>> call spreads on apple >> dan >> ea, no risk reversals >> guy, thank you. >> thanks for joining us >> i just feel smarter >> you should. that's it? all right. thanks for watching! we'll be back here next friday and have a great long weekend. "mad money" starts right now my mission is simple, to make you money i'm here to level the playing field for all investors. there's always a bull market somewhere, and i promise to help you find it. "mad money" starts now hey, i'm cramer. welcome to "mad money. welcome to cramerica other people want to make friends. i'm just trying to save you some money. my job is not just to entertain you, but to educate and teach. so call me at 1-800-743-cnbc, or tweet me @jimcramer. every night i come out here for two big reasons. the first is obviously i like the attention. but 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. and 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 cheapskate and save neverly every penny you earn the truth is if you want to become really wealthy in this country, that means planning you financial strategy for an entire lifetime even if you don't have a high paying job, as long as you can save a decent chunk of your paycheck and invest it wisely year after year, you can make your wealth grow to the point if you become, if not filthy rich, at least financially independent, meaning you don't need to worry about your job security or where your next paycheck is going to come from, and you'll be able to retire

easily without the need to rely on social security, which for all we know might not even be around when some of 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 talking about the con southeast accept 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. well don't talk enough about that on "mad money." tonight's different. but there is one constant when it comes to managing your finances, no matter how old you are, and that's the fact that you will never get a better opportunity to make your money work for you than by investing in the stock market. even when we're in a bear market, when the action is treacherous and volatile and feels like stocks go down every single day, when you take a long-term view, it's easy to see if the stock market is by far

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

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 depression, through the end of 2014, the 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 town, they're the only game in town if your goal is to grow your wealth. now for some you what want to get rich quick, rather than get rich carefully, that 10% average return for the average s&p 500, i know, it may not seem like such an impressive number. wait a second, you're i don't think. forget the fact it's more than double what you can expect from a 30-year treasury let's examine that 10% figure in absolute terms when you're taking a long-term view, which is what you're doing

tonight, meaning planning for your entire lifetime, racking up a return from a simple 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 down years, but overall, long enough time frame, that 10% figure has held steady. but to really understand the value of an asset class that tends to give you a 10% return in an average year, you need to view this through the lens of what's known as compound interest sometimes i'll talk about this as the magic of compound think of it like this. if you invest $100 in s&p 500 and it gains 10% in the first year, then you've got $110 after another year of 10% gains, you've got $121. a third year of the same gives you $133 the gains keep getting larger and larger because each year you're making additional money off the previous year's profits. 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. but the truth is as you get older, an investment that can pretty consistently take your money up in seven years' time and double it, it just becomes pretty incredible. that said, the magic of compounding works best the younger you. that means you have more time for your money to grow yet sadly, young people are least likely to be impressed by that steady capital appreciation that's why claimed economist george bernard shaw famously said that youth was wasted on the young. 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've got more than 40 years before you're expected to require. 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 around 10%, that in four 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, page for a huge chunk of a ritzy retirement and that monster multi-year 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, there are commissions there, and then you wait granted, you're waiting 40 years.

but $450,000 when you're approaching the age many people retire it seems a lot more valuable 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 -- can turn into a massive fortune when you're old. and have all sorts of additional costs and responsibilities and all you have to do after you initially save that money is let it sit on the sidelines. ideally in a 401(k) plan or ira so you don't have to pay capital gains or dividend tax. the same logic applies if you're 30 or 40 or even 50, but 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 and of course it's not just capital gains, but also dividends. everything gets reinvested let's go to brenton in new mexico, brenton? >> jim cramer, big boo-yah from the land of enchantment. how are you, sir >> i am good how about you? >> caller: i'm doing fine, thank you. hey, general question. mutual funds and index funds claim minimizing single stock risk right. >> caller: but inherently, though, isn't it fair to say that 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

i prefer it to be in an 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 is too much single stock risk but i want you to be able to pick stocks, and i know you want the do it or you wouldn't be watching this show brian in oklahoma, brian >> caller: thanks for having me. first time investor. how do you -- how do you value a company's -- one company versus another, a measure of their value? >> well, we spend a lot of time in "get rich carefully" talk:00 that you measure the future earning stream if you can measure the future earning stream, you can figure out what you'll pay for that earning stream now and what really matters is if you take a longer term view, you can feel what that stock might give you for dividends and capital gains. dividends tend to be for preservation, and the capital gains cap is for the

appreciation stream. i want you have a little bit of both, but you got to be thinking 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 and 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 punch here is. what you absolutely must not be doing in your retirement account. and i'm unveiling the rules you need to navigate in a 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 1-800-743-cnbc miss something head to madmoney.cnbc.com.

