stocks that's been beaten down i think contrarian, define risk ways and baba makes sense. thanks for watching. for more "options action" check tisaiocn.cbsite, oponctn@bcom you also friday back here at 5:30 "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 is 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 the make friends. i'm just trying to make you some money. my job is not just to entertain you, but to help you make money. so call me at 1-800-743-cnbc or tweet me @jimcramer. do you know in the old day there's were whole swaths of august when nothing used the happen well would go to the movies

during the day yeah, right from my old hedge fund well would sneak out to see the fugitive for the third time. now a brain crunch er next weeks game plan. take monday. that's when we hear from one of my favorite company, estee lauder for years it's been trouncing wall street's estimates. why? because estee lauder is at the heart of what i call the selfie generation, the desire to make yourself look as good as possible because you know that the moment you walk out of the house, you have to expect to instagram or rooney mcfatty flash opportunity. if you don't look your best, you're going to be mortified when the pictures show up on instagram. the tyranny of social media. of course, we're going to need a legion of psychiatrists to help young people deal with the fall frout this whole social media self-inspired self loathing. but in the meantime, thuse este

lauder to make themselves look terrific last quarter estee lauder had a perfectly good three months, just not good enough has there been enough of a reset? we'll find out monday morning. by the way, if it's a good quarter, that's a terrific sign for ulta beauty, a solid beauty partner in if u.s. and also reason to go back and buy some macys which got overly hated real fast and does a lot of business with estee lauder tuesday morning we hear from kohl's ever since our visit to a new jersey kohl's near princeton to interview outgoing ceo kevin mansell, i've been telling club owners of action alerts that this is among the cheapest of the discount chains. i don't think they're being hurt by the resurge of walmart. kohl's has a good yield. it has a partnership with amazon where you can return goods by walking through stores to exchange them for the ever so popular kohl's catch the stock, however, an erratic trader

i say maybe buy some before and buy some after i love those kalz casohl's cash remember they turned me down on a credit card? i'm back all is forgiven. less than a year ago, the offprice change delivered the many of first upside surprises since then the stock has run up roughly 30 points in a straight line people can't get enough of this discounter i expect yet another good quarter. but then again, feel somewhat chastised. i don't want it to soar by the time monday to tuesday just pointing that out you know what's the perfect fit for the moment a device play, medtronic they report in the morning i loved when they were on this i loved what they had the safe the medical device makers are all killing it i think it would be a gift if this stock came down ahead of the quarter, and you should take that gift. you know, i've been deeply troubled by the action in the home build.

>> especially toll brothers which has been obliterated so far this year, philadelphia's own. toll is the premier upward home build were fantastic management. they've been making a huge amount of per home they've been selling a lot of them yet even the they continue to buy back stock and reward shareholders, toll has become despised why? the conventional wisdom is housing has gotten too expensive, even as the economy is roaring i want to hear what they have to say about the affordability situation. that's the buzzword, affordability. then it's urban outfitters current tells us this current fashion psych legal be a long one, and we're earlyinnings. that is good news for all shareholders because urban has been killing it lately we're not done with retail the market may not have liked what i thought was totally respectable from home depot because it was too housing related, but lows, on the other hand, a turnaround play. that may make all the difference any like the ones home depot gave us. i like loews i like target too. let's wait and see what they

have to say, even as crow brian cornwell's turnaround efforts are really bearing fruit after the close, we get results from the beleaguered l brands. can the good news from bath & bodyworks cover up the weaker news from the scantily clad victoria's secret? that's the only hope for this down and outer troubling. now get. this you know there has been a lot of panic in semiconductor land these days. you don't need me to tell you. applied materials not so hot, mxp semi, geez these have been so on fire not that long ago. texas instruments which recently reported excellent numbers also falls in that category and then there is the one that doesn't get championed enough, and that's adi, analog devices which we hearfrom wednesday. this company has done such a good job and i now regard it as the ultimate industrial chip number i bet it delivers a great number, but i can't you if you want the share away from adi

