elissa leement thanks for watching. catch us tomorrow at 5:00 for "fast money." don't go anywhere. "mad money" with jim cramer starts right now. 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 money. my job is not just to entertain you but to educate you so call me or tweet me. we live in a very confusing moment at least for the stock market. it's a time when there's always somebody on tv or in the newspaper or on the internet telling you to do exactly the

opposite of what you should really be doing. and they tell you to do the wrong thing with incredible conviction. sometimes they sound super intelligent, too, much smarter than i sound, for example. but here on "mad money," we're not about sounding smart. if we were i probably wouldn't have so many silly sound effects. we're about trying to get it right, what to buy, what to sell, what direction the market is headed, how it works. you get these things right, and it's a heck of a lot easier to make money in this or any market. and in all my 30-plus years in the investment business, i have to tell you the easiest way to get it right is by working hard and being as rigorous as possible. there's no trick, no five simple rules that will make you a multimillionaire overnight, even though people keep propounding them. if you do the work and practice real analytic rigor, you might learn something that will make you a better investor and that's one who makes more money, because that's the goal here not ideology not politics not

viewpoint -- making money. now, regular viewers are probably aware that for the better part of a decade i've been running my own charitable trust, which you can follow along with. research director stephanie link, you see a lot on the judges show. because i play with an open hand we send out explaining every single trade the trust makes which means i've got years and years of documentation real time contemporaneous documentation about where i went wrong and where i went right. as part of the research for my latest book "get rich carefully," i went back over every single trade for the last five years. it was painful to analyzed what worked and what didn't. but it is a treasure trove of valuable information and it's done in real time. tonight i want to go over some of the important lessons i picked up from going over the trust's successes and blunders. success, that's work. worse, you have to cut out the blunders.

before i get down to details, i advise you to do the same thing with your trading history. you can learn a lot by systematically going over your past decisions. like in "the art of stock picking," know yourself and you need not fear the results of 100 battle. let's get started. looking back at the trust history, i noted something counterintuitive. sometimes the best time to buy a stock is right after analysts cut their estimates for the underlying company. one of the best investments my charitable trusts ever made was back in march of 2009 right near the big generational bottom when caterpillar, the giant equipment manufacturer, had been going down for weeks and weeks on end. as analysts raced to cut their estimates for what looked to be a particularly bad quarter they were throwing everything at it. you see the analysts had all turned bearish. at once after cat's business globally took huge hits because

customers were struggling to get credit for new machines and orders they seemed to be cancel canceled pretty much every day. you kept hearing about them. this was in the depths of the great recession. when caterpillar did report, the quarter turned out to be even uglier than the analysts had predicted. and some firms slashed their estimates for the rest of the year taking them down by an extraordinary 50%. can you imagine that? a 50% decline in earnings estimates? but, and this is important, cat's stock barely reacted to the bad news falling only slightly and then instantly stabilizing and then most importantly returning to where it was when the hideous earnings announcements were issued. thoo's that's a classic sign you're looking at a bottom right there, right there. cat was screaming, look at me! look at me! the bad news is out. the worst is over. and the best is yet to come. calling bottoms yourself can be a dangerous activity. you come in too early as so

often happens, you're going to get caught. but sometimes the market will pretty much call the bottom for you, and that's what happened in 2009 when caterpillar reported awful numbers. the analysts eviscerated their estimates and the stock barely batted an eyelash. it may seem counterintuitive to buy a stock right after the estimates have been slashed, but when you think about it, that's what makes a great deal of sense. you want to wait until a stock has been derisked until the bad news is baked into the share price. then you can build a position that might lead to tremendous profits down the road. sure enough, caterpillar scored from that for months on end as business improved worldwide and the analysts had to steadily raise earnings estimates from levels that were far too low, particularly those 50% cuts. the big money was made if you bought an estimate cut, not an estimate boost, because cat earnings had troughed, and anybody could have caught this move by watching how the stock didn't get crushed like you'd expect after the hideous quarter

