>> semis, if you think they've held in here, amd, i like it to the upside >> it looks like our time has expired. i'm melissa lee. thanks so much for watching. ckr more options action, che out ourweekend meantime, "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 trying to save you money. my job is not just to entertain you but educate and teach. call me at 11-00-743 cnbc. or tweet me @jim cramer. i like the attention the second and more important reason is i want to help you

build and preserve your wealth we live in a world where it's increasingly difficult to become rich if you weren't born that way. love it or hate it, i believe the stock market is the best ladder we have in this country for social mobility. there are millions upon millions of people in this country, but there simply aren't that many jobs that pay you a salary fat enough to actually make you rich even if you're a total cheaps skate and save nearly every single penny you earn, the truth is you want to become really wealthy in this country, unless you're born with a silver spoon in your mouth, planning your financial strategy for on entire lifetime if you don't have a super high paying job, as long as you save a decent chunk of your paycheck and invest is wisely year after year, you can make your wealth grow, you become, if not filthy least, at least, very least, financial lly indpept meaning y don't need to worry about your job security, where your next paycheck is going to come from you'll be able to retire easily

without the need to rely on social security, all we know might not be around we our younger viewers hit retirement age. that's why tonight, tonight i want to help you figure out the best way to manage your money in order to help achieve real financial independence >> house of pleasure >> but in order to do that, we need to talk about the concept of generational investing because the kind of strategies that make sense when you're young and in your 20s are very different from the sort of things you should be doing when you're middle-aged, or a senior citizen for that matter. we don't talk enough about that on "mad money. tonight's digit. different. there's one constant when it come to managing your finances no matter how old you are. that's the fact you will never get a better opportunity to make your money wheby investing in t stock market even when we're in a bear market -- [ bear ] when the action is treacherous, it feels like stocks go down every single day, when you take a long-term view, it's easy to see the stock market is by far the most effective method of

wealth creation out there. sure, it might go down for weeks, for months. might go down for year it might crash like it does upon occasion but if you take the long view, the very long view, stocks tend -- excuse me, stocks tepid tend to go higher. i don't say that as some sort of poll yanna when i got started in the business in the 1980s the dow jones industrial average was trading in the 800s. despite multiple bear markets between then and now the dow currently stands what you might call well above that mark, right? a pretty fantastic amount of wealth creation. ♪ hallelujah no matter how old you are, no matter how wealthy you are, you really should have some your money socked away in this, the stock market for those who are concerned the market is rigged, dangerous, simply too unreliable or unsafe a place to trust your savings, can i give you historical perspective right now?

if you go all the way back to 1928, that's right, before the great stock market crash that preceded the great kdepression, through the end of 2015, average annual return for the s&p 500 including dividends is about 10%. show me an asset class with a better average return. you can't do it. stocks aren't just the best game in up to, they're the only game in town if your goal is to grow your wealth. for those who want to get rich quick, rather than -- the average 10% from the s&p 500, i know, may not seem like such an impressive number. some are probably saying thanks for nothing. wait a second, you're wrong, you're just wrong. forget the fact it's more than double what you can expect from a 30-year treasury, deposit, i mean, they -- let's examine that 10% figure in absolute terms when you're taking a long-term view, which is what we're doing tonight, meaning planning for your entire lifetime, racking up a 10% return from a simple

inexpensive s&p 500 index fund which you know i prefer starts to seem pretty darn impressive sure, the market is going to have its up years and its down years but overa s but over a loh timeframe, the 10% figure including dividends held steady. 10% return in an average year, you need to view this number through the lens of what's known as compound interest sometimes i'll talk about this as the magic of compounding. think of it like this. if you invest $100 in the s&p 500, and it gains 10% in the first year, then you've got $110 after another year pof of 10% gains, you got $121. a third year of the same gives you $133. they keep getting larger and larger because each year you're making additional money off the previous year's profit eventually with a 10% average return, you'll double your money in roughly seven years now for those of you who are really young, right out of