thursday we find fought we have another tencent on our hands ten cent being -- >> all aboard! >> you get it? that sound is worth a thousand words. alibaba reports. and until the implosion of tencent, the once red hot chinese gaming play, i would have said alibaba with both hands, at least play the bounce. some of tencent cross the party -- that's the communist party that is -- and you can get only what is described as a shortfall from the actual government holy cow alibaba may be in better graces, but tweeze the slowdown in the chinese economy and the trade war, it's too hard at thursday, there are four stocks that might be worth buying going into the quarter. the crowd kings, vmware and splunk, intuit and hp inc. that makes my computers and perhaps yours too. i never thought i'd say this

i'm darn glad i have an hp because the touch screen is the bomb splunk had a good quarter last tight, not perfect and the stock has struggled. but i'm not backing away it is the finest analyzer of date in an increasingly did tall world. intuit is crushing h&r block i love those guys. vmware may be the strongest reporting. it helps other businesses on the cloud, and it's the preferred way the get on amazon web services remember, one of the reasons we like amazon isn't just a retailer especially how strong cisco was on wednesday we're lchl down with retail. getting close. we have ross and gap i think ross and gap will be the strong i prefer the latter. adidas is the best category in the whole shopping ball save handbags gap is more of a quandary. i cannot figure out why the company can't seem to deliver in this, a fabulous environment but maybe it's like jcpenney

no jcpenney has a bad balance sheep. maybe this will be the quarter it all comes together. here is the bottom line. i yearn from the sleepy weeks of august where you could bass income the notion that there is a whole lot of nothing going on. these days are just over instead we just get another monster week ahead of us taking calls let's go to remy in california remy >> caller: thank you for taking my call, jim i love you show. >> thank you. >> caller: i listen to it on sirius radio every day >> okay. >> caller: i did start investing in my 30s in the way that you've been suggesting. >> yes. >> caller: and now i'm 65. so my question is two goals. when would you advise me to move the money from 401(k) stock

funds into 401(k) nonstock funds and where should i invest this now? >> remmy going to tell you you're young whether you think young, you're young. i want no change i want you to continue to let it go i'm going to tell you, we're in similar boats. all i'm telling you is exactly what i'm doing dog days of summer i wish no downtime here, folks. so get your head right for another yuge week! and of course, stick 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 1-800-743-cnbc miss something head to madmoney.cnbc.com.

i'm opening up the lines to from you, the voice of maerk r america because it's an uncertain time i want to hear from you. >> i want to tell you are absolutely positively fantastic. >> thanks for helping us not panic in times like this the average investor, which we all know and love, you cater to us, and we appreciate for all you teach us. >> i am not going anywhere you shouldn't either we will get through this together >> cramer has your back. call 1-800-743-cnbc. and let's take on the market together >> we're going to figure this out. we'll puzzle it over, and we'll make it so that we're all smarter.

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♪ news flash at the end of the day, we're only human if you remember only within thing about being an investor, that's it. nobody's perfect everyone is fallible and it's inevitable that we're going to make mistakes it's just the nature of the business and the nature of humans that's why if you're going to own individual stocks, you need to follow a set of rules, rules that are designed to protect you from yourself. rules that i learned the hard way. and that brings me to my next commandment. this is a real important one never buy a stock all at once. i can't stress it enough

do not any under circumstances buy all at once. now no broker likes to fool around like partial orders like i'm telling you to give. no financial adviser has time to buy stocks methodically over time the game is to get the trade on at one level in a big way. make the statement buy in the portfolio. but from where i stand, that's all wrong. [ buzzer ] 100% wrong you should never buy all at once and you should never sell all at once instead what i want you to do is stage your buys. stage your sells the term we use on wall street is work your orders. try to get the best price over time, and not necessarily in one day. maybe multiple days. why? okay when i first started out as professional money manager, i really wanted to prove to everyone how clever i was and how right i would be so if i felt like buying caterpillar, i'd buy it now, buy it big, buy it all one price because i was so sure i was right. put me up on 50,000 cat, i'd

