down 10%. >> dan. >> starbucks sell rallies. >> our time has expired. i'm melissa lee. thanks so much for watching. for more "options action" check out the website. otherwise have a wonderful labor day weekend. do not go anywhere. "mad money" with jim cramer starts at the top of the hour. 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 save you money. my job isn't just to entertain but to teach you. call me at 1-800-743-cnbc. or tweet me @jimcramer. nobody -- i repeat noek nobody likes to be disciplined.

they don't like to be admonished or follow the rules. i don't blame them. i was a rambunctious kid myself when i started to manage my own money. when i learned the rules i spurned them because they cut off my upside. even if they cushioned the inevitable downside. in other words the rules kept me from making a huge amount of money when things were going gang busters in order to keep me losing big money when things went badly. >> the house of pain. >> the rules i'm discussing tonight keep you in the game even then we you -- even when things are tough and you make the mistakes. the rules protect you against your own bad judgment, about what's going offing on in the companies you own. but if you're going to make money buying stocks because you can't get much money returned these days that's pretty much the case you have to work harder with your money to do so.

that requires discipline. discipline, because once you start buying and selling stocks, you can make more mistakes than if you do nothing with your money. but if you do nothing with your moe money you'll have a whole lot of nothing to show for it. that's why we're doing a show tonight on how to trade and invest responsibly to make your money work for you. how to tend it, how to make it grow. what kind of gardeners of money tonight. how to keep it growing from what we call active money management. it's not a sin and a lot of you practice it, and i want you to do it right. i want to delve into a little psychology of stock ownership. one question i'm asked repeatedly when people stop me on the street, guy back and forth from the street, to squawk on the street and wall street, or they ask me on twitter, don't you worry about your stocks? now, it is true that i don't own any individual stocks.

i invest just for charity with all profits and dividends given away to charitable causes. more than $2 million since the time i set up the charitable trust. but believe me, i still worry because i want to give as much money to charity as i can. and i explain what i'm going to do as part of the bulletins for action alert.com. you bet i'm concerned. it can be down right embarrassing when i get it wrong. yep, i'm always worried about the trust stocks. especially when they go down. i'm doubly worried when they go down when the market as a whole going up. that's a sign to me that something is wrong. that something -- someone knows something i don't know. then i better find out or i won't be able to take advantage of the weakness to buy more. i have to sell instead. that's why i'm bugging you about reading the news releases, particularly that part right before the q&a and going to the websites for more information. you can't be informed if you don't try to inform yourself.

i know that those who don't know what they own and can't articulate what they own and don't know what a company makes or sells don't know why it would be going down either. so they don't know whether to buy or sell into a big sell-off. however, we are talking about psychology here. the psychology of the mind when all that homework doesn't pan out. believe me it is frustrating. when we select a stock on the show to highlight we do a massive amount of work on it every amount of time. the same amount for my hedge fund if not more so. there are plenty of times that's something you can't detect. chicanery in the numbers. there's bu there's puffing by the management and you don't know the truth. i talk about the press releases that make things sound much better than they are. we are pleased to report that sales increased by 12% and it sure sounds good except the

consensus was looking for more than 12% which means you have a hits you short fall. >> boo! >> or worse than that kind of puffery is when you own a stock and someone out there knows the truth and you don't. maybe someone found out about the truth playing golf with an executive. you know that stuff goes on. maybe some hedge funds paid under the table to get the truth as we have seen time and again for years and years. there are many of the titans who ended up in jail for doing it. in order, the insiders had the call. you didn't. there are also tons of times where you own too much stock in the market versus what the market is going to do. we call this being too long. you are too long as the professionals say and you can't buy any more stock on the way down because you're so out of capital so you're going to lose money or at least on paper. or worse, you're borrowing money to finance your portfolio. which i think is just a terrible idea. stocks aren't houses. you can't fall back and live in

them if you have a mortgage on them. they just get taken away by the margin clerks. >> sell sell sell sell. >> so what do you do? how do you manage a portfolio under conditions where things go wrong with the stocks you own all the time, and things go wrong in the market all the time wholly apart of what's going on at the individual companies in which you own shares. there are no magic bullets but i believe that when in doubt, this one principle is key. discipline trumps conviction. memorize that term. discipline trumps conviction. i stared at a yellow post it with those words for many years when i was managing money professionally. to remind myself the things go wrong and you need to have a scheme to help you deal with those situations when things go wrong as they inevitably do. yet, i put a discipline trumps conviction sign right on my personal computer to remind me of what to do in the stock market when things go awry.