in the last barrage of investment cuts. maybe some of you are saying cramer, that was march of 2009, generational bottom once in a lifetime situation. let me give you another more recent example of when it made sense to buy after the earnings estimates were cut. remember the incident jpmorgan had with the london whale in the spring of 2012? the rogue trade they're caused the bank to lose $6 million by hiding ever and ever larger losses? as the market tried to handle the magnitude of the pain, the stock kept going lower. then "the new york times" reported the losses were as high as $9 billion for jpmorgan several stocks followed suit slashed estimates to match that $9 billion figure. however, just like caterpillar in march of 2009 jpmorgan's stock had already been obliterated, and it didn't get hit on that last round of estimate cuts. instead, it flat lined, then it actually inched up slightly again, just like with cat. the stock was telling you the estimates had come down too far.

sure enough soon afterwards, we learned that jpmorgan's losses were contained at $6 billion, not the much balilyhooed $9 billion figure reported in "the times," and that was the moment you had to buy. the stock had been clubbed down to $31 over the previous month. you caught an immense rally. as a matter of fact, over time you caught a double but it did go almost straight from there are 31 to $50 in a straight line. wow, 12 months 61% gain. same thing happened with fed ex. they cut the numbers twice, everyone took them down next thing you know you caught almost a double. if you want to know the single most reliable sign a stock is bottoming, you simply need to wait for the moment the estimates are so low they can actually be beaten. luckily for you the market will almost always tell you when that happens, as we saw with caterpillar in 2009 and jpmorgan in 2012 and most recently with fed ex. when the estimates get slashed, the stock doesn't go lower, that's the market scream a

bottom is probably at hand. david in arizona, david. >> caller: hi jim. is there any signals or clues that we can look for to find out if a company might do a reverse stock split? >> well a lot of times when a stock goes under five there's pressure to do it. i have to tell you, i have seen reverse stock splits in my time and they have almost been a tale that things are worse than you think, not better. be careful of reverse stock splits. i don't really care for them. let's go to lee in colorado please. lee. >> caller: boo-yah from the pike's peak region of colorado. >> love it. when the went there with my folks in '64. what's up? >> caller: you said the value of an equity drops on a day when the market rallies 1% or more you should consider selling. >> exactly. >> caller: is the inverse true? should you consider buying or adding to a position if the stock climbs on a down market die dey? >> absolutely. definitely. yes. the inverse is totally true. like we've had some days where some really high momentum stocks really bucked the trend of the market's decline, and that was

the signal look when things get better we are really going to fly. you are totally right, lee in california. gus in florida, gus. >> caller: hello, mr. cramer. i was wondering if a stock has a risky dividend yield does that mean if it has a high dividend yield, does that mean it's risky? >> if the yield is much thr than the average stock yields, that's a red flag. now, there are funny situation where is the yield happens to be very high and everything's fine. but i worry about, for instance, if mes of the good yielding stocks are five, six, and you get one that looks like it's a 10, 11 i am going to tell you that's a red flag and it's probably not sustainable. listen, i know the market can get confusing. but if you're looking for a sign that a stock is bottoming, wait for the moment when the estimates are finally too low. the market will always tell you, and i've got your back too. "mad money" will be right back. don't miss a second of mald mad. follow @jimcramer on twitter. have a question?

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yeah, everybody makes a mistake sometime. that's some classic investing advice from stock sage otis redding. if you want to become a great investor you don't just need to learn from your mistakes. you need to learn how to recognize what your mistakes actually are and by the same token, you need to notice what works. that might sound trite. it's not. the thing about being hume season we have a very hard time acknowledging what's going on inside our own heads. we're full of all sorts of unconscious biases, and that can make it incredibly different to learn from experience. i'm not here to give you a psychology 101 lesson on continue in addition. i'm here to be your investing coach. i mention all this because it's important to remember you need to approach all the stuff empirically. what do i mean? at my old firm i consumer

sentiment a box of old trading tickets in my closet. i'd scrutinize them looking for mistakes patterns of wrongdoing that needed correcting and much more rarely for patterns of success that needed repeating. these days i don't have a box anymore and people don't have the hard copy slips anymore, but i have the entire record of my charitable trust, which you can follow along with at actionalertsplus.com. we can keep track of trades and all my bulletins explaining my reasoning for buying or selling a stock before i buy it totally contemptoraneous contemporaneous. like i said, i analyzed the last five years of research for "get rich carefully," my latest book. i approached it empirically because the numbers don't lie. what do they teach us? i have another counterintuitive lesson for you. stop worrying and learn to love secondary stock offerings. we've all been conditioned to believe when a company issues new stock, that's bad news for shareholders or when an insider sells that's also bad news.