imagine traveling hassle-free with your golf clubs. now you can, with shipsticks.com! 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

and deliver your clubs on-time, guaranteed, for as low as $39.99. shipsticks.com saves you time and money. make it simple. make it ship sticks. it's pretty amazing out there. the world is full of more possibilities than ever before. and american express has your back every step of the way- whether it's the comfort of knowing help is just a call away with global assist. or getting financing to fund your business. no one has your back like american express.

so where ever you go. we're right there with you. the powerful backing of american express. don't do business without it. don't live life without it. this wi-fi is fast. i know! i know! i know! i know! when did brian move back in? brian's back? he doesn't get my room. he's only going to be here for like a week. like a month, tops.

oh boy. wi-fi fast enough for the whole family is simple, easy, awesome. in many cultures, young men would stay with their families until their 40's. ♪ tonight we're talking generational investing, meaning how to handle your finances depending 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. but just because some of this may sound straight forward doesn't necessarily mean that 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 need to have two discreet piles of cash. your retirement portfolio which is more conservative and should be invested in vehicles like a 401(k) or ira, and then your discretionary mad money portfolio, hence where the name comes from, where you can take risk with your money once you topped out your retirement fund. retirement objectives must always come first. i love to play with the discretionary mad money side of things that's why what this show is about. but a truth is a bet on your retirement is a bet on your own longevity. you want to live for a long time, and you shouldn't have to work your fingers to the bone that means planning for a retirement from the moment you get your first paycheck. regular viewers here know my rules. no matter who 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 a fabulous way

to get exposure of the stock market's gains without putting in the kind of time or effort that is necessary like what we do around here, picking individual stocks. and hey, if you don't have the time or inclination to pick individual stocks, then all of your stock market exposure can dom com via the index fund that mirrors the s&p 500. i'm fine with that there is no reason this needs to be incredibly complicated. but like i mentioned earlier tonight, it's very important you actually get yourself some exposure to the market, because no other asset class can grow your wealth the way equities do. once you save more than $10,000, that means you have enough money to start a diversified perfect of five stocks remember, anything less than five stocks and five distinct sectors, you aren't really diversified. you take that money and invest it in individual companies for your retirement portfolio. it's only once you saved a large enough amount of money for retirement, once you maxed out on all the benefits of your ira and 401(k) plan, if you have one, that we start talking about that discretionary portfolio, where you can afford to take more risk. i really want to make this point, because a lot of people

feel all i want you to be is in individual stocks. that's just wrong. index funds, and then individual stocks now when you're younger, your retirement portfolio and discretionary portfolio might not look all that different. younger investors can afford to take all sorts of risks with our money that we old guys simply can't. that's true for a host of reasons. when you're still in your 20s or even 30s, if you invest in something risky and it crosses your portfolio, well, you still got a lot of time to make the money back you've lost your whole working life basically you've got years and years and years of paychecks however, if you're pushing or approaching retirement and you lose a fortune in the stock market, that's a real problem and you're 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 take risks with their money that older folks can't, but for those in the younger demographic, it's imperative that you take those risks. now you shouldn't go crazy and speculate with all your savings.

the retirement portfolio is absolutely offlimits, but you should absolutely devote some part of your mad money portfolio to betting on these high risk long shots i know i'm out there saying this stuff. but i believe in this. i'm talk about smaller, less well-known companies with massive upside potential, coupled with enormous downside risk if things go wrong. remember, this is for the younger cohort the example is biotech stocks which can fly through the roof if they get big drug approval or even a positive piece of data. but the same token, the smaller bioteches will get slammed if there is any negative news and the stocks will be difficult to own in negative markets because they don't have dividends or earnings protection however, we're talking about long-term investing. looking for good opportunities that can work regardless whether we're in a bull or bear market and there are plenty of speculative companies that have nothing to do with the drug companies. why do i insist that younger investors speculate, take risks