scream, as if i were the sena smartest guy in the universe when i think about of that young cramer with a full head of hair, i would say i was one arison of a gun. i was arrogant and wrong you don't pick them up up at once what happens if it goes down immediately? you'll feel like a dope. thus my rule, never buy all at once i should have been buying cat in implements at 5,000 shares i know it sounds measly, but i'm right. buy gradually over time. try to get the best price you can. hope goes down, buy more at lower levels, get a better cost basis. i know you trade institutionally and the institution guys are saying jim, come on. 50,000 is nothing. i no longer trade in size, but i still invest and i invest for my charitable trust you. follow along at action alert

owners.com whenever we have a new name we buy it in small increments, say 500 shares at a time or smaller. over the course of multiple days, it makes since when you're buying all at once, you're declaring the stock won't go lower no one has that insight. buying in stages is all about recognizing that our judgment is fallible so why don't more people do it my way why don't buyers decide to buy it in 100-share increments i think because they want to be big too. they don't want the waste the broker's time. your broker wants to get the trade done i know my brokers hated it in my old hedge fund when i would place incremental orders but it's plain hubris to put your stock into any stock@all at once you need to resist feeling like you're making a statement when you purchase a stock i've bought and so-called billions of shares of stock, billions you know how often i got in at the absolute bottom, how often the last price i paid was the

lowest and enthen it was off to the races? maybe one trade in a onwu100 an' pretty good at the game. humility beats hubris every time next rule, i want you to buy damaged stocks, not damaged companies. let's say the mall is having a sale and you pick up piece of merchandise, only to find out that it's broken when you get home maybe it doesn't work. maybe there is a hole in it. in the real world you return that merchandise and get your money back there are guarantees and warranties galore on main street wall street is very different. if you buy a stock and it turns out to belong to a defective company you, have to eat the loss hey, it's caveat emptor. that's why you need to be very careful to distinguish between broken stocks, names that are down for no particularly good reason maybe macro stocks and broken companies sometimes damaged companies can be easy to discern when value

into big pharma rollups started plummeting, a combination of slowing growth and chicanery with one of their pharmacies, it wasn't a good buy to rush too. it bottomed to the single digits a lot thought it was worth buying at 150, then 100. it was like an auction going down but the stock was downright toxic. on the other hand, sometimes the stock will sell off for reasons that have nothing to do. it could be caused by etfs or washington worries or greece just because the stock is down, it doesn't necessarily mean there is anything wrong with the actual business. how do we distinguish between a broken company and broken stock? complicated question what i like to do is develop a list of stock is like very much. i call this my bullpen in the action owners club when wall street holds a sale, i use that as an opportunity to pick up the stocks on my list that was designed in a cooler moment with a cooler head. but the bottom line is that you

never really know. and that's why this rule works in tandem with the last one. you never buy a position all at once, because what you think is merely a damaged stock might turn out to be a damaged company. if you take your time, you're much less likely to end up with a large quantity of broken merchandise. stick with cramer. the earnings are relentless. and the schedule is grueling, but cramer has burned the midnight oil, and he's ready to run the gauntlet to find you a raging bull market powerful executives, scores of tough questions. all week cramer sits down with some of the market's most influential c suite players. join "mad money" on air and online for must-see interviews you can't afford to miss