it just tend to weigh on the stock for a time and you don't want to touch it right? isn't the way we think about these things? but, you know, it weighs for a moment and then it just keeps going on. but you know what, these days that totally reasonable fear of secondaries, i'm banishing, i'm saying it's a mistake, because interest rates are still low by historical standard and that's true even with the rise from the spring and summer of 2014. companies can issue payback debt and derisk their enterprises. that's why these deals are worth running to not running from. real estate investment trusts have done these deals and they've worked fabulously for investors because first of all the money the companies raised is use to pay down expensive debt or refinance it with cheaper debt that carries a lower interest rate. the money saved on those interest rate payments then falls straight to the bottom line allowing analysts to immediately raise estimates once the refinancing is complete. second, the ratings agencies often upgrade when companies issue stock to expand the

businesses, and that almost always produces a nice move up in the share price. third, the newly raised capital might allow the real estate investment trusts to buy more properties, which leads to greater earnings power. it's virtuous circle. you can find these deals in all sorts of companies that were hard hit by the housing crash and have snapped back. take the mortgage insurance companies. that's a group that pretty much had been left for dead right? the additional capital raised by their secondaries allow them to write more policies on more homes. you made a killing and the philadelphia-based mortgage insurer, if you listened to me in february 2013, when i told you to buy the stock on the offering or ahead of the deal. i caught flak for that recommendation. as many people assumed the issuance of stock signalled a top. but there were plenty of sophisticated institutions out there that were champing at the bit for the stocks because they realized if the company got its hand on more capital it could flourish in that virtuous circle

i outlined nap's why you had to take action pretty much as soon as the deal was announced. two months later, a 50% gain. you need to take immediate bold action. the opportunity will not last. there's a second kind of secondary i think you should jump all over, the kind the master limited partnerships do typically the oil and gas pipeline players that are always issuing stock to finance their expansion plans to crisscross the country with pipelines so they can move oil and gas from texas, oklahoma north dakota colorado west virginia ohio and pennsylvania to the rest of the nation. by far and away the cheapest way to transport oil and gas and the safest versus trades. but constructing new pipelines is expensive, and the companies that build them need to raise cash pretty skon constantly in the stock market. they've become serial issuers of equity to expand their pipeline networks. no fear. i really like all the mark west

offerings as they've been winners over time. these master limited partnerships are super high yielder, meaning they can be dangerous stocks in an environment where interest rates are rying and bonds are becoming more competitive as an asset class to companies that yield well. they can also get sold as people rush into bonds to get a safer yield and take on less principal risk. however, if we're in a moment when rates are stable you should jump all over these secondaries. they allow the pipeline companies to increase capacity so they can meet surging demand from the explosion of domestic oil and gas production and more capacity means more distribution boosts down the road. third, you should always keep an eye out for secondaries that are priced what we call deep in the hole. wall street-speak meaning they're being sold at dramatically lower prices than where the stocks were trading when the deals were announced. many of the master limited partnership secondary are priced to be in the hole but also tech stocks too. september 2013 when linkedin was trading at $246 the company announced it wanted to sell a billion dollars worth of stock to raise money for corporate

purposes. the brokers who handled the deal let it be known linkedinwas willing to sell shares well below that price and buyers lined up. they sold 4 million shares at $223. it was a good deal for all involved. best of all the stock immediately traded right back to where it had been before the secondary was announced. subsequently, the stock did get hammered but it soon bounced back and gained favor the internet status people. same thing on mozilla, which announced a secondary deep in the hole after and another good quarter and almost jumped 100% subsequently. you only get stock from full-service brokers typically as the large corporate clients like they do with these sorts of deals with investment bankers. when you see these deals they are almost always worth trying to get in on. rarely, like in march of 2014 did some of the deals really go wrong. last but not least, we've now reached a moment where many private equity firms are issuing secondaries in company theys

