one of the things i try to say over and over again that if you don't have time at all then you should be a good mutual fund. we have a lot of good managers that come on cnbc. if you have some time do one stock and if you have a couple of hours a week you can do a whole bunch, if you don't have time and can't monitor, buy one stock and look at it as frequently as possible. it's more important than ever the hyperconnected, disaster-loving world, when something terrifying happens, i

don't want you to be panicked in your portfolio. it could tornado ourn out to beg opportunity. >> stay with cramer. "hello. you can go ahead and put your bag right here." "have a nice flight." ♪ music plays ♪ music plays traveling can feel like one big mystery. you're never quite sure what is coming your way. but when you've got an entire company who knows that the fewest cancellations

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time after time, timing is everything and a stitch in time saves nine, whatever the saying and whatever trick you use, i am teaching you that timing your buys and your sells can and should be done and those who say it is impossible they simply want to keep you in your collective chains. consider me a bolt cutter, setting you free. i want on talk to you about a particular kind of chain that you need to be unshackled from and it's the ipo chain. first, i like ipos and it's been an amazing period of time and we've had so many great ipos. we do our best to try to analyze them for you on "mad money," but they're not easy to do. you ask me, is xyz ipo a good one? how should i know some it depends on how they bring the deal and it's the gibberish for the amount of shares being offered. there will be 50 million shares outstanding. the bankers are talking about bring the deal at 20 and 1

billion, $20 times 50 million shares, but the bankers can do a lot of different things. first, they don't offer all of the stock well is, venture capitalists that might fund it might own a lot, whoever ceded the company might have substantial shares left. the price that they're talking about, that may just be the price talk. meaning what the initial price they are thinking of bringing the company at, know the last price. if demand accelerates y'all hear the price move up, maybe to 25, maybe to 30. obviously, that values the company in a much more rich level. i may like the ipo if it is valued at 20, and i might like the stock at 20 and think it's a sale of 30. you would accept that with anything other than i'm and some stocks coget too expensive. the bankers, if they want the stock to pop, in other words, if they want to generate a hot deal, and they can hold back stock. say xyz has 50 million shares and the bankers after canvassing

the buyers in the roadshows and getting indications of interest and while the company has $50 million shares and has the offering and priced at $20 a share and the stock will just wallop. the opposite is true if they cut back shares. bankers are experienced. these syndicate managers can figure out how to make a stock pop and how much of a. they want simply by cutting back the number of shares. demand for 20 be and that's where it's oversubscribed and just over 5 million shares. only one-tenth of the shares are outstanding in half of the demand out there. that cutback will generate real excitement when people get their allocation or the number of shares they're giveners have the numbers they ask for. that's what makes for a hot deal, because if the bankers have demands for 10 million shares and they issue 5 million everyone will be cut back who wants the stock. the deal will be wildly oversubscribed and the allocation will be below what we're hoping for. that, people, is how hot deals

are made. i happen to call these kinds of offerings, sliver offering from the days we brought public the street.com. they did a sliver, just a sliver of it. so a lot of them during the social media craze. the bankers choose to make the deal hot and reward customers who put it on the deal and perhaps to create excitement from the company's stock and they offer more stock on the deal there would be a risk that they would go below than what's priced a deal. one that immediately goes below the offering price and it hurts shareholders who bought and hurts the companies and better offer a sliver to get people excited and six months down the road when what's known as the lock-up expires and hopefully the stock will still below where the ipo was priced and the insiders who choose to sell will get out of a big profit. i don't care about insiders. i care about you, and any deal with a new company offers, is one i want you in for. let's take groupon.

i'm not a huge fan of this kind of company in general even as this company has improved prospects dramatically over time with new management whom i happen to like very much. i know they can and have condition great things for retailers, but i'm tired of my daily groupon email offering and i i don't want to save on a slice of pizza and brazilian waxing, but groupon ipo, let me in. there are 360 million share, but the bankers only offer 40 million shares and that sliver would exceed that demand would exceed supply. the company raised 700 million and the deals, and needless to say, they only made out like bandits if you sold, well, if you sold when the selling was good you made out terrifically and that was the first day of trading. how about the buyers and what's known in the after market, the price of the stock once it's it you willy started trading and if you bought at 28, you didn't have that much, can you?

you could have made two bucks and after the groupon began a long, ugly slog down until the company saw fit to relief the errant ceo and if i become a statesman at the helm. it's been a buy ever since. what was the the right thing to do? follow steve miller's famous edict and take the money and run and even fly like an eagle and ring the register when it it opens and the brokers don't like to encourage what's known as flipping which is putting for a hot deal and banging out when the stock opens for trading and i'm not your broker and they may not condone the practice. i say why not some you do a lot of commission business and fee business and you put in for a sliver deal and why can't you take the pop? where does it is a you can't some unshackle yourself, here's the bottom line. put in for a sliver deal and sell it it into the pot and you time the sell at the very open of the hot deal. please, don't stick around for one red hot minute longer and never, never e never buy in the after product. the vast majority of timing

buying in the after market is for sushgs. be smart, take the money and run. stick with cramer. how much money do you have in your pocket right now? i have $40, $21. could something that small make an impact on something as big as your retirement? i don't think so. well if you start putting that towards your retirement every week and let it grow over time, for twenty to thirty years, that retirement challenge might not seem so big after all. ♪