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if you want to build a portfolio of individual stocks, a big if since there's nothing wrong with getting all of your equity exposure from a cheap index fund, then here is the s&p 500. which brings me to my next rule. do the homework. listen, growing up my kids hated doing homework they thought it was punishment sometimes when i looked at what they were studying, i have to admit i found it easy to sympathize with their point of view what's the relevance of most things they teach in high school how will it help you later in life why even bother? of course that's a terrible attitude i just really take that back but as a parent, i'd always encourage my kids to study because you never know what they'll turn out to be interested in later in life. but i bring this up because many of you have the same attitude many of you need to do for stocks you suspect it might be just as

irrelevant to your portfolio as school work is to my kids. when i tell people they need to listen to the starbucks call, for instance, which is really a good one, or they know what the analysts are expecting from netflix which is always about subscriber growth, if you're going to own these stocks, they don't want to hear it. they think i'm being a scold they just want to own them, not do anything. reading research reports, they really want no part of it. they look at me as though i'm some sort of old-fashioned teacher, a school marm who is asking way too much in this busy 21st century world but that's just plain wrong, people owning stocks without doing a proper research, i regard it as just plain lunacy. you never want to do that. >> [ buzzer >> they doh know nothing >> but people still do it. on the one hand there is the buy and hold school of thought that you don't need to keep track because you're in 40 long haul as if that somehow makes it all okay on the other hand, you have people who don't have the time to be that diligent.

for those of you who don't have the time, i got the solution for you. either get someone else to manage your money, or do the smart thing and invest in a low cost s&p 500 index fund. if you can't devote a few hours a week to your portfolio, you really shouldn't be messing around with stocks but it's the buy and hold premise that's a lot more pernicious back in the 1990s buy and hold became the be all and end all of invest you know what? i am just going to hold on to that cmgi. you got to look that one google it. because it's got to go become to 100 where i bought it. oh, man. i got 100 companies i could put in that sentence yet the experts say if you hold things for the long-term, isn't everything supposed towork out for best of course, this philosophy took a real blow during the financial crisis when so many people who practiced buy and hold got wiped out. that's why i've always been evangelistic for buy homework. what is the homework before you buy a stock you should listen to the conference calls. that's the minimum you can go to the company's

website. you can read the research. read some news stories google the darn thing. everything is available on the web, everything. you have so much more available now, so much more knowledge that there really is no excuse. you aren't up there begging at the goldman sachs library for mike feature from three months ago. remember the plastic sheets? that was ridiculous. you have all this stuff at your fingertips if you fall back on the buy and hold strategy for any group of stocks and don't pay attention, i'll assure you will be soundly beaten by professional managers who are searching for new stocks all the time more importantly, i'm sure any index fund can beat someone who does no homework it's not a strategy. it's just being lazy the next rule is another essential. diversify, diversify, and then diversify some more. always be diversified to control risk listen, i'm a firm believer in the idea if you control the downside, the upside will indeed take care of itself. and controlling the downside means managing risk. what's the biggest risk out there?

sector risk. stocks in the same sector, they tend to trade together especially at extreme moments. do you know at about 50% of the action in a given stock comes down totes sector? in some of these areas because of etfs it's even higher i don't care how great a tech stock was in 2000, if you had all your eggs in that same group you got scrambled. same thing for oil there is one thing to keep you from getting nailed and that's diversification. i've been playing since 2002 i always like to say diversification is the only free lunch in the business. people make fun of me in the office because i say itso much if you mix up enough different sectors in your portfolio, at least five, you won't be wiped out when one group gets obliterated,ing? that happens far more often than you think. if it's such a no-brainer, if

every adviser and commentator has been telling people to do it for years, how it is anybody can still be undiversified it comes back again to the homework issue a lot of people simply don't know what they own they couldn't tell you if you bumped into them so they end up with stocks that are frighteningly similar without even knowing it. i still field calls from people who generally think owning fang is a diversified strategy. hardly with facebook, amazon, netflix and google, now alphabet faux diversification another example how much i might like the oil stocks at any given moment and it's usually wrong, i can't count on a portfolio of exxonmobil, chesapeake and halliburton. j & j, bristol-myers and united health, even as i like all they leave you way too exposed to health care risks that could overwhelm the whole group all at once having an underdiversified