took private before the great recession that have become public since the dark time. in the past i did tend to shy away from these indebted companies for fear the private equity firms knew something we didn't and the stocks were about to get clobbered. these days that's become too cynical because these private equity-backed companies often have high levels of debt left over from before the federal reserve cut interest rates drastically years ago and have been able to refinance with the capital. that was ben bernanke's gift to these companies. refinancing means an immediate boost to earnings and subsequent lift to the stocks. we've seen terrific performance after private equity-backed deals in dunkin' brands dollar general and hca, hospital corporation of america, among a host of others that worked out exceedingly well. forget the conventional diswis dom that says a secondary stock offering always means the stock is in trouble and the stock will get polarized. there are many case where is secondaries can make fabulous opportunities like when pipeline

master limited partnerships raise money to expand or when you get secondaries from newly public private equity-backed names. and of course when you get a deep in the hole deal where the price is just too good to ignore. much more ahead on "mad money." tonight, you've got to know when to hold 'em and when to fold 'em. how to identify a major cue that means you should head for exits. earnings are great but they're not everything. i'm dishing on the things that can spark a surge in the stock. i'll help you draft an all-star portfolio. stick with cramer. >> mr. cramer love the show. >> boo-yah. >> my kids in elementary school are learning so much from you. >> i know you hear this all the time, jim, but thank you, thank you so much. >> this mab my best year by far and away in the market. >> i just want to thank you for looking out for the regular guys out there. >> great to hear your voice and know that you're there for us. >> from our family to yours,

happy holidays, cramerica.

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that's... (see the number on your screen) call now. if ever there was a musician who understood the stock market it was kenny rogers. not being glib.

we need to know when to hold 'em, when to fold 'em, when to walk away and when to run. it's investing advice. i've got some suggestions for when you should fold 'em if not walk away from your positions or even run. before i get there, though let me remind you that i'm not just blowing smoke here. i'm not sharing my opinions. you know the saying -- opinions are like something unspeakable on national television everyone's got one, they all stink. i'm sharing the results of my rigorous empirical research into what works and what doesn't, research i conducted when writing "get rich carefully," which is my most comprehensive book. in the spirit of the gambler, i need to tell you when it comes to picking stocks cash is not always king. in fact, if you buy a stock just because it's sitting on a mountain of cash you could get hurt. think about it. what do cisco, microsoft, oracle and intel all have in common? people were lulled into buying their stocks at very high levels simply because they had so much cash on the books. you probably heard them say this or that stock is a gigantic

percentage of its market capitalization in cash and therefore is cheap and must be bought. maybe in a high interest rate environment it might be good because then companies get extra interest income. but unless rates are high cash by itself actually means very little. what really does matter is how companies put that cash to work. sure, intel, cisco, and microsoft give you some nice-sized dividends, but though yields haven't meant much other than as a floor. these tech titans have also bought back a lot of stock. now, i'm not against stock buybacks per se but these companies have often bought it back badly, maybe too high at times rather than be opportunistic on weakness as has been the case with the best buyback that i see out there, which is apple. apple comes into the market aggressively when its stock is down but doesn't go heavily when the stock is moving higher. the bad buybackers pick up their own stock all over the place at any time oblivious to whetheritis attractive or not at the moment. in short, cisco, microsoft, cal,

and intel may have a lot of cash, but i think the cash sometimes is wasted on undisciplined buybacks a at not great prices. when you see a company doing, that you know what maybe it's not the right time to invest. maybe you want to think about another stock. i want you to contrast their behavior as one of the best performing stocks in the s&p 500 since a generational bottom in 2009 and that's wyndham worldwide run by the great steve holmes, who's one of the most shareholder ceos out there. holmes buys back stock aggressively when it can make a difference particularly during those rav anging downturns when most other ceos seem frozen and are unwilling to step in and take advantage of the weakness even though the declines are market driven and not all specific to their companies. that's when windham comes into the market. i like that. it's not by rote. plus, windham ratchets up its dividend far more than expected because every year holmes thinks it's his duty to return excessive cash to you, the shareholder. he doesn't sit on it and do nothing but watch it grow at a