one of my best forms of protection is to recognize when you're not tough on your decision making and you like your stocks equally or you at least pretend you can't be flexible. you can't change up when things go wrong. that's bad, people. that's why i have come up with a system of ranking my stocks then times are good as hedge funds -- these are hedges against yourself for when things get tough. you know, when it is really calm out there. you can really do some good decision making. remember, not all stocks are created equal. when things go kerr flewy, you have to circle the wagon like out west in the 1800s. buy them down to get a better basis or average price for your holdings. why does this matter so much? because we must expect corrections. and we must expect declines as a matter of course. more on that later in the show. we must anticipate the days where we wake up and we hear the good people on squawk street saying the futures are down,

down a great deal and it's down half a percent. come on, you've heard that so many times we have learned so much about what triggers corrections. but the most important thing is to have game plan where you know where you have done all the home work and you have the tremendous conviction up, discipline dictates you must assume there's something you don't know going on with your individual stocks or there's something happening in the world that is beyond the control of your acumen. and you're just being victimized by the events of the moment. my ranking system will indeed get you through the chaotic times. allow you to stay cool and methodical about your money when all others around you are fretting and can't take it anymore and they have to get out of dodge at the exact worst time. here's the bottom line. in order to be able to deal with the decline in your stocks or on the stock market as a whole, you have to accept that something is wrong at the companies you own shares in that you might not

know about or maybe there's something happening in the stock market you didn't foresee. therefore, you must be ready with a game plan. that can bail you out short term and keep you in the market longer term so that your money works for you and not against you in a time when you need it most. frank in new york, frank? >> caller: jim, i understand why a company goes public to raise capital for various different reasons, but why would a company want to go private? >> all right, a great question. i want a company to go private because they think it's worth a lot more than the stock market is currently paying for it. when you see a company go private that is typically because the owners of the company -- the managers recognize there's so much value in t-- and the stockholders and buyers don't. how about ann in california? >> caller: hi, i haven't seen any prospectus on stock puts lately. i'm curious there's any way to tell when a company is going to split their stock?

>> no, there isn't. remember when you split a stock you only get two pieces, so i a two for one split of the same company. it doesn't create any wealth at all. it happens to be exciting and when stocks do split, some of the smaller investors then get a chance to buy. all right? that they didn't have otherwise. so i am pro split but it does not create any wealth and they tend not to signal when it will happen. discipline is necessary if you want to make big money in the stock market. when there's a decline, you have to accept the facts and always have a game plan ready. i'll help you out. there are trades and there are investments. i'll explain why understanding the difference will save you from a world of hurt. and then headlines may be black and white but investing on the every word could have you drowning in a sea of read. plus a correction is always lurking around the corner. i'll help you protect yourself when it strikes, so stick with cramer. >> announcer: don't miss a second of "mad money."

follow @jimcramer on twitter. have a question? tweet cramer, #madtweets. send jim an e-mail to madmoney@cnbc.com or give us a call at 1-800-743-cnbc. miss something? head to madmoney.cnbc.com.

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tonight we are going over the rules. the rules make it so losses can be palatable. rules that keep you in the game

when others are freaking out. these became second nature to me, but that was years ago now and when i think about it it's usually in response to a tweet @jimcramer that asks a question, and the rules answer kind of ax owe mattcally. that's why i have to dust them off here, make sure that people make sure i'm not ducking the questions. i'm looking for a better format to flesh them out than 140 characters where i can't be thoughtful. i want to be thoughtful on twitter but it is really hard. this is the format. so here's the typical question. someone will mention the stock. it's had a hideous decline. what do i do now? i often then turn the table on the person, asking why did you buy it in first place? the followers tend to regard that answer as either arrogant or flip. but what i'm really trying to do is figure out if they bought it as an investment, which means it might be fine for them and they