portfolio is not only an amateur mistake. if you concentrate all your best in one sector and that sector takes off, you beat pretty much whoever is diversified out there. that's the nature of the beast a huge fund manager who does that and gets lucky can then market himself as a huge success, get profiled by every magazine, raise tons of capital from unsuspecting investors who don't realize how much risk they're really truly taking on here is the bottom line. whether you're an amateur or professional, you always need to do your homework and keep your portfolio diversified. it may not be exciting it may not be sexy but this is the kind of routine maintenance stuff that protects you from monster losses down the line mike in south carolina. mike >> caller: hey, jim, from south carolina. >> thank you for calling. >> caller: i'm a new investor, investing about $100,000 how many stocks? i start with about 30. that a lot, not enough >> i would tell you that after 10, you're kind of a mutual fund now, look, if you're a real

stock junkie like i am, you can take on a lot more if you have help like i do for the action alerts club, it's not that bad but ten is about the maximum most people can do don't do more than that because you won't be able to do the homework roberto in texas, please, roberto? >> caller: hi, jim hey, boo-yah i just had a question because i'm a new investor i'm 29 i about $1500, and i'm wondering how i should invest in either an index fund -- >> s&p 500 index fund. plain and simple first 10,000 don't forget, index funds keep you diversified. and we like to diversify, diversify, diversify sure, homework isn't fun, but losing money is worse. diversification is key, so stick with cramer.

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look, i don't want to go all zen in the art of portfolio maintenance on you, but when it comes to managing your own money, you are often your own worst enemy. [ gunshot don't take it personally i'm my own worst enemy too what do i mean by that okay if you want to invest wisely, you constantly need to be fighting off your own worst impulses we're not robots we have emotions, and those emotions can really throw you off your game. that's why the theme of tonight's show is that discipline trumps conviction you obey the rules so you do the smart thing even when your emotions are telling you to do the opposite, which brings me to my next rule for investing nobody ever made a dime

panicking. yet panic, you should repeat after me, frankly, it's not a strategy panic is not a strategy. yet you see it over and over again as if it is. a stock gets hammered, then investors sell after the hammering. the market gets crushed with a huge day people bail at the end of the day. in short, something gets annihilated and people can't take the pain. so they bolt. >> house of pain >> sell, sell, sell! >> panic is the operation instinct in all of these cases there issing in basic and instinctive about panic and the desire to flee if you're a stone age hunter gatherer who accidentally stumbles into a family of grizzly bears, panic can be pretty helpful it tells you to run away but it's not a useful emotion when it comes to analyzing the statement where your running away when maybe you should be running toward the truth is there are almost be a better time to sell than in a panic. a better time to leave the table than whatever moment inspire you'd to panic in the first

place. and don't i know it. back in 2010, i was on the air for the flash crash when the market fell 900 points in less than an hour i watched the monitor for the ticker and i couldn't believe what was happened. people were dumping stocks simply because everyone else was dumping stocks they don't even know why they were dumping it. and that's what a panic looks like that's textbook. i urged viewers right there on the stock to pick a stock they love and buy it using limit orders so you wouldn't have to accept a price you wouldn't like the result, to this day people still come up to me and thank me for that advice during the flash crash. but i simply put my rule into practice i did the same thing back in 2016 when we had a thousand-point sell-off over two days i told people to buy down but only using limit orders. and that's what we did for charitable trust we got outstanding buys simply because we stayed calm and took advantage of everyone else's panic. so the next time there is a big

market wide sell-off and you feel like fleeing, and never touching a stock again, i want you to do something for me i want you to take the opposite side of your emotions, the opposite side of the trade when you see one of those high speed routs of a sector, even individual stock, why not buy a little get a feel for it. see what i mean. the most rewarding trades you can make are those where the decks have been cleared out by terrified folks using market orders. >> sell, sell, sell! >> who don't get that the exit doors aren't as big as they think they are mind you, i'm not saying you should buy every stock, every panic, every sell-off. they're not all worth buying often when people freak out about an individual company, it could be with good reason. but i am saying that it's a rare moment when you won't get some sort of bounce after a big decline. so next time you want to dump everything, take a deep breath and wait for the rebound before you sell, rather than rushing to join the fleeing masses. you could get trampled