ridiculous rate of return. he's part of a new breed of executives. he wants to fulfill his end of the social compact with shareholders. you stick with him, you don't rent the stock, you earn it. in return, he makes you you get cut of the business and he growings that business as fast as he can. he's the very model of what of the tech companies need at the helm, someone who understands that stock price going higher is important and recognizes it's part of his job to figure out the best and opportunistic commonsensical way to make that happen. another sign you should fold on a stock and leave the table. if you own shares of a company who blames customers for its own poor performance, it might be time to walk away. i learned with this with juniper. juniper was trading in the low further when it had its first shortfalls. at the time the company blamed some nameless japanese customers for the lack of orders. i thought the explanation sounded plausible.

japan's telco company vbs huge users of juniper products and the company had been devastated by the tsunami and fukushima disaster. so i thought it sounded rational. i bought into that. i stayed pat. seemed right. but soon the stock dropped to the 30s on more worries about missed orders this time from europe and the united states. i still stuck with juniper because the company had a ton of cash. oops. it was pretty clear europe had a lot of problem, and i ascribed the domestic weakness to the fact that the u.s. government had been a big juneiper customer and were getting that budget freeze. it wasn't until the stock dropped to the 20s, and talking about half from where i liked it, that i realized the blaming the customer act was a bad alibi alibi. cisco was taking market share the whole time and was simply kicking juniper's butt with a better mouse trap. the juniper customers weren't sitting on their hands. they were buying elsewhere,

which i didn't realize until i dug deeper in costisco. the information was there to be had but only from a competitor not from the company source. when a company blames the customer, check to see whether the customer isn't still buying except from a different vendor. bottom line, know when to hold 'em and more important when to fold 'em. when a company is sitting on a mountain of cash and not doing with it, that's a stock you do not want to own. when a company starts blaming its customers for shortfalls like juniper did in 2011 always be skeptical. those customers may simply be giving their business to another player. let's go to paul in texas to start the calls, please. paul. >> caller: boo-yah, jim. >> boo-yah, paul. >> caller: i want to take a second just to thank you and your entire staff for all the energy, effort and time that you put on helping us home gamers not only understand the market but participate in it. >> thank you. i am just trying to teach. there's lot of misimpressions of

the show and they do get tiresome @jimcramer on twitter. i'm trying to teach people to be better investors. thank you. how can i help? >> caller: i've been looking at mlps and i know you discuss those on a lot of your shows. >> yes. >> caller: if you could teach us the additional homework and data that you look at before we decide which segment of an mlp to buy, because i know some of them have better dividends than the other parts of it. >> i got to tell you, paul i have to put together so much information myself on these. it is amazing. i piece them together from all the different research houses. i use rbn, which is a terrific oil analysis company that has really helped me on the national limited partnerships. for the most part what i try to do is listen to the conference calls. these companies are very transparent. that's why i've always liked kinder morgan. that's why i like enterprise product partners. they tell you what you need to

know. tammy in iowa. tammy. >> caller: hi jim. i love your show. >> thank you. >> caller: however, i am new to the market and i don't have any investments right now. i wanted to maybe do some homework and i wanted to know how maybe i should start out some investments. >> well you know what here's what i want you to do. i want you to paper trade. i want you to buy stocks get the feel for it don't put real money out. i want you to feel what it's like to lose money, i want you to feel like what you would do if the stock went down. trade on paper. i even made my traders at my old hedge fund learn by trading on paper first. then when you get very confident you can use your real money, and i bet you'll know exactly how many to buy and how much home twoshg do. let's go to bob in missouri please. bob. >> caller: hi, jim. this is bob from kirk wood missouri. >> okay. >> caller: i would like to get your opinion on covered call strategies like say -- say you