college, waiting seven years to double your money, i know, seems like an eternity and listen, i've got more risky ways of growing your capital faster if you stay tuned however, the truth is, as you get older, an investment that can pretty consistently, you know, take your money up in seven years' time and double it, i'll tell you it just becomes pretty incredible. that said, the magic in compounding works the best the younger you are, that means you have more time for your money to grow sadly, young people are the least likely to be impressed by that steady capital appreciation that's why a claimed economist, george bernard shaw, famously said youth is wasted on the young. okay, wasn't a -- so let me do my best to make these numbers sound more impressive. we're going to walk you through it suppose you're 22 years old and you're just entering the workforce. you got more than 40 years before you're expected to retire so let's say you invest $10,000 in an s&p 500 index fund right now. and let's also suppose that the next 40 years aren't too

different from the last 40 years. in that case, if the average return from the s&p 500 holds steady at around 10%, then in 4 decades your $10,000 investment will turn out to be worth more than -- ♪ -- $450,000. that's enough to send multiple children through college, grad school, buy a nice house in most parts of the country, pay for a huge chunk of a pretty ritzy retirement that monster multiyear gain, it didn't require any kind of stock picking. it doesn't require you to trade or time the market or even do any sort of research into individual companies. which i know is hard for most of you. you just need to invest your money in a low-cost s&p 500 index fund, or etf, commissions there then you wait. granted you're waiting 40 years.

$450,000 when you're approaching the age many people retire seems more than the initial $10,000 investment you made when you were young and had your entire work life ahead of you to make money the regular way. so, please, i'm begging you, think of it like this. a little money saved and passively invested in the stock market is the easiest way possible when you're young to turn -- turn into a massive fortune when you're old. and i have all sorts of additional costs and responsibilities. have all sort additional costs and responsibilities.have all sortsa costs and responsibilities all you have to do after you initially save the money, let it sit on the sideline, so you don't have to pay capital gains or dividend taxes on your gains. same logic applies if you're 30, 40, even 50. you get a lot more bang for your buck if you start younger which brings me to the bottom line, even if you don't have time to do homework, the stock market is still the best tool out there for growing your wealth and thanks to the magic of compounding, the earlier in your life you start investing in the market, the bigger your

long-term capital gains can be of course, not just capital gains but also dividends everything gets reinvested let's go to brenton in new mexico brenton? >> caller: jim cramer, big boo-yah from the land of enchantment. how are you, 123sir? >> i am good, how about you? >> caller: i'm doing good. thank you. general question mutual funds and index funds claim minimizing single stock risk. >> right. >> caller: but inherently isn't it fair to say mutual funds and index funds have other risks that you would avoid with a single stock portfolio >> absolutely. and i think that that's why i always suggest that there be two portfolios there should be that capital preservation and somewhat appreciation fund, that is going to be -- we put that aside for retirement and that should be in a diversified fund, preferred to be in index fund, and the rest

should be mad money, a sliver of it, though, "mad money," we pick individual stocks. that's why we call the show "mad money. i don't want the bulk of your portfolio in individual stocks there's too much single stock risk i want you to be able to pick stocks i know you want to do it or you wouldn't be watching the show. brian in oklahoma. brian? >> caller: thanks for having me, first-time investor. how do you value a company's -- one company versus another measure their value? >> well, we spend a lot of time and get rich carefully talking about that and what you really trying to do is measure the future earnings stream you can figure out what you'll pay for the earnings stream now. what really matters is if you take a longer term view, you can get a feel for what that stock might be able to give you for dividends and capital gains. dividends tep dividends tend to be for capital -- low preservation. the capital gains is for the appreciation stream. i want you to have little bit of

both but you got to be thinking about what a company can earn in the future that's what dictates stock prices this show is about helping you build and preserve your wealth the stock market is the best tool out there to do that. a lot more "mad money" ahead including the four-letter word of the investing world what it is and why the conventional wisdom about it is all wrong. plus i'm not pulling any punches here what you absolutely must not be doing in your retirement account. and i'm unveiling the rules you need to navigate in the bear market so stay with cramer. >> 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 1-800-743cnbc. miss something head to madmoney.cnbc.com.