hey, speak of hideous down days, i have another rule that can help you handle big declines ready? when the stock market gets unrelentingly negative, remember he who defends everything defends nothing. it's just as true now. granted, he was talking about battle plans and we're talking about portfolio plans, but the point stands so he who defends everything defends nothing. what does that mean? it's about how you evaluate your holdings when the markets fly and many stocks are in bull market mode you don't need to worry about most of your positions the more exposure to the bull the better, right? but when things get more difficulty, when you're on the defensive, you need to recognize many of the stocks bought during better times might not fit the new environment. in short, when the economy is slowing, you can't hang on to everything you might want the own. if you try to defend all of your positions in a market that turns against you, that's a recipe for you to be getting blown out of the stock market [ gunshot and when i say defend, you can't treat a declining market like it's a buying opportunity for

every single stock in your portfolio and you keep chipping away if you do that, you'll quickly run out of capital, anyone would, leaving you unprepared to buy more if we do go lower maybe appreciably lower. yet when the market gets negative, you need to get more selective and focus your efforts. that's why i rank all my stocks at all times for my action alerts ones are stocks i'd buy right now. threes i'd sell. that way i know which stocks to defend when things get tough i make this plan not in the heat of battle and i know which ones to cut or use as sources of capital to buy the ones. let's say tech is getting hammered but you think it's going to rebound it's important that you don't try to hang on to the whole complex. pick the best tech stocks that you want to buy under weakness toss out the rest for cash new the reserves to buy the stocks of higher quality tech companies at lower prices. that's right the nonessentials, the ones that

have no catalyst and you only own because you want exposure to the bull market, they get the heave-ho immediately when things turn bearish karen cramer worked for me for years at my old hedge fund used to call this circling your wag agains around the best names the first few times you do it you'll curse yourself because you might end up slaughtering stocks you owned for quite some time eventually after you experienced a number of rough mark, you'll realize how valuable this process is because over time you'll end up with great cost bases on stocks you really like. emotions get in the way of making money so the next time the market gets slammed, don't panic nobody ever made a dime by panicking. but also don't double down just with your eyes closed and the whole portfolio in weakness. vicious, negative markets can give you buying opportunities, but you need to focus your capital on your absolute favorites rather than chasing bargains in lower quality merchandise when it turns out they weren't bargainsat all. rich in new york, rich >> caller: hi, mr. cramer.

it's a pleasure. >> how you >> caller: >> i'm good, thank you could you please explain the technique of buying calls and if it could be or should be used bious home gamers to boost or pad our portfolios >> hey, look, it's a great question the najarian brothers, i don't know if you have ever seen them, they've done some fabulous work on options and there is "options action"s on friday afternoon they can be a low-risk way to be able to limit your exposure. and if you get the book "getting back to even," i have a 100-page exhibition of how to use calls to limit your downside and get maximum upside exposure. "getting back to even. david in california, david >> caller: boo-yah, jim cramer thanks for having me >> oh, i'm glad you called >> caller: thanks. all right. so a quick question. for millennials who are somewhat knowledgeable about the market,

where should they invest their money other than fang? >> well, you know what there is a lot of different fang-like names in all sorts of different industries for instance, i like aerospace that's a long-term bull market maybe you get something in that group. i like a little bit of foreign exposure, and i think that that's not such a bad idea maybe an etf that has europe, because europe is way behind where we are and will be that way for multiple years and then i think that you know what if you're really young, why not look at some riskier biotech stocks you got your whole life to make nah that money back. remember, emotions have no place in investing they get in the way of making money. so the next time the market gets slammed, please don't panic. nobody ever made a dime by panicking. sell-offs can give you huge opportunities. >> buy, buy, buy buy, buy, buy! >> but you need to do your homework don't chase, and don't buy damaged merchandise, just damaged stocks "mad money" is back after the break.