got a stock -- or say a stock's like one or 1.2 beta following the market and you go ut and maybe threes and you get an 8% to 10% premium, which i'd be very happy with in three mos, and you collect the premium option and then the dividends. >> well, a lot of my friends like them. my friend matt is a close confidant and writer at thestreet.com, does it. i've always shied away from it and here's why. i don't like to cut up from my upside the same reason i don't like to sell puts. that can make so it my downside is much bigger than i thought. if i own a stock, i own it for capital appreciation and for income. and if i cut off my capital appreciation by selling a covered call i feel like i'm missing out on some of the best reasons why i buy a stock to begin with. all right. you have to know when to hold 'em and when to fold 'em. kenny rogers couldn't have been more right. it's key to know how to determine when to buy and when to sell. i'll help you out. much more "mad money" ahead. everyone loves earnings per

share but not every company is judged on this metric. i'll dish on the many factors that can push a stock higher. you've drafted an all-star for your portfolio, should you ever give it the boot? don't miss "my take. "plus, i'll take your tweets just ahead. stick with cramer. plus, i'll take your tweets just ahead. stick with cramer. " plus, i'll take your tweets just ahead. stick with cramer. these ally bank ira cds really do sound like a sure thing but i'm a bit skeptical of sure things. why's that? look what daddy's got... ahhhhhhhhhh!!!!! growth you can count on from the bank where no branches equals great rates. [coughing] dave, i'm sorry to interrupt... i gotta take a sick day tomorrow. dads don't take sick days, dads take nyquil. the nighttime, sniffling sneezing, coughing aching, fever, bestep with a cold medicine.

a huge part of this business can simply be boiled down to figure out where a given stock is headed. of course that isn't always easy. sometimes it's a lot less obvious than other times. as i'm always telling you most stocks trade on their earnings per share numbers and the growth of those numbers. when the earnings are headed lower, so is the stock. when the earnings are going higher, the stock rallies too. actually figuring out the trajectory of the earnings might take some serious homework, but at least you know what you should be looking for. of course i said most stocks most of the time. you need to be aware for some industries earnings are not the most important metric and if the only thing you're watching is the earnings per share you could end up getting clobbered or you could be missing some fabulous opportunities. that's why you need to keep track of the key metrics for everything you own by sector. for example, when it comes to oil companies, production growth is key, not earnings.

which is why i favor the independent oils, which keep finding and producing oil at record-breaking rates. and i shy away from xonexxonmobil, which gives you good earnings but low production growth. i don't like it. it's the average sells price of products, also known as the asp. in these sectors, those metrics are more important than anything to beating the earnings estimates. a case study, debit energy where it preetedly beat eps, just trumped them but production growth disappointed quarter after quarter. debit wasn't producing enough new oil so even though it classically beat wall street estimate, the stock went down because of the production shortfalls. you see the earnings per share number that printed didn't real hi matter. in fact i often wonder if they would have reported lower earnings and higher production

growth, i think stock would have rallied. i know that because my charitable trust owned chevron at the same time and it didn't hit the earnings number but it stock advanced anyway because it posted superior production growth versus its peers. it's no wonder that devin had been one of the worst performing equities in the entire oil patch until they reconfigured their asset base and have new assets. it had been undermanaged for years. another example, i totally missed the bottom in micron mu. the semiconductor company that makes memory chips. that was back at the end of 2012. why? i wasn't paying close enough attention to the key metric with this company. it had been a dog for more than a decade so when it reported another terrible earnings number, i didn't think any of it, i said it's going to go down again. then the stock jumped hiker. what did i miss? d-rams dynamic random access memory chips, the most basic chip in the semiconductor food chain and micron's food and butter, had a nice bump-up in