should buy more or as a trade and should cut their losses. why does this matter? never turn a trade into an investment. if there's one concept you must take away from the show you must never ever turn a trade into something that it wasn't meant to be. a long term investment. so first let's talk about the process of buying a stock. the actual check down you must do before you pull the trigger. when i decide i'm going to buy an oil driller, okay, i have to declare right up front to myself whether i am buying it for a trade or for an investment at. what's the difference? a trade means that i'm buying it because of a specific catalyst, a reason that will drive it higher that catalyst might be a data point, a recommendation, a belief that things are better than expected when the earnings come out or some news about a restructuring, a breakup into several pieces or some other material event that can occur. in other words, there's a moment to pull the trigger. a moment to buy buy buy. perhaps because you think that

oil is about to spike, because of a shutdown of the spigot in russia or some problems in the middle east. then there's a moment to sell sell sell when the event occurs. and you're done. but you must declare first before you buy. here's why. the vast majority of you will buy a stock for reasons and then either the reason occurs and nothing happens to the stock, so you then decide, darn, i'll just call it an investment. i won't worry, buy more if it goes down or perhaps the reason never occurs that you bought it for and you decide to hold on to it because, well, what's the worst thing that can happen? the answer of course is plenty. and almost all of it bad. the answer is that you would never have bought it in first place if you didn't think the reason was going to occur. so now there's no reason for you to own it in the first place. i have seen a myriad of investors turn trades into investments, developing a rationale or alibi to fool themselves they're doing the right thing. that's because they don't make the distinction between a trade and investment. if the reason i bought the oil

company doesn't materialize, then i really can't say i'll hold on the it because it has a swell dividend. the only thing that would have saved that dividend from being cut is higher oil prices. without them the idea for the trade has gone to the diff de z dendz -- dividend. now when i want to invest in a company, not trade, invest in a company, i buy a small amount of it to start. and then hope the market will knock down the stock so i can buy more at a a better price. that's right. when i invest i want the correction which is always the way you want to be thinking if you're trying to start a new investing position. ideally the stock is down already from its highs because you don't want to invest in at stock at the 52-week high, but there is onothing like a nationwide marketwide sale to get you better on the buys. trading is the opposite. i put the maximum on at the beginning because i believe the data point or the event is about to occur. i never buy anything for a trade

without the defined catalyst. that's the word we use. catalyst. i never buy anything for a trade hoping it will go higher. i buy down, lower prices when investing. i cut my losses immediately when i'm trading if the reason i'm trading the stock doesn't pan out. that's why i like to say that my first loss can be my best loss. if you buy a stock for trade not an investment and it starts going against you in a meaningful way, perhaps a decline of 50 cleptss is meaning when trading you have a real problem on your hands. when it comes to trading i'm an extremely disciplined person to the penny. i like to cut my losses quickly and get over them quickly. that's why i say the first loss is the best loss. all other losses tend to be from lower levels and a bigger cost to me if i don't operate on this principle. anyone watching, can you feel the trade going awry? but because of ego, pig headedness, they don't want to heed the thunder and they stay

in. only to panic out at lower levels when the catalyst doesn't occur and the whole reason to own the darn stock evaporated. so please don't fool yourself. cut your losses quickly when you put a trade on it and it starts to go awry. sure, there's an occasion or two when it's about to pan out and the market doesn't know it. for the most part it does and you're probably going to be wrong. just a fact of life. it's a compendium of the studies i have made. the bottom line, never turn a trade into the investment. better to take the loss, because believe me the percentages say you'll lose some money. start fearing the losses because it's the lat their can wipe out all those good juicy gains you have and then some. hey, a stock rising can be quite seductive. but i'll help you know when it's ever right to run after a hot stock. then corrections are as certain

as death and taxes. don't miss my take on how to prepare yourself for the inevitable. plus, it's easy to get attached to your holdings but holding on for too long can burn you in the end. i'll let you know when to cut the cord. stick with cramer! cramer, you are super. you are awesome. >> i'm a first time investor. >> you inspeired me to get in te game. >> you're the best i'm glad you're on tv. >> you have transformed me. thank you, cramer.

we are going over the rules that have gotten me this point in my career where i can play for charity and instead of trading at my own hedge fund which i retired from. but the lessons of the hedge fund are very much with me. i'm going over them tonight in this special show to help you with your portfolio. let me give you one that's always the height of silliness. if it weren't for that darn buy of -- and then you fill it in. why don't we use high max. i would have been up big or i would be making a huge amount of money in the market if only i hadn't let blank let's use fireeye run against me when there was all that insider selling. darn it all. believe me, it takes only one or two losers to wreck a portfolio.