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you're cleaning that up. don't get caught off guard by directv. touchdown. get the best with xfinity. tonight we're talking generational investing meaning how to handle your finances depending on whether you're old or young, or somewhere in between as much as many of us might not want to admit it, the rules in this game can be totally different depending on what age you are. nobody would suggest that a retiree pour all of his or her money into high risk speculative stocks that could either have enormous upside potential or go all the way to zero and absolutely wreck your portfolio. just because some of this may sound straightforward doesn't necessarily mean it's obvious or standard which is why i'm taking the time to go over the really important differences depending on where you are in your life

cycle. now, i always tell you you need two discreet policies, retirement portfolio, conservative, invested in tax-favored vehicles through a 401(k), i.r.a. and discretionary "mad money" portfolio, hence where the name comes from, you can start taking a few more risks with your much once you already topped out your retirement fund. no matter how old you are, retirement objectives must always come first. i love to play with the discretionary "mad money" side of things, that's what this show's arbout but a truth is a bet on retirement is a bet on your own longevity you want to live a ong time and shouldn't have to work your fipgers to the bone. that means planning for retirement from the moment you get your first paycheck. regular viewers know my rules, no matter what you are, the first $10,000 you invest in the market should go straight into a low cost index fund or etf that mirrors the s&p 500. index funds are fabulous way to get exposure to the stock

market's gains without putting in the kind of time or effort that's necessary, what we do around here, picking individual stocks hey, if you don't have the time or inclination to pick individual stocks, can come via the fund that mirrors the s&p 500. i'm fine with that no reason this needs to be incredibly complicated it's very important you actually get yourself exposure to the market no other asset class can build your wealth the way equities do. once you save more than $10,000, that means you have enough money to start a diversified portfolio of five stocks remember, anything less than five stocks in five distinct sectors, you're not really diversified. take the money, invest it in individual companies for your retirement portfolio only once you saved a large enough amount of money for retirement that we start talking about that discretionary portfolio where you can afford to take more risks i really want to make this point because a lot of people think i

only waunt you to be in individual stocks. that's just wrong. index funds then individual stocks when you're younger your retirement and discretionary portfolio may not look that different. that's true for a host of reasons. when you're still in your 20s or even your 30s, if you i venvestn something risky and crushes your portfolio, you still got a lot f of time to make the money back years and years and years of paychecks. however, if you're pushing approaching retirement, you lose a portion in the stock market, that's a real problem and you going to have very little time to fix it. which brings me to my first rule of generational investing, not only can younger people afford to catake risks with their mone that older folks can't, those in the younger demographic, it's imperative that you take those risks. you shouldn't go crazy and speculate, all of your savings,

you should absolutely devote some of your discretionary "mad money" portfolio for betting on long risk high shot. i believe in this. i'm talking about smaller less well-known companies with massive upside potential couple with enormous downside risk if things go wrong. remember, this is for the younger cohort the classic example, biotech stocks which fly through the roof if they get a big drug afroou abeautifa approv approval by the same target the smaller biotechs will get slammed if there's negative news and the stock is difficult to own in more negative markets because they don't have dividend or earnings protection. however, we're talking about long-term investing, looking for good opportunities that work regardless of whether we're in a bull or bear market. there are plenty of speculative companies that don't have anything to do with the drug business why do i insist younger investors speculate, take risks that might scare older people? because the gains here can be

absolutely stunning. ♪ hallelujah it would be downright foolish to pass up owning the -- when you're in your 20s and 30s you should be investing like a youngeyoun er person, not an old man let me give you an example that sheds light on the situation when "mad money" initially came on the air in 2005, our first ceo interview was with dr. len shrifer. at the time, a biotech that had been kicking on for 17 years without really developing anything noteworthy that could move the needle. since then, though, this company has become a powerhouse with the stock taking off into the stratosphere based on the surprising strength of a drug called alea, blockbuster macular degeneration formula. fast forward ten years into summer 2015, the stock traded up