their average selling prices during the quarter. that was extraordinary, something almost no one expected, and it happened because the d-ram business had been so horrible for so long many in the industry had thrown their hands up and given up. supply had become constrained, a rarity in this commodity semiconductor business. micron subsequently went on to buy a failing japanese d-ram xet competitor, taking out more capacity, and tripled from its bottom all because supply had been taken out and average selling prices increased. there is one more situation where you need to be aware of a metric that might not seem to be important but is actually all that matters. when a company is based in the united states but all we care about is how it's doing in an emerging market particularly china. while i've made some mistakes in this company, one of my best buys for my charitable trust ever was made picking up yum! brands, the parent of kfc, taco bell, and pizza hut, off a sudden decline in chinese sales because of a tainted kfc chicken scandal. first, if you didn't know any

better you were flabber gasted the stock could have gone down as much as it could on china. yum! is a worldwide outlet locations everywhere. but the growth in the american company isn't in the united states it's in china. so when the chinese kfc division had a shortfall, even though the rest of the company was doing well, the stock got clocked anyway. soon after the company demonstrated it had a plan to turn china around one that involved heavy spending to promote kfc. yum! let it be known its earnings would be slashed as it boosted its chinese advertising to recover that share. no matter even though the earnings were about to get hurt you had to buy the stock on that shortfall. not long after, yum!'s chinese business began to turn again and the stock headed right back up to its 52-week high because kfc sales growth in china is more important to yum!'s stock than the actual reported earnings of the entire chain. once again, though china had another scare and there was more tainted food coming from kfc and

the stock went all the way back down. you see, all that mattered was the problems with kfc in china. the rest of the business was holding in. it didn't matter. for better or worse, china remains in control of the direction of yum! in short, as much as we like to keep things simple and just focus on the earnings per share, stips the truly important metric can elude us if we don't keep our eyes on the ball. all that said though let's not kid ourselves. with most stocks the earnings per share number is the key metric. ever since the market bottomed in 2009 you know what there have been endless criticisms about how the averages have rallied on bottom line numbers only earnings per share, without any real revenue growth sales. that analysis turned to be wrong and it's still absurd. anybody who's waited for revenue growth to kick in missed the greatest move of our lifetime. these so-called experts think they're being careful when they tell you to wait for revenues

but they're actually being reckless and have kept you out some of to best stocks out there. here's the bottom line. the earnings are not always all important. in some sector particularly tech and new oil, not to mention u.s. companies that depend on overseas growth there are key metrics that matter more than earnings. and those are the metrics you should watch. but for the bulk of the market nothing is more important than good old earnings per share. there's much more "mad money" ahead. sometimes even the best players in the game go through a rough patch i'll tell you how to manage your core stock like it's struggling to put numbers on the board. plus my twitter account @jimcramer is on fire. all this typing is going to give me carpal tunnel so i'll respond to your tweets on camera, of course. stick with cramer.

if tles one lesson i've learned from reviewing all the trades my charitable trust has made over the last five years, actually there are 14 of them in "get rich carefully," my recent book, but the one i want to leave you with is this -- when you have a core holding in your portfolio, that's a high quality

stock with terrific prospects that you want to own for the long haul don't sell it at the first little gain or the first sign of turbulence. if you really have conviction in a stock, you need to let that stock ride. let me put this in sports terms so most people understand it. when a football team wants to keep a player no matter what they slap the franchise tag on him. they name him a franchise player. that means he can't be traded to another team. i can't tell you how many times i wish i had that designation from when we owned a great stock for my charitable trust. instead, we'll deem it a core holding and say we want to own it through thick and thin. but so often we don't follow through with that and it's almost always a big mistake. the temptation to take a gain is almost so palpable it can take every fiber of your being to fight against it. it's such a difficult task to keep a fabulous stock riding in your portfolio because you never want a gain to turn into a loss.