i try to devote far more of my time analyzing my loser stocks than my winners. not because of some sort of masochistic streak. i recognize that stocks telegraph declines ahead of time. loss control is the paramount concern for those in the market because the winner, the good stocks, i have to tell you something, they take care of themselves. take the loss before it gets hideous. don't buy into the notion that you can't sell until it comes back. and then you promised not to do it again. how many times have i heard that one? by the way that's how losers think. you need to think like a winner not a loser. so you want one of the people whom i answer with focus, will you, on twitter. because you are obviously unfocused and undone by the market. of course the flip side is true too. you don't have a profit. listen to me, you don't have a profit until you sell the stock and nail it down.

sell sell sell. it's not a profit. it's something ephemeral. people confuse real gains you can take to the bank or of course to get yourself a cashmere sweater with phony paper gains that are meaningless because they can be taken away in heart beat by a tough market. most people are reluctant to book a profit because they don't want to pay taxes. i tell people if i could just rewind the tape to january of 2000 or july of 2007 when people were sitting on literally trillions of dollars in unrealized gains because they didn't want to pay the tax man, we'd be able to drill this point home that people would respect it. gains not taken can be losses that will be taken. gains taken never become losses. it's that simple. i stress this point because we have all been brainwashed not to sell. somehow we think it's sinful. it's trading low. common sensical to sell. logical to sell and it may be the only way to really get rich in a choppy business.

but it's just counter to human nature. when it comes to stocks and human nature i think you've got to learn to counter it. it's so often hard to resist though. i get it. for example, i can't tell how many times i have had my heart in my throat pounding pounding because i didn't own enough stock in a rising market. i didn't have enough exposure. i can't tell you how often i felt that i had to play. i had to be big in stocks because the market was going higher and going higher without me. do you know that almost every time i had that feeling that instinct almost every time i had that i can't miss this action drama playing around in my head. do you know what happened? that's right, i lost money. disappointment is the most important rule. we're doing winning investing here that's what we're teaching and sometimes that means admitting you missed the opportunity and it's too late. i always feel like i have missed something right near the top of the market. the top of the move.

when i was a hedge fund manager i actually -- are you sitting down for this one, i turned that sentiment into the profit center by actually betting against myself and the market. when i thought i was missing the upside. that heart stuck in the throat feeling correlated with the tops of moves not the bottom ones. i actually made money saying, oh, there's that pain again. sell. i always remember that the best time to buy is when it feels more awful not when it would relieve the incessant pain of fearing you'll miss the next big rally. the rally has already occurred. you must protect yourself against overtrading because there aren't that many great ideas to act on up. the real great guys don't have that many ideas. you have to think when you're prone to this. for instance, when i go on twitter, i'm always amazed at how people want me to opine on a stock that reported and do it in one headline alone. i find that business wires that report these numbers are almost always wrong in their quick takeaways.

simply because business is a lot more harder and complicated than the press release. which often obfuscates what is happening as anyone who goes through a bank quarter knows. the headlines can't capture the reality because the reality is a jumble. headlines that present stories about such and such a number being better than expected are the type of headlines that punish the quick draw mcgraw traders. the reality is there's something else, some other metric that's more important or that the quarters manufactured with one time gains. i think you have to read the whole story and listen to the conference call. which part is most important, the portion right before the q&a when the company lays out its guidance for the future. that moment and not what the headline writers is responding to. what you will see make the stock move. that's where you get the accurate move from. everyone else is guesswork. we can't do much with just guess work. except get in trouble. so many of you want to get in trouble because me yodcally you want to be right.

the electronic trading you can move too fast and many do. it's like your car goes too fast for you. if this is a great opportunity you won't take the time to inform yourself. before you do so before you know what to look for and what matters. you might want to have a grid of what all of the analysts have been saying about what is about to occur. you won't be fooled by the first move which can be taken by people less informed than you are. and most important understand that the headline for many companies earnings doesn't tell you how they're doing on the key metrics. with oil what are you look for? production growth, not earnings per share. with hotels what are you look for? revenue per room. many time in my career i have seen up headline numbers only to learn that the company is guiding down expectations later on in the conference call or the key metric wasn't beaten even though the headline said it was.