that might scare older people? because the gains here could be absolutely stunning. ♪ hallelujah and it would be downright foolish to pass up the opportunity to own the winner, even if it means up picking losers on the way. when you're in your 20s and 30s, you should be investing like a young person, not an old man let me give you an example when "mad money" came on the air way back in 2005, our very first ceo interview was with dr. lynn slifer and regeneron, trading around $5 a share. at the time it was a biotech that had been kick around for 17 years. 17 years without ever really developing anything note worthy that could move the needle since then, this company has become a powerhouse with the stock taking off into the stratosphere based on the surprising strength of a drug called ilea, its blockbuster macular degeneration formula, and a number of other therapies. fast forward ten years to this

summer, 2015, and regeneron stock had traded all the way up to $592 before getting slammed by a sell-off. but forsake of using round numbers in this example, let's just call it 500 ten years ago what would happen with that $500 for buy in at 5? how about this a gain of roughly 9,900% no, regeneron 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 profit, no products on the market, and only the promises of the ceo that things would work out. of course, regeneron worked out in a major way, but many similar small companies have done nothing. or lost period over longer periods. 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 wide net, speculate using a basket. if you had taken small positions in 10 of these biotechs, nine of them go to zero. as long as the tenth one was regeneron, you still would have made a monster gain. this should only be one small part of your diversified "mad money" portfolio but it absolutely belong there's because the risk reward of trying to find the speculative winners absolutely makes sense when you're young. for older investors, though, speculation is much more risky game, and i only recommend playing it with excess cash that you absolutely can afford the lose here is 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 it 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've got the answer to the question on the of investors' minds. stocks or bonds? the age old wisdom you've heard

is wrong, and i'm about to rewrite the script plus, the game plan you need to follow when the bear market strikes. and it's the most important piece of advice about financial health i could ever give you many of you have will have to take action tomorrow don't miss this. 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 that 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. you always pay your insurance on time.

tap one little bumper and up go your rates.

what good is your insurance if you get punished for using it? news flash: nobody's perfect. for drivers with accident forgiveness, liberty mutual won't raise your rates due to your first accident. switch and you could save $782 on home and auto insurance. call for a free quote today. liberty mutual insurance. ♪ liberty. liberty. liberty. liberty. ♪ - anncr: as you grow older, -your brain naturally begins to change which may cause trouble with recall. - learning from him is great... when i can keep up! - anncr: thankfully, prevagen helps your brain and improves memory. - dad's got all the answers. - anncr: prevagen is now the number-one-selling brain health supplement in drug stores nationwide. - she outsmarts me every single time. - checkmate! you wanna play again? - anncr: prevagen. healthier brain. better life.

it's time to address a major issue that i have to admit i don't spend enough time discussing with everyone i'm talking about the question of stocks versus bonds now, there is good reason why you don't hear me recommending you invest in bonds very often, and it's not just because this show is about stocks the fact is every since the great recession, interest rates have been held down to incredibly low levels, and therefore bond yields like the return you get from owning, say, u.s. treasuries have been absolutely paltry, both by historical standards and versus what you can 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 castigate you'd 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 insuring 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, then like i've 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 pooh-poohing bonds all together there is absolutely a place for bonds in your portfolio. it's an essential place, especially as you get older. here is 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 moments where u.s. treasury yields are at historically low levels, at the end of the day, stock investing and bond investing are about two entirely different things. stocks are the tool you use for capital appreciation, meaning turn your money into more money. what 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 that you can risk your wealth that you have to generate even greater wealth that's what it is. you invest in bonds to protect whatever part of your wealth you can't afford the lose there it is which brings me to the generational investing aspect of this question. depending on how old you are, there is a huge difference of how you should approach the very idea of putting money into bonds. when you're young it's about taking risks so you can get better returns how people in their 20s and 30s can get away with that attitude, because you've 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 retirement accounts now bonds are a staple of saving for retirement because the u.s. treasure have i the closest thing to risk-free but most financial advisers will tell you need to earn a lot more

bonds a lot earlier in your life than i think is necessary. even if you invest in 30-year u.s. treasuries with the highest yields, their lower terms don't produce much in the way of capital appreciation let's say for the sake of this example, that 30-year treasury bonds, row 3.5% much higher than the 2.5 to 3.2 a a% we saw in the first three months with that 3.35 yield, as long as you reinvest your coupon payments back, 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 stetd steadily makin money, i think you're being too cautious i know it puts me out, there but i've been around that's how i feel. even in your 401(k) and ira, you