to $592 million. for the sake of using round number in this example, let's call it 500 bucks. ten years ago. could have bought regeneron, speculation 5 bucks. what would happen to the 500 bucks buying it at $5? how about this a gain of rough ll lly 9,900%. not a double not a triple not a quadruple. no, regenron is a ten bagger but you never could have gotten in on that gigantic gain if you hadn't taken a little risk in 2005 and bought a company with no profits, no products on the market and only the promises of the ceo that things would work out. of course, regeneron worked out in major way similar small cap biotechs have done nothing or lost you enormous sums over a short period of time tor loing e or ld you won't always be able to identify who are the winners in this kind of space but that's

okay as long as you cast a large net. taking small positions in ten little speculative biotechs, i'd said nine of them are going to zero as long as the tenth one was regeneron, you would have made a monster game this should be one small part of your diversified "mad money" portfolio but absolutely belongs there. the risk/reward of trying to find speculative winners splut s absolutely makes sense when you're young older investors, speculation is a much more risky game and only recommend playing it with excess cash you absolutely can afford to lose. here's the bottom line remember to speculate while you're still young enough to be able to take the hit if something goes wrong as long as you're disciplined and only makes a small part of your discretionary portfolio, not your retirement portfolio, then it's absolutely worth hunting for the next regeneron without hesitation much more "mad" ahead. i have the answer to the question on top of your minds, stocks or bonds? the age-old wisdom you heard is

wrong. i'm about to rewrite the script. plus the game plan you need to follow when the bear market breaks and the most important pieces of information i can gi you. many of you have to take action tomorrow don't miss this. stick with cramer.

what's critical thinking like?

a basketball costs $14. what's team spirit worth? (cheers) what's it worth to talk to your mom? what's the value of a walk in the woods? the value of capital is to create, not just wealth, but things that matter. morgan stanley

it's time to address a major issue that i have to admit, i don't spend enough time discussing here on "mad money. i'm talking about the question of stocks versus bonds now there's a good reason why you don't hear me recommending you invest in bonds very often and it's not just because the show is about stocks the fact is, ever since the great recession, interest rates have been held down to incredibly low levels, therefore, bond yields like the return you get from owning, saying, u.s. treasuries have been absolutely paltry by historical standards, versus what you get from safe dividend paying stocks. in general for the last few years, even when the stock market has been getting absolutely pounded, bonds simply haven't represented very good values versus equities that's why i've so often castigated you about the idea that excessive prudence can be the most reckless strategy of all. because if you invest too much of your money in safe, virtually

risk-free u.s. treasury bonds, you've basically been ensuring that you'll get a very low return on your investment for many years to come all in all, if you want to grow your capital and after all, that's what investing is supposed to be about, like i said before, stocks are still really the only game in town, even after, what can i say, so many years however, i don't want to make it sound like i'm poopooing bonds all together there's absolutely a place for bonds in your portfolio, an essential place. especially as you get older. here's the crux of the issue, though even though i believe that stocks are the best way for you to grow your capital over the long term, even in h moments when u.s. treasury yields are historically low levels, at the end of the day, stock investing and bond investing are about two entire sly different things. stocks are the tool you use for capital appreciation, meaning turn your money into more money. bonds are all about capital preservation they protect your money and give you a nice and steady, albeit

small return that's still big enough to offset the impact of inflation for the most part. you invest in stocks so you can risk your wealth you have to generate even greater wealth okay that's what it is. you invest in bonds to protect whatever part of your wealth you simply can't afford to lose. there it is. which brings me to the generational investing aspect of this question. depend on how old you are, there's a huge difference in how you should approach the very idea of putting your money into bonds. when you're young, investing is all about taking risks so you can get better returns i've already explained how people in their 20s and 30s can get away with that attitude. you got the rest of your working life to make back any potential losses but as you get older, you'll have more and more wealth that you simply can't afford to lose it especially in your retirement accounts now, bonds are a staple of saving for retirement because you u.s. treasuries are the closest thing to risk reinvestment out there most financial experts tell you you need to own a lot more bonds a lot earlier in your lifetime that i think is truly necessary. you never get rich from owning