the bottom line, don't let gains turn into losses and never trade because you fear the market going up without you or a stock rallying off the headline that maybe just maybe might be wrong as they so often are. ed in california, ed? >> reporter: booyah, jim. i'd like your opinion on a strategy that i have been using and deep in the money calls going out anywhere from 6 to 12 months on stocks that you rec -- recommend. this is to avoid any volatility in the market swings. what do you think? >> this is what i want. ed is doing what i want. i talked about this in "getting back to even." at. he is doing what's called stock replacement. he is taking the risk by declining at a -- by stopping the decline at a certain point and getting the upside. big percentage gains. you are the man, ed. you know what i have to say about that? you have horse sense. jacob in california, please. >> caller: hey, jim, booyah. >> booyah. >> caller: hey, jim, i love the show. >> thank you. >> caller: i love the advice,

it's phenomenal. as a -- as an initial, you know, first time investor, what is your recommendation on how many positions one should have without going, you know, over their head? >> stephanie lincoln and i, coprofessionals for years and years, managers of the charitable trust we can only handle 30. more than 30 we get hurt. more than a dozen in an individual who may not be let's say as sophisticated as we are will end up making mistakes. try to limit it. when i play diversification it's five with "mad money." larry in massachusetts. >> caller: jim, it was often said that jack kennedy's greatest strength was he surrounded himself with extraordinarily bright people. salinger, rusk, sorensen. i wouldn't be in the game without your teaching. due to the many books, and action alerts on the show. i have to tell you how much the folks you gather at the

street.com, bob lange and regina and -- >> holy cow, you're a close follower of the world i find myself living in. what's going on? >> caller: when does the core holding look long in the tooth or something to be ditched? what characteristics made it a core holding that the bad news threshold is something higher? >> first of all, thank you for the nice things about action alerts, regina, everybody. when everybody knows what you know, there isn't a single analyst that doesn't love your stock, when you constantly hear that company is great and that ceo is great it's long in the tooth. got fomo? yes. don't trade because you fear the market going up without you or you fear a stock rally off of

something that's wrong. sure, corrections are coming. i will show you how to prepare for the painful days. >> the house of pain. >> then we all want our stocks to succeed but getting too attached can be a portfolio killer. i'll explain why emotions and money don't mix. they're oil and water. plus, i'm taking on your tweets. stick with cramer. (vo) rush hour around here starts at 6:30 a.m. - on the nose. but for me, it starts with the opening bell. and the rush i get, lasts way more than an hour. (announcer) at scottrade, we share your passion for trading. that's why we've built powerful technology to alert you to your next opportunity. because at scottrade, our passion is to power yours.

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tonight we are going over the rules and disciplines that i have learned and holy cow, four decades of investing. rules that i want you to know. rules that i want you to just kind of learn by heart like i have. and, you know, not just like the usual twitter, 140 character stuff. this is real stuff here. a lot of people for instance don't think a correction is ever going to occur. they get lulled during good times. a lot of people get involved when that's been months and months of good times and when bad times hit, they are eager to pin blame or to be shocked in disbelief. instead of just expecting corrections and not being fearful of them. yep, when a correction occurs many decided they now want

nothing to do with the market. that the corrections signifies that something is wrong with the market as a whole as if these aren't stocks of companies and therefore the market can't be touched.constantly. corrections happen all the time. they're to be anticipated. learned this from the great peter when. he said anticipate these. but you can't write off the market when they happen. i always like to tell the stories -- i like to put things in sports analogy. i tell the story of joe dimaggio. his 56-game hitting streak, still the most amazing baseball feat of all time, when he failed to hit in games 57, should you have traded dimaggio, should you have cut him? because, well, whatever. was he finished? is that smart thinking? same with the market. corrections are to be expected and accepted as a matter of course. particularly after 56 great days

of the market. you're going to get something like that. hey, when they happen, they're not a reason to panic. they can be great opportunities. even as people insist that they're wrecked, that the market is done because the charts are bad. taking out the 200 day moving a average, a hinder berg cross or whatever that is, some claptrap and we put on our -- you read bears who come out of hibernation. they like to be right that day. now, given that so many don't expect corrections here's something that seems common sensical, but is avoided by many people i have met and especially on twitter. lots of people wrongly believe in being fully invested at all times. lots of managers think they're supposed to be fully invested every day. this is nonsense. lots of times the market just stinks so you want to have some cash on hand. i'm not saying going in and out of the market. have some cash. pretty good.