but when i first penned that gain-to-loss rule i was talking about trading wins not investing gains. if you own a stock and think it can go up the next few year not months, not day, then by all means do it your best to make it a franchise player or stick a nontrade label on it. you won't regret it as long as the fundamentals stay positive. of course all bets are off with if the business starts to deteriorate. if that's the case you must immediately sell it or it's your fault. you'll be to blame if you give up those gains. but that's really the only case where you should rid yourself of a core holding or i suspect that you'll leave an enormous amount of money on the table as it climbs higher without you. once a stock is dubbed a franchise player stop giving it away. hold out for better prices. if it comes down below your cost basis, buy more. my actionalerts.com record is

crystal clear on this issue. when we own a stock we think is materially undervalued versus the enterprise i have to do everything i cannot to take the gain and eliminate. sure i am always willing to part with some of my position in the stock. that's called trading around a core position. but it's vital that you keep enough left in your portfolio so that it will still be meaningful if the stock continues to advance. what makes me so sure of this rule? because we rate stocks from 1 to 4 every week for the charitable trust and the 1s, the top flight are by and large meant to be core positions. that's hallowed ground where we want as many shares as we can get. but as i peruse the bulletins from the last five years it's unnerving to see how many of these 1s we sold because of short-term market turbulence only for the stocks to continue to roar ahead without us after all that darn homework. a core position is what it says it is, something that's integral to your portfolio, to your core. it should not be so easily

dislodged. i know that if we've been able to hold onto more core positions for trust we would have been able to donate a heck of a lot more money to charity than the more than $2 million we've given since i started this bizarre but i think thoughtful and educational project. here's the bottom line -- core hold rgs called that for a reason. resist the urge to sell your franchise players no matter how tempting it might be. the only time it makes sense to blow out of a core holding is if the fundamentals take a nosedive, but aside from that you need to try to let these winners ride. only trimming your position somewhat to keep it from getting too oversized.

all right. we have to get through to the tweets. a teat from @robertwells. name three of your favorite foods. first is buffalo chicken wings. he's from buffalo and they're fantastic. second is my homegrown tomatoes which i put into sauce and my sauce is better than anyone's. my third, the short rib taco's at bar san miguel. a tweet from @robertpopovic. who are the best options tray dey traders out there? we have terrific ones on option action. to me, the great day trader in

options is someone who uses an option to be able to create a stock that's a high dollar amount and then trades around that option by selling common against it and then bringing the common back in constantly using that call as an annuities trade. if you don't know how to do that, i have 100 pages on it in the book "getting back to even." it's called stock replacement. i pioneered it and you ought to look at it. next up @wellsmontague says boo-yah. just wanted to throw out that you rock. always make me learn and laugh. thank you. these are the kinds of tweets i need, not because i'm insecure but i do get way down by the number of people @jimcramer on twitter who blame me for making silly mistakes when they actually should be thinking about what they do because in the end i don't mean to disparage what i'm doing here but it is just a tv show. i'm doing my darned best.

@17dano, do you agree at least 15 to 20 stocks #getaplan. i think it depends on time and temperament. stephanie link and i try not to have more than 30 so she can study 15 and i can study 15. i have a lot. i am a quick study. i know a lot of company, yet i still find it's a burden to know 15 so well that i know every nook and cranny about it. let's take a tweet from @because 51 who says best way to start an investment account for a toddler without leaving them the year-end taxes. #jetaplan. uniform get to minors. everyone needs to do it. i'm embarrassed at how well we invested for uniform gift to minors because i was just very methodical about it and they now belong to the kids which makes it a little bit different story. always put the money away. i always disclose what i do with my personal money because i use fidelity blue chip and fidelity

contra fund just happens to be the ones we knew when my kids were born. our next tweet. this tweeter asks me are ends a valuable investment tool and what are your best of breed? #getaplan. my best of breed get a plan, i've got best of breed in the book "getting back to even." i've got a bunch of ideas but they constantly have to be updated. i'm uncomfortable saying such and such is best of breed because things change so fast. i say homework. stick with cramer.

thanks for letting me teach tonight. i like to say there's always a bull market somewhere and i promise to always try to find it just for you. i'm jim cramer. see you next time. >> mr. cramer absolutely love the show. >> we really appreciate you out there, man. >> boo-yah. my kids are in elementary school learning so much from you. >> boo-yah, mr. cramer. >> i know you hear this all the time, jim, but thank you, thank you, thank you so much. >> this has been my best year by far and away in the market. >> i just want to thank you for, you know looking out for the regular guys out there. >> great to hear your voice and know that you're there for us. >> from our family to yours. happy holidays, cramerica.

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