treasuries, though even if you invest in 30-year u.s. treasuries, our government's longest dated bonds with the highest yields, their lower term simply don't produce much in the way of capital appreciation let's say simplefy for the sake of this sample that 30-year treasury bonds, say they're yielding 3 president.5%, relati level for historical standards higher than the 3.25% range we saw in the first nine months of 2015 with that 3.5% yield, as long as you reinvest your coupon payments back into treasuries, you might double your money in 20 years remember, the average historical return for the s&p 500, the benchmark for u.s. stocks, is 10% annually which will let you double your money in a little more than seven years. so if you're under the age of 35, and you own a bunch of bonds, with the idea that they'll slowly but steadily make you money, see, i think you're being way too cautious i know it puts me out there, but you know what, i've been around. that's how i feel. even in your 401(k), your i.r.a., you want to be very heavily weighted toward stocks

while you're young particularly because these tax advantage retirement vehicles allow you to avoid capital gains taxes, dividend taxes, allowing gains to come pound tax free year after year after year. i told you how great compounding is as you get older owning treas y treasuries especially in the retirement fund becomes absolutely essential unlike b the stock market when you can lose enormous amounts of much in the blink of an eye, bonds really are safe. once you used the stock market to make yourself financial lly independent, funnel more of mor money into treasuries. ideally you do that by putting your cash in the cheap bond fund, that mirrors the yield from long-term treasury. let's get down to brass tax. precisely how much of your retirement portfolio should you keep in bonds versus stocks? again, depends on how old you are. 50i i don't think your retirement fund should have any bond exposure whatsoever until you turn 30. if you own bonds at the age of 25, you're wasting your youth.

better to put your capital to, work in the stock market with it can actually grow. in your 30s, i'm going to let you keep 10% of your retirement funded bonds or once you're in your 40s, i think you can go up to 20%, 30% bounds in your 50s, 30% to 40%. 60s a as you approach retirement age, 40% to 50% bonds. even after you retire, i still think you should keep a substantial chunk of your portfolio in the stock market. post retirement, increase your bond exposure from 60% to 70%. once you stop working you can't afford to take too many losses with your investors especially since you're going to need to start spending the money in your retirement accounts. excuse me. that said, i still think keeping roughly a third of your money in stocks makes sense even for a retiree because you're going to be living off your investments for the rest of your life. some part of your portfolio should always be trying to

create more wealth in case loyo live longer than you expect and need more money to support yourself in other words, going all in on bonds, once you've retired, is a bet against your own longevity who the heck wants to take that kind of bet? here's the bottom line for younger investors, putting your money in bonds is a fool's game as you get older, you should gradually increase your retirement fund's bond exposure, to the point where 40%, 50% is in u.s. treasuries by the time you're in your 60s because that part of your wealth will be protected against the volatility of the stock market. even after you retire, you should keep owning some socks so some piece of your capital can continue to appreciate over the long term, best case, you live a very long time and the extra money comes in handy let's take some questions. how about nasir in pennsylvania? >> caller: boo-yah, jim. >> how are you >> caller: i'm good. big fan of the show. >> thank you. >> caller: thank you for taking my call. >> of course. >> caller: i love your book, "get rich carefully. >> thank you. >> caller:time looking for

advice today on how to determin entry price for a stock especially if i'm looking to start a core position, given how cost -- >> all right i think this is a great question the reason why it's a great question, a lot of people feel like they want to draw a line in the sand, they want to make what i call a statement buy or want to be in a position where they kind of got rid of it, they bought it, and they put it away. that's why i say take in account human frailty. the most i ever like to buy at one point is half of my position i prefer to buy a quarter. if the stock goes higher, well, what a terrible high quality problem. if it goes lower, you got room to buy i like to buy in stages. all my books i talk about stage buying because i don't want to be overconfident don't you be overconfident do it in stages. brian in new york. brian? >> caller: hey, jim. how are you? >> i'm fine. how you doing? >> caller: i have a 401(k) plan from a previous employer and i'm trying to decide whether to put it in an annuity managed by an