a lot of times there's nothing to do but have some cash. in in fact, one of the big reasons i outperformed all the others is there were substantial blocks of time where i had a lot of cash. hey, i was largely in cash including the 1987 crash. but from a much lower level than this one, so it was a 22.6% hit to be presize. -- precise. passion is a great investment at times even when it earns little to nothing. it's a perfect hedge as opposed to shotting the market because the market goes higher as in the 2008. you can face devastating losses as an overvalued market and climb and climb and climb. i think cash may be the single most underrated of investments because nothing feels as good as cash when the market comes down. i know that from my charitable

trust. always great to have big cash position when the market gets hammered. it's why you follow my method of how to trade around the stock, i sell a little, trim here and there. yes, to get ready and reposition myself for the next correction. close viewers of the show know i sell strength and i buy weakness. when the time is right i almost try -- i almost always had that cash to put to work. because i believe so strongly in cash as an option. if you don't raise that cash, here's what could happen. you might end up selling your winners to subsidize your losers. that is another common mistake people make. so many bad portfolio managers and so many befuddled individual investors sell their best stocks to hold on the worst stocks. you can tell. you'll be reviewing a portfolio as i used to all the time before my rules prohibited giving individual investment advice and the portfolio we filled with junk, you will see, hey, what happened to -- what happened to all your blue chips that can best weather the tough times,

aal low you to come out smiling on the other side and they will say, i had to sell those. i had to buy more of the other stocks because they went down. portfolios riddled with stocks that stopped working a long time. i have counselled enough professional counselors to know that the best things that can be sold is the best stocks. there's a ready buyer to put up capital and the bad stocks seem to go straight down the line and fold under pressure. when some of the more admired professionals have good and awful stocks they don't sell the awful ones because they're down so much. a typical alibi for not taking action. they're probably going lower. do not subsidize losing stocks with winners. if you own companies with deteriorating fundamentals as to those with bad stocks, reapply the proceeds, go to the good ones. move on. don't feel bad for yourself. lots of times the circumstances are simply changed for the stock

market. the company might do a lot of business in russia which could have been great before sochi and then the fight over ukraine, it may have changed. you may have to sell it for a company that's largely domestic or a slowdown in the economy has caused shoppers to stay away from expensive branded products and that happened in the food stocks. or perhaps pfizer has been making fortunes with big drugs until they went off patent and the generic competition crushed their margins. they were so often kept because they had gone down and investors bought them and subsidized the losers. let me give you the bottom line. get ready for the correction, it's coming. have some cash on hand and when it happens don't sell the good ones to subsidize the bad. you'll have a terrible portfolio that won't be able to bounce back when times turn better. "mad money" is back after the break. we've got trouble in tummy town.

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and help you navigate the tougher times to come up when you least expect it. if you aren't prepared mentally you won't be tough enough to handle the moments and you'll flee instead of thinking of what's right to do or you'll be paralyzed with fear and self-doubt instead of mindful and opportunistic. emotions have to be checked at the store in this business. i often hear people say i hope that a stock goes up. and then they ask, doesn't it have to go up? doesn't a team have to win some time? this is not a sporting event. we are buying stocks that we believe should go higher because of the fundamentals and we're avoiding stocks where the underlying business is bad and getting worse. where should hope fit in? nowhere. people treat this business at times like a religion. like an ideology. they believe if they pray things will work out, with their chanting maybe they will. or they fall in love with the miserable pieces of paper with the idea that love will be requited. be realistic. hope, pray, love.

rooting. these are all enemies of good stock picking. i can still recall the ringing in my ears when i'd get off the trading desk with karen cramer and she would say what's the deal with the memorex which got crushed back in the '90s. i'm hoping it gets a big contract, she would scream, hope, we need hope to get this to work? sell it and get me something in her favor that gives me more than hope. many times she didn't ask. she sold it after i used the word hope to see if i would buy it back. i didn't buy it back. i was hoping something would happen and once it was sold i felt, well, relief. now, sometimes the stocks of good companies do nothing and you get frustrate and you want to sell them. good stocks can do nothing for ages. i remember when berkshire hathaway did nothing for ages. this waiting can be unnerving.