not every stock can be owned forever. none. and there are very few stocks you should own all of the time. year after year, decade after decade, the fact is. you don't know what will make you sell a stock, then it's not okay for you to buy that sock. lots of people end up selling at the wrong time because they never anticipated selling at all and they figured that's never going to happen and they never thought about what they wanted to buy. they didn't have what i call an exit strategy. as an investing coach, i need you to make sure you don't make that same mistake. i need you to develop extra strategies for your stock. how do you time yourselves? well are many stocks when you buy them, you need to understand that some day, possibly some kay soon you will have to sell. high-flying tech stocks, like they blow with the wind and they can be obsolete and it's not safe to own them unless you

recognize they can't be owned prefer and you take your profits when you have them before they slip away that's why warren buffett doesn't own tech stocks and they only make money when the economy's healthy. and the so-called cyclicals. you have to sell them eight ways to sunday at the first sign of a slowdown. you can't ride through it. a tech stock like skyworks solutions is like pepsico and nvidia is not hershey and arm holdings is not altria and not mcdonald's. the tech maims like skyworks and micron are trading vehicles that then crash. there are staples that can plot along slowly and pretty much forever. it it can make you a lot of money and in not a lot of time, but you have to take it it off the table because. you let it it ride, that vehicle will eventually crash, and it's dropping 10, 20, 30, 40, pain 50% in a matter of days and hours even. altria, on the other hand, can be owned long term and

management can still mess up and the business can underperform and somebody can legislate tobacco and we'll find out about that ahead and we'll sell it, but it's unlikely and it will fall off a cliff. tech stock that are winners when the product cycle is strong like smart foerns and pcs are also risers when the market is weak. the well-run companies like smart foerns can make you a lot of money when times are good, but you better believe it can get you a eighted when business isn't hot. the only up side is there is no hershey bar cycle and more kellogg and frosted flakes and no seasonality and that's not the case with most tech stock. take the fabulous dotcom run and it was so fantastic. i have to tell you, you have to catch it. if you brought it up in the last two mothers of the rally and if you would, you would have made a fortune and the most ever. back then you had to buy the parts and equipmentmakers

because the carriers, big, small and independent were expanding and they were buying equipment like mad and they had the money from the stock market, right up until the demand pell apart and they keep owning these stocks and if you didn't sell by march of 2000, you had a buy and then you had to sell. you have on change you when the facts change. i don't want you to end up like the victims of the dotcom bomb, the people that repuzed to sell when the story got wiped out. sometimes it means selling something that you bought at a higher price and something people hate to do. you don't make money on every single trade or investment. all you want to do is live to play again. aufsh the tech stock will get hammered after the first signs that things are deteriorating. when that happens, don't tell yourself it's too late to sell. >> use the strength to lighten up and the first loss is the best loss like i can tell you with cramer's real money and is

that ever pertinent to what i'm talking about and this is where discipline makes a huge difference and i'm tireless in telling you not greedy. i endlessly tell you that it doesn't matter where a stock's been and you don't want to own a high-flyingic to that lost its momentum because it's going down, down, down. >> when that happens, sorry. look, if you love me you'll buy it it back lower when business is improving. here's the bottom line. >> don't treat risky trading vehicles as. they're staples that can be owned for ages. handle them with care, please. they're real names at a certain point. take caution and you can do very well for yourself. remember to take profits on the way up and get out on the way down and you don't have to call the top and you have to be willing to jump ship when it's clear, the stock has peaked and the business and you are ready to head down if you don't exit. stay with cramer. o found a magi. it told him what was happening on the trading floor in real time. ♪

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we have to get to some of these tweets that you're sending

me@jimcramer mad tweets. mow volume. i want to use limit order and tips on getting low, no-volume stocks. don't do that unless you're buying ten shares or a hundred shares, why? because what i talked about is the exit strategy. it's difficult to get out of those with 100 shares yes, you can go buy and nothing bigger if there's no real market. it's not for are you and now to blood diamond who writes when you are not on "squawk on the street," "mad money" and i i'm #addictedtojimcramer. i often need a vacation and don't take them. that's how i come back and i'm more recharged, hash tag. sharnado. sharnado. our next tweet comes from an early bird show. this one says following, can can you talk about the preferred stock market. look, preferreds are another form of corporate bonds or

preferred and stocks and i like the preferreds and i am talking about bank preferreds and that's the best sources -- the best thing i've had and now here is a tweet from @matthewfelder how much do you average per sleep and what keeps you up at night. unfortunately, i have a sleep disorder and i usually have two or three nights a month that i don't go to sleep and most nights i any to bed between 11:30 and 12:00 and wake up at 3:30 or 4:00. i know. last night it was three hours and #, charitable jim. to buy stock on a pullback. thanks for all you do. i am going refer you to bob lang's stuff and realmoney.com. he knows it better than anyone. i like to say, stick with cramer. "hello. you can go ahead and put your bag right here."

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sharnado some. i like to say there's always a bull market somewhere and i bull market somewhere and i promise to find it >> imagine a store with no signs in the aisles, a store that doesn't bag your purchases, one that never advertises, where you have to pay a fee just to walk in the door. who in the world would shop here? as it rns out, about 3 mil fanatically loyal customers every day. it's called costco... >> i love costco. >> i bought ground beef. >> lawn furniture. >> a television. >> i bought my engagement ring here. >> ...a chain of stripped-down warehouses that's become a sensation at home and abroad. >> [ speaking chinese ] >> but its crowning achievement -- con