insurance company, or if i should just put it in a traditional i.r.a. >> i want you to run it yourself i mean, you watch the show i think you can do it yourself the annuities have fees. now, look, i'm not against anything that makes it so that people can build wealth, but my experience has been that a lot of annuities have fees that eat things up. maybe there's some that don't. i belief in self-directed investing. when it comes for that and if you have to, you can put it in an index fund if you don't have time. i do like totake control of my investments. i. r.a. lets you do that listen, investing in stocks and investing in bonds are two very different things as you get older, you can gradually add exposure to bonds. young investors, you just don't belong in blonds much more "mad money" ahead including the playbook for when a bear market takes a bite of your money. plus i'm not kidding around about this, if you want to ensure a strong retirement, you're going to want to listen to my advice and take action tomorrow morning don't miss it. i'm answering the questions

you've been sending me on twitter, so why don't you stay with cramer? what's better than "mad money" how about more "mad money" follow "mad money" on facebook, twitter and instagram to go one-on-one with cramer >> reaction. what other questions do we have? ah i always tell people you got to start with an index fund because i need you to be diversified. >> get more with guest. >> how do you stage -- >> and go behind the scenes with the most interactive show on television. >> if you can't explain in thre bullets why you're buying a certain stock, don't buy it. >> follow "mad money" today. she can't become a guitar legend just by playing air guitar. the baby's room won't build itself. and her paw won't heal on its own.

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tonight, rather that focusing on the day-to-day versus tuesday s, i want to hel you take a longer view, how to invest for a lifetime. taking a much longer time horizon than we usual ily discuss on "mad money," taking a 20, 30, 40, even a 50-year view. no such thing as a stock you can buy and hold for the next decade or two doesn't work like that i wish it were that easy it's not regular viewers know my mantra,

it's buy -- which means no matter how confident you are in a company, you need to keep checking it up on it on a regular basis. however, you can't pick a few stocks and ignore them for the next couple decades doesn't mean it's impossible to take a truly long-term view simply need to zoom out a bit. y when you start examining stocks over a multidecade time horizon, one thing becomes readily apparent, if you know what you're doing, a bear market -- [ growl -- can simply be a different kind of opportunity. that's right when stocks are getting slammed, when they're getting hit everywhere you look, when it seems like the losses will be endless, when the shares of individual companies can't even mount significant rallies in the face of incredibly positive news, definition of a bear market, frankly, you have to recognize that you can be getting a terrific opportunity to pick up some high-quality stocks for the long run into the weak ps. understand i'm not giving you a license to buy stocks indiscriminately into any kind of dip we you're faced with a bear

market meaning when the average are down by more than 10%, let's use that as the parlance on the show, from their highs, and they seem like they could go even lower, it probably makes more sense to start buying most stocks rather than selling them. as long as you're willing to take short-term pain for long-term gain of course, whenever you buy during a bear market, you need to be very careful that means you never buy a position all at once you know i say that all the time and you just asking yourself to look like a moron if that stock keeps going lower. instead, gradually leg into your favorite stocks buying small chunks to your position inkme inkmentinkment incrementally on the way down. in a bear market, after you make a purchase, wait for the stock to go down pretty meaningfully and substantially before you buy more over the very long term, you'll probably find you've taken advantage of a terrific opportunity most people were too afraid to pounce on, but i need you to think longer term something we didn't do at the beginning of the show. we're way past that now, aren't we you don't believe any?

yu look at the chart of the s&p 500 over the ten year looking in the fall of 2005 if you use the weakness to vaer gradually build a position on the way down, in a couple years you made a killing nasty bear of 2011, we snapped back from those losses more rapidly. this is why warren buffett seems so sanguine when the market is getting crushed, he's incredible longtime -- enough money he can afford to take any level of short-term gain. if you're a hedge fund managers who needs to be up for the day, the year for that matter because investors will flee your business, you can't ain order t -- you'll lose enough money in a short enough period of time that the fund will likely go under. go read "con fregs fessions of street" when things got tough