you have partners in your fund calling you regularly asking what you're doing with the money. they don't want to hear you own stocks that don't move up at once. but individuals have no such pain. individuals can sit on stocks as long as they want. when i counsel patients many get antsy. they want to -- they want a tesla, they want a netflix, they want it now. give me mobile eye. i say some of the best stocks require some incubation. do you know how patient with intel, i watched it do nothing in the late 1980s but i believed. i held on to it because at that time i had only a few partners and none of them needed to know every minute how much they were worth. a common strain of those who would call regularly to ask how i was doing. later in the career when partners hounded my daily, i hated that, i would never hold on to intel that long. lots of times it takes time to incubate. when you buy a stock and you recognize it can take a long

time to turn, market is such in your muind so you give up. here is something important to remember. stocks that are stuck in the mud tend to romp like thoroughbreds, they're mudders. if you have the patience, if you don't, let someone else invest your money. finally i like to say no would have should haves. you make a call, you buy some celgene. then it has a patent issue that causes it to get hammered or sell dupont the day before it's sent soaring the next thing you're ruminating and you're filled with self-doubt. that's nonsense. get it together. the market requires you to have the right head on at all times. you have to be ready to see the ball right for the next pitch, okay? there's no time to get down on yourself. do that for fantasy if you cut like brady or something. if you want to be introspective, bracket some time at the end of each month or quarter assess

year stock picking abilities but to second guess yourself is to put you in a loser mentality. when i saw the younger people that was costly to me i made them wear the symbol of the stock that they screwed up on as a post it on their forehead for the day. i even sent them outside. but i insist any time -- if only i is time that keeps you from getting the next big stock. karen cramer all believed that women are much better traders than men. hey, i'm putting it out. there she taught me to steel myself without the mental baggage of a screwup. here's the bottom line. this business is not about hope. it is about the fundamentals. don't root for your stocks to go higher. pick shares in good companies and they will unless circumstances change dramatically. that cause you to sell. they'll go higher. but be patient on the good ones and try to keep the self-doubt to a minimum. clear your head, get out there

immediately and find out the next big winning idea. there's no room for should have would have could have. stick with cramer. d sure... but don't get just any one. get one inspired by dentists. with a round brush head. go pro with oral-b. oral-b's rounded brush head cups your teeth to break up plaque, and rotates to sweep it away. and oral-b delivers a clinically proven superior clean vs. sonicare diamond clean. my mouth feels super clean. oral-b. know you're getting a superior clean. i'm never going back manual brush.

favorite part of the special we go for what you want. that's right. we have some tweets you've been sending me. our first tweet comes from mark richard underscore take cash and buy selectively? your take, really easy call.

a huge percentage of the gains that people have in the stock market over the years come exactly from dividend reinvestment. this is a no-brainer. there are few no-brainers and very few lunches in this business. compounding is the secret behind great wealth. reinvest. here we have one who wants to know who first came one the night that you first say bristol-myers. that was an old broker when karen cramer and i trader -- traded together and we had a trader that said bristol meyers and i thought that was the way it was pronounced. next one from craig, who asks which is smarter, add to a holding that's been recently hurt or initiate a new position? #mad tweets. if you don't want to buy more of that stock lower then you should sell it. if you liked it higher, you should love it, lower.

the answer is buy more of the lower one or get rid of it. up next @no to l whatever asks at what percent for profits should we sell shares? this is really important. that's no firm -- there's no firm rule but when a stock goes up about 50% i like to sell some of it. and then a little bit more and i sell more. but the ultimate goal for all great investing you play with the house's money. that's the way to do it. always try to fight to get to the point where you're playing for the house's money. and yes, stay with cramer.

♪ i like to say there's always a bull market somewhere. i promise to try to find i just for you right here on "mad money." i'm jim cramer. and i will see you next time.

>> narrator: in this episode of "american greed"... in the big-money world of fine and rare wine, there's one name that's spoken with awe -- rudy kurniawan. >> he had the deepest cellar of the most collectible wines in the world. he was able to produce them, and that made him a star. >> narrator: rich collectors want to fill their cellars with trophy wines, and kurniawan is their source. >> so, it kind of became a feeding frenzy for these mythical wines that really don't exist very often in the world. >> narrator: selling wine to billionaires makes kurniawan a fortune. >> rudy kurniawan loved the high life. he spent his money on every kind of luxury you can imagine. he was building a mansion in beverly hills. he bought cars, like a lamborghini. >> narra