want to be very heavily weighted towards stock while you're young. while you avoid paying capital gains taxes and dividend tax, allowing your gains to pom pound year after year after year i've told you how great compounding. as you get older, owning treasure risks especially your retirement fund, becomes absolutely essential unlike the stock market where you can lose enormous amounts of money in the blink of an eye, bonds really are safe. once you use the stock market to make yourself financially independent, you know your investment won't somehow vanish overnight, ideally you do that by putting your cash in a cheap bond fund. let's get down to brass tax. precisely how much of your time and portfolio should you keep in bonds versus stocks? again, that depends on how old you are. i'm going to give you my rule of thumb, though. 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. it's better to put your capital to work in the stock market

where it can actually grow in your 30, i'm going let you keep 10% of your retirement fund in bonds, or 20% if you're on the conservative side. once you're in your 40s, i think you can go up to 20 to 30% bonds. in your 50s i say 30 to 40%. and your 60s, as you approach retirement age, already, take it up to 40 to 50%. that's right, 40 to 50% bonds. even as you retire, i still think you should keep a substantial chunk of your portfolio in the stock market. postretirement my recommendation is you increase your bond exposure to 60 to 70% because once you stop working, you really can't afford to take too many losses with your investments. especially since you're going to need to start spending the money in your retirement accounts. excuse me. but that said, i still think keeping roughly a third of your money in stocks makes sense, even for a retiree that's because you're going to be living off your investment for the rest of your life. so some part of your portfolio

should always be trying to create more wealth, in case you live longer than you expect and need more money to support yourself in other words, going all in on bonds once you retire is betting against your own longevity who the heck wants the take that kind of bet? here is the bottom line. for younger investor, putting money in bonds is good as you get older 40 to 50 is in treasuries by the time you're in your 60s because that will be protected against the volatility of the stock market. but even if you retire, you should keep owning some stocks so that some piece of your capital can continue to appreciate over the long-term. best case, you live a very long time and that extra money, it comes in handy let's take some questions. how about nasir in pennsylvania. nasir? >> caller: boo-yah, jim. >> how you >> caller: i'm good. a big fan of the show. >> thank you. >> caller: thank you for taking my call. >> caller: of course. >> caller: and i love your book,

"get rich carefully. i'm looking for advice on how to find an entry price for a stock, especially if i'm looking to start a core position, given how important cost basis averaging >> all right i think this is a great question and the reason why it's a great question is 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 they 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 taking into account human frailty, the most i ever liked to buy at one point is half 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. in all my books i talk about stage buying because i don't want you overconfident don't you be overconfident do it in stages. brian in new york, brian >> caller: hey, jim how. are you? >> caller: i'm fine. how you doing? >> caller: i have a 401(k) plan from a previous employer. >> okay. >> caller: and i'm trying decide

whether to put it in an annuity managed by an insurance company or if i should just put it in a traditional ira. >> 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 so it that people can build wealth, but my experience has been that a lot of annuities have fees that eat things up. maybe there are some that don't, but i believe in self-directed investing. when it comes for, that and if you have to, you can put it in your index fund if you don't have time. i do like to take control of my investment an ira lets you do that. listen, investing in stocks, investing in bonds are two very different things as you get older, you can gradually add exposure to bonds. but young investors, you don't belong in bonds. still much more "mad money" ahead, including a playbook when the 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. and i'm answering the

questions you've been sending me on twitter so why don't you stay with cramer the schedule is grueling, but cramer has burned the midnight oil and he is ready to run the conflict 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 ust-see interviews you can't afford to miss

tonight, rather than focusing on the day to day vicissitudes of the stock market, i want to help you take a longer view, point out how you can invest for a lifetime. that means taking a much longer time horizon than we usually discuss on "mad money. when i say longer, i'm talking taking a 20, 30, 40, or even a 50-year view of course there is no such thing as a stock you can buy and hold for the next decade or two it doesn't work like that. i wish it were that easy it's not regular viewers know my mantra, it's buy and homework, not buy and hold which means no matter how confident you are in a company you need to keep checking up on

it, make sure nothing has gone wrong with the story however, just because you can't pick a few stocks and ignore them for the next couple decades, you need to zoom out of it and 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 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 announce significant rallies in the face of incredibly positive news, the definition of a bear market, frankly you have to recognize you could be getting a terrific opportunity to pick up high quality stocks for the long run into the weakness. now understand i'm not giving you a license to buy stock indiscriminately in any kind of dip. but what i am saying is when you're faced with a bear market, meaning when the averages are down more than 10% -- let's use