welcome back to tonight's check yourself before you wreck yourself edition of "mad money." i'm a big believer in the idea that once you get some money saved up, you are in control of your financial destiny but that also means you need to be very careful, because you're the one with the most power to derail your financial future look, mistakes will always be part of the investing game you can't rule them out and you

can't outlaw them. i just want to be sure that you don't make the same mistakes twice or three times or endlessly for that matter. and that's why i have rules. rules for investing to protect you from the kind of misjudgments that i used to make when i was young and inexperienced. rules like, for example, don't own too many stocks. >> buy, buy, buy, buy, buy, buy, buy, buy, buy, buy, buy, buy >> back at my old hedge fund, i would spend three hours every day analyzing the mistakes of the day before and you wonder why i retired i made myself sick to my stomach every single day that was my fmajor task i do it generally between 4:00 a.m. and 7:00 a.m. some people are night owls i'm an early morning owl i would analyze every losing trade. you don't need to analyze the winners. they take care of themselves try to figure out how coy have made more money or much more importantly lost less money. i was for lack of a better word, maniacal about it. and after a couple years, i had an epiphany. i realized good performance

could be linked to having fewer positions. in short, when we own fewer stocks, we tended to make more money. it was just axiomatic. that's why ever since i won't buy a stoke without first taking a different one off the table. try to do that for my charitable trust which is the only way you can do it these days you don't just buy shares in more and more companies. you need to limit your holdings. that's a great discipline and one should you should adopt pronto all the managers i know have hundreds of stocks i don't know how you stay on top of 30. all the really good manage verse a few names they know inside out, which means they can buy confidently on the way down when the market goes awry that's why i say don't own too many stocks. now i know to be constrained you end up selling stocks for stocks that aren't as good. i know that. hindsight is 2020. but take it for me, as someone who has on the other hand stocks for 20 years, it's far more

likely you'll be selling marginal companies in order to get bigger in better ones. that's how to make a portfolio work for you that's portfolio management. you don't want to be a mutual fund manager, right? you might as well give to it an index fund by the way, the time i lost my money money, my sheet, my positions were thick as a brick. when i made the most money, my sheets were one sheet of paper double spaced. and i ran hundreds of millions of dollars so please remember, whether you're a pro or an a am checks, it's almost always possible you have too many positions. rule of thumb, if you're just investing for yourself and you own more than ten positions, that's right, if you own more than ten stock, maybe you ought the pair back a bit. so you can have too many stocks, but you know what it's hard to have too much of cash which brings me to my next rule. cash is for winners. the widespread aversion to cash in this business breaks my heart. at times cash is such a perfect investment, it drives me crazy

how few people recommend it. they hate the market so they're only 95% long instead of 100%. or they think the market stinks so they decide to short a few highfliers against their longs in positions they own. no, no, and no as an investor, that is absolutely the wrong way the approach things. you don't like the market? you don't like any sectors sell stock, raise cash don't buy put options on the stocks you own or find other stocks to short against your current positions. the odds do not favor you winning on both stocks, the short and long it's a strategy whose goal is mediocrity but if you can raise cash and put to it work at lower levels, that's the best way the protect yourself against a lousy market. let me tell you a little story i was one of the biggest options traders on wall street for a time i can tell you when i bought put options to hedge my positions, i almost always ended up losing money. when did i make money? when i bought put options to profit from low quality companies that were going to have i thought shortfalls or stocks that seemed hopelessly overvalued versus the