for any. the vast majority of you are not running hedge funds, don't need to make money every day or even every month or year. what you need is a long-term strategy, let you rake in massive multiyear gains over the rest of your lifetime, have enough money to retire comfortably, send your kids to college. again, this is not an excuse to hang on to loser stocks of loser companies simply because you hope that one day eventually will turn around my point is that the ugliest most vicious markets that send everything down, the good with the bad, they will always create opportunities for smart investors. as long as you're patient enough to take advantage of them slowly because if you pounce too quickly, you'll end up buying way too close to the top the oath ever caveat, if you're not simply playing with an s&p 500 index fund, you have to be careful about what stocks you pick during a bear market. you need to do the homework, make sure you own the stocks of companies that are actually doing well, good balance sheets or at least companies that are doing okay but could do better in a stronger environment. during a bear market, you must

absolutely not buy the stocks right in the blast radius of whatever's causing the decline think the banks in 2008, 2009. oil natural gas resource plays that started going down literally in the fall of 2014. you don't want to own the companies that are causing the weakness instead, search for collateral damage stock going down because everything is taken lower by the s&p 500 futures and etfs that crush entire futures if you own anything in the blast zone, please don't hesitate to -- >> sell, sell, sell. >> kand swap into something's safer. if you want to take advantage of a monster decline to do buying, you absolutely need to have cash on the sidelines in order to make your move otherwise, you'll just be shuffling money between different stocks all which are going lower. that's why i'm so adamant you always have some cash in your portfolio and the better the market's doing, the bigger your cash position sloub. that's right, the better the bigger when things go wrong, you'll be able to use the weakness to buy the stocks of companies you

liked at bargain basement prices bottom line, when you approach the stock market with a truly long-term time horizon, remember big bear market declines can turn out to be excellent buying opportunities as we've seen since we started the show. as long as you only purchase high-quality merchandise in small inkmencrements on the way down stick with cramer. ♪

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to improve short-term memory. prevagen. the name to remember. not rebalancing your portfolio. pursuing your passion, not reacting to market downturns. focused on what you love, not how your money will last through retirement. let us help you with those decisions, and get on with your life. we make it easier to plan for retirement with day one target date funds from prudential. look forward to your 401k plan. all night, i've. telling you about the best way to approach investing from a long life, long generational perspective, how to manage your

money when you young, middle ages hey, haven't you heard 60 is the new 50 even once you retire there's another aspect ofvestind to get your kids interested in managing their own money generally and learning about the stock market in particular i say this to parents with children of all ages while i love the public school system, you simply cannot rely on the private schools or ritzy private schools for that matter to teach your kids about money okay, they can do a bangup job with english, history, biology, physics, calculous, whatever, you want your kids to become fluent in a foreign language, great. the typical high school can teach you french, spanish, fancy ones that teach you chinese. however, if you want your children to be fluent in the language of finance, you're going to have to do it yourself. i get the sense personal finance is viewed to be too simple, so to speak, for most educators to bother with, it's like beneath them typical high school health class will help kids learn how to put

a condom on a banana nobody is going to explain why it's dangerous to have a balance on their future credit card bills. you can't wait until your kids go to college to teach them this stuff. at most, institutions of higher education, students get bombarded with credit card offers that can seem irresistible if they don't know better i took down five of them throw in thousands of dollars of credit card debt on top of student loans and they could be? the hole for decades, many dass means you, the parents, will need to pabecame them oubale bat it's about not getting hit up for cash every month when your kids are well into their 30s what parent doesn't want financially responsible children at this point, you need to do it yourself that means you need to have some long boring conversations about the dangers of high interest rate debt. like can be easily racked up on a credit card. they need to save money coupled

with the power of compound interest in my view, the best way to make this dull personal finance medicine to go down is a spoonful of stock picking sugar. in other words, starting at a fairly early age, i recommend giving your children gifts of stock in high-quality companies that resonate with young people. my classic example, i've been using it since the show started is disney. give them a couple of shares a year for the holidays. starting wi ining when they're g to appreciate the big movie franchises, "frozen," "star wars," whatever, disney has so much going for it, blockbuster films planned up over many, many years in the future, not to mention the terrific theme park business by the time your kids are teenagers, i think their disney holdings will show a nice gain there was no better way to demonstrate the power of saving money and investing in stocks than having your children actually make money in the stock market, themselves, and follow it along and look, as much as i like disney, you don't have to go with mickey mouse. it could be any high-quality company that will resonate with