that as the parlance on the show from the highs, and it seems like they could go lower, then it probably makes sense to start buying those 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 i say that all the time. and you're just asking yourself to look like a moron if that stock keeps going lower. instead, buying small chunks of your position incrementally on the way down humility, please on a bear market use wider scales, meaning after you make a purchase, wait for the stock to go down meaningfully and substantially before you buy more over the very long-term, you'll 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 but we're way past that you don't believe me look at the chart of the s&p 500 over the ten years starting the fall 2005. look at those hideous declines

during the financial crisis in 2008-2009. if you use that weakness to very gradually build a position in the cheap s&p 500 mutual fund on the way down, then within a couple years you made a killing. or how about that nasty bear of 2011 we snap back from those losses even more rapidly. by the way, this is why warren buffett always seems so sanguine when the market is getting crushed. he is incredibly long time horizon, and enough money that he can afford to take virtually any level short-term pain in order to get long-term gains don't get me wrong if you have a shorter time horizon, for example, if you're a hedge fund manager who absolutely needs to be up for the year for the day for all that matter, because investors will flee your business, then you cannot afford to approach a bear market as a long-term opportunity. as the hedge fund manager buys into weakness, you lose enough money in a short period of time, the fund will likely go under. go read confessions of a street addict when things got tough for me, although we were able to pull out of a tailspin but the vast majority of you are not running hedge funds. you don't need to make money

every day, or every month or year you need a long-term strategy that lets you rake in massive multi-year gains over the rest of your lifetime so you have enough money to retire comfortably, send your kids to college. that means you don't have to be concerned with short-term performance. this is not to hang on to loser stocks of loser companies because you hope one day eventually they'll turn around my point is the ugliest, most. >> have 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 other caveat, if you're not playing with an s&p 500 index fund you have to careful what stocks you pick in a bear market you need to do your homework, good balance sheets, or at least the companies that are doing okay but could do better in a stroerng environment during a bear market, we must absolutely not buy the stocks right in the blast radius of whatever is causing the decline. think the banks in 2008-2009

oil and 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, you should search for collateral damage stocks that are going down simply because everything is being taken lower by the s&p 500 futures and the etfs that crush entire sectors you own anything in the blast zone, please don't hesitate to -- >> sell, sell, sell! >> and swap into something safer. one more very important point. if you want to take advantage of a monster decline to do some buys, you need to have some 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 that you always have some cash in your portfolio and the better the market is doing, the bigger your cash position should be that's right the better, the bigger that's way when things inevitably go wrong, you'll be able to use the weakness to buy at bargain basement prices here is the bottom line. when you approach the stock market with a truly long-term

time horizon, you have to remember that big bear market declines can actually 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 increments on the way down stick with cramer. when it comes to your portfolio, cramer will always go the extra mile traveling the country and telling the most valuable stories. ♪ start your investment journey with "mad money" and let cramer help map out your financial future at at&t innovations, we give you more for your thing. here were adding tv and movies from our unlimited plan

to the powerful new samsung galaxy note9... ...the perfect device for entertainment & productivity. so, it's essentially the ed helms of devices? how so? well he's both very entertaining and very productive. you think? yeah, i do. and that's my completely unbiased opinion. buy a galaxy note9 and get one 75% off. more for your thing. that's our thing.

♪ all night i've been telling you about the best way to approach investing from a long life, long generational perspective. how to manage your money when you're young, when you're middle aged, hey, when you haven't heard, 60 is the new 50?

and even once you retire but there is another aspect to generational investing that really got us stressed here, and that's a need to get your kids interested in managing their own money and learning about the stock market in general. i say this to parents with kids over all ages. while i love the public school system, you cannot rely on the public schools or even ritzy private schools to teach your kids about money they can do a bang-up job with english, biology, chemistry, history, whatever. you want your kids to become fluent in a foreign language great. french, more of these fancy once that >> teach you chinese if you want your children to become fluent in the language of finance, you're going to have to do it yourself i get the view that personal finance is being too simple to even bother with it's like beneath them your typical hypothetical health class will teach kids how to put a condom on a banana, but nobody is going to explain why it's dangerous to maintain an

outstanding balance on future credit card bills. and you can't wait until after your kids go to college to teach them this stuff. because at most, institution of higher education, students get bombarded with credit card offers that can seem irresistible if they don't know any better i took down five of them throw in thousands of dollars of credit card debt on top of their student loans and they could be in the hole for decades, which in many cases means that you, the parents, will need the bail them out we don't want that yep, raising financially responsible children isn't just about being a good parent it's about not getting hit up for cash every month even when your kids are well into their 30s. that's why if you want your kids to learn about money, and what parent doesn't want financially responsible children, then 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 the kind anyone can easily wrack up on a credit card, and the need to save money coupled with the power of compound interest for generating wealth, like we talked about earlier. but in my view, the way to make