fundamentals if you dislike the market, you don't need to bend yourself into pretzels to hedge risk just sell some stocks and go into some cash which is literally short-term treasuries to a less than a year of variety. people start talking about how little cash earns, although it's sure earning more than it did a while ago. or they say can't be in cash that's for losers. no cash is for winners. especially if you think is there is a major disaster ahead or the market is going through a prolonged sell-off i grew up in a different time. i only shorted when i had an edge i can't short at all right now by contract, even for the charitable trust but back when i could i didn't short for having shorts on against the longs, i didn't care about not having enough exposure i care about not losing money. so if you don't lying the market, if you think there is nothing compelling to buy into any weakness, i suggest that you sell stock and raise cash. go sit on the sidelines. nothing wrong with that wait or to the situation to improve. believe me, it's never the wrong call when you don't like the tape or you can't find anything that truly makes sense for you

the bottom line, always be careful not to own too many stocks and not to have too little cash. stick with cramer. i'm opening up the lines to hear from you, the voices of cramerica because it's an uncertain time i want to talk to you. >> mr. cramer, i just want to tell you, you are absolutely, positively fantastic >> thank you for helping us not panic in times like this the average investor, which we all know and love, you cater to us, and we appreciate you for owl you teach us. >> i am not going anywhere you shouldn't either well will get through this together. >> cramer has your back. call 1-800-743-cnbc. and let's take on the market together >> we're going to figure this out. we'll puzzle it over, and we'll make it so that we're all smarter. no more lugging your clubs through the airport or risk having your clubs lost or damaged by the airlines. sending your own clubs ahead with shipsticks.com makes it fast & easy to get to your golf destination. with just a few clicks or a phone call we'll pick up

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your tweets are piling up. holy cow let's start with one from quinton, who asks @jimcramer, at what age should i put bonds into my retirement account. currently stocks at etf funds at 25 years old okay i don't want bonds until very, very late. i like to actually extend it a little here and not until you are in your late 50s do i want to start seeing a lot of bonds why? because people live longer than they used to, and bonds don't generate enough return how about higher yield in dividend stocks? that's what i go with. moving on. could this be one of our next

producers? he says mad tweets, whatever, i would like to see from you a show titled typical errors of emotional investing. well, that's a great idea, and i'm going to do it because i do know that over and over again, emotional investing produces major mistakes that lead to big losses you got to check them at the door, and i will do that for you. another tweet, this one from steve daniels who sa says @jimcramer, boo-yah what other time of index funds do you recommend except for ones that mirror the s&p 500? okay there is a place called vanguard, an vanguard is terrific and they have a thing called the total returnfund of all stocks that one is one of my absolute favorites. stick with cramer. ba-ba-boo-yah! >> wow, that was a massive boo-yah. i'm so thrilled about it what's going on? >> because they're so darn safe.

>> stop betting that wile e. coyote will catch the roadrunner it doesn't happen. oh, yeah, i got to get this off. i had a blood test today okay anyway i'll pick that up later. bob evans farms? whoa that's great but now the company -- but now the company has shown that it know house to -- by selling pieces of subsidiary breaking news for this newfound treacherous time go. out. go long, go long, it's a go play >> so stick with cramer! especially if you get a few more good days of wang. wow. that was my stomach growling

cramer you are super. you are awesome. >> i'm a first time investor. >> thank you for inspiring me to get in the game. >> your show is the best i'm so glad you're on tv. >> i want you to know that you have transformed me. thank you, cramer. at ally, we offer low-cost trades and high-yield savings. but if that's not enough, we offer innovative investing tools to prepare you for the future. looks like you hooked it. and if that's not enough, we'll help your kid prepare for the future. don't hook it kid. and if that's still not enough,

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you'll know what you're invested in and how it's performing. so you can spend more time floating about on your inflatable swan. [ding] boo-yah, jim congratulations on a great show. >> "mad money" is not a show about picking stocks for you it's a show about empowering you to think for yourself. >> this is bill from new york. jim, thank you so much >> curtis from north carolina. i want to say thanks to you for creating "mad money." >> ba-ba-boo-yah. >> the man, the myth, the legend. >> the wizard of wall street >> i want to give a good boo-yah. >> you are the reason why we do this i like to say there is always a bull market some, where and i promise i would try to find it just for you, right here on "mad money. i'm jim cramer, and see you next time

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