somebody who's still in elementary school. here's the bottom line, the point of getting your kids interested in stocks early is simply you need to teach them a better way to think about money rather than viewing cash as something to be spent, you want your children to learn money is something that can be saved. and invested which creates still more money at the earliest possible age and look, if you don't want to do this for your children, do it for yourself because kids who can manage their own finances are kids who won't be begging you for moolah even after you've gone into retirement stick with cramer.

okay crameri cramerica, it's time for me to check out the twitter sphere and take a look at some of the tweets you sent @jimcramer let's catch up with our viewers at home and see what's trending in their portfolios. first up, we have @fridge93 who says @jimcramer, you talk in your book about research for a new investor, what a few piece of information we should look for when stock picking? the first thing is i want you to know the product i want you to know what it does, i want you to like it. then the reason of why is because a lot of times stocks go down after you buy them and if you like the product, you'll be more inclined not to panic and get out. after that, you can read in "get rich carefully," i do compare n comparisons tell you how to rate a stock. do it on a number basis, figure out where it should stand versus

others but you got to like the company first or i promise you in the first big selloff, you'll become a seller, not a buyer i don't want that. okay the next question is from patrick, it's sutera @patsutera. @jimcramer, jim, for retirement is it best to dollar cost average index funds or wait and buy on market downturn/mad tweet? this is really important here's the way i do it i try to do it 1/12th a month if i can, okay? each month, do 1/12th. if there's a big break in the stock market, i accelerate some i would do later in the year and put them to work in that break even up to a third of it so in other words, i like to take advantage of the declines and accelerate what i put in and i've done that for years and years and it's really worked for me otherwise divide by 112. next up is larry bloom, @jimcramer, this morning my wife said what would they do without cramer

my wife said the same thing. all right. now, look, you know, i'm a teacher. i got some books try to come out here every night. what would you do without yourself this is about empowering you, it's not about giving you ideas. it's about how to look at them a lot of people look at the show who haven't watched it over the evolution, say, te he tell you to trade in and out of this or that i hope you know that it's the opposite longer term investing is the way to make money, index fundsthen "mad money" and doing homework and trying to figure out how to do it yourself last is jeffrey hope @jimcramer, jim, would you mind sharing your sunday stock routine, please all right. i have -- i get this thing from the -- from standard & poors it's pushed to me via e-mail it's hundreds and hundreds of charts i go over each one

i have a file, says good, bad, question mark, try to figure out why that went up then story idea for show i write down each one and where they are and where they fit then when they're done, i tepnd to do a page "real money c," a long street for the rest of the week i send my staff which stocks i don't understand and why and theories about why we should be doing certain piece and it takes up almost all sunday except for when the eagles are playing. stick with cramer. always obvious. opportunities sometimes they just drop in. cme group can help you navigate risks and capture opportunities. we enable you to reach global markets and drive forward with broader possibilities. cme group: how the world advances.

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(slow jazz music) ♪ fly me to the moon ♪ and let me play (bell ring) i like to say there's always a bull market somewhere. i promise to try to find it just for you right here on "mad money. i'm jim cramer and i'll see you next time

>> narrator: in this episode of "american greed"... john and dan sullivan are more than loving brothers. they are partners in business and crime. >> they were good thieves -- big liars and good thieves. >> narrator: under cover of a home-repair business, the sullivans prey on victims based on race and age. >> they had catchphrases to describe who they were targeting. they said, "the blacker, the better. the older, the better." to say how they viewed their targets was odious doesn't even begin to capture how morally bankrupt the sullivans were. >> narrator: for 10 years, they construct a trail of ruin by stealing homes and abandoning projects, until they get nailed. >> i told him that, "i don't know how long it's gonna