this go down is with a spoonful of stock picking sugar in other words, starting at fairly early age, i recommend giving your children gifts of stock and high quality companies that resonate with young people. my classic example, i've been using since the show started is disney give them a couple of shares a year for the holidays, starting when they're old enough to appreciate the big movie franchises, "frozen," "star wars," whatever. because disney is going for so many blockbuster films planned over many, many years in the future, not to mention a terrific theme park business, by the time your kids are teenagers, i think their disney holdings will show a nice gain there is 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 is still in elementary school. here is the bottom line. the point of getting your kids interested in stocks early is

simply that 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, invested to create 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 for moolah even after you have gone into retirement stick with cramer. the nature of a virus is to change. move. mutate.

today, life-changing technology from abbott is helping hunt them down at their source. because the faster we can identify new viruses, the faster we can get to stopping them. the most personal technology, is technology with the power to change your life. life. to the fullest.

"mad money" is going on the road to my hometown of philadelphia for the big nfl kickoff. "mad money" countdown to kickoff, thursday, 6:00 p.m. eastern on cnbc. and don't miss the game, the falcons versus the eagles, thursday on nbc. okay, cramerica, it's time for me to check out the twitter sphere and take a look at some of the tweets you se sent @jimcramer. let's check with viewers and see what's trending in their portfolios first up @fridge93 who says you talk in your book about research for a new investor, what are a few pieces of information we should look for when stock picking. the first thing is i want you to know the product i want you know what it does, i want you to like it. the reason for it 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. and after that, you can read in "get rich carefully.

i do comparisons i tell you exactly how to rate a stock. you can do it on a numbered basis and figure out where it should stand versus others but you've got to like the company first, or i promise you, in the first big sell-off, you'll become a seller, not a buyer. i don't want that. okay the next question is from patrick sutera jim, for retirement, it is best a dollar cost average index funds or wait and buy on market down turns,/mad tweets here this is really important. here ishow i do it try to do it 1/12 a month if i can. each month but if there is a big break in the stock market, i accelerate some i would do later in the year and put them to year in that break even up to a third of it so in other words i like to take advantage of declines and accelerate what i put. in and i've done it for years

and years, and it's really work for me otherwise divide by 1/12 next up is larry blumen. what would they do without cramer my wife said the same thing. all right. now, look, look, i'm a teacher i got some books try to come out here every night. but it's really important for people to know, what would you do without yourself? see, 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 this show who haven't watched it over the evolution and say all he does, he tells you to trade in and out of this or that. i hope that you know that it's the opposite longer term investing is the way to make money. index funds and then "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 a -- i get this thing from the -- standard & poor's.

it's pushed to me via e-mail it's hundreds and hundreds of charts i go over each one i have a file that says good, bad, question mark try to figure out why that went up and then story idea for show and i write down each one and where they are and where they fit. and then when i'm done, i tend to do a piece for real money, a long piece, that's the paid side of the street where i look at what trends i see. and then for the rest of the week, i send my staff which staffs i don't understand and why and some theories about why we should be doing certain pieces and it takes up almost all sunday except for when the eagles are playing stick with cramer. alerts -- wouldn't you like one from the market

when it might be time to buy or sell? with fidelity's real-time analytics, you'll get clear, actionable alerts about potential investment opportunities in real time. fidelity. open an account today. who would have guessed? an energy company helping cars emit less. making cars lighter, it's a good place to start, advanced oils for those hard-working parts. fuels that go further so drivers pump less.

improving efficiency is what we do best. energy lives here. i like to say there is 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,"

the numbers don't add up for this captivating accountant. scaccia: she's convincing. she's charming. she's confident. and she's chaotic. and you say, oh, that's just lizzie. narrator: social climber lizzie mulder appears to have it all -- money... she had money to spend on anything and everything she wanted. narrator: ...status... the average home in this area, i would say is about $5 million. narrator: ...and friends... we were close. it was like family. i trusted her wholeheartedly. narrator: but in upscale laguna beach, looks can be deceiving. welcome to the orange county dream a real housewife is willing to steal for... scaccia: somebody that i believed was my friend was screwing us intentionally.

narrator: ...even if it means swindling her best friends.