career of tony broks ton any show in the history of television. >> she has her own show. >> she has a reality show. anyway. >> tulips. >> shows what you know about tony final trade. >> pr you u a trade to get you done. >> bac 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 but to educate and teach you so call me at 1-800-743-cnbc or tweet me @jimcramer. snoo i say it over and over again. in other words, no matter how

much you may love a stock, no matter how enthralled you are with the underlying company, if the rules say sell it, you sell it you violate the rules of the road as your own peril but where do the rules come from not like the laws of physics and you can't deduce them the way you can say gravity. the rules come from experience particularly my experience i have spent nearly 40 years in the business i have learned some powerful lessons. in many cases, i have learned them the hard way and because i don't want you to repeat my mistakes, tonight i want to lay out some of my important rules

for investing, the stuff i live by some of the stuff may seem basic, back at my old hedge fund i occasionally convince myself that it was okay to make an exception. to ignore my discipline just this once. whenever i broke my rules, let's just say i got burned. it is like the old joke where the guy goes to the doctor and says doctor, it hurts when i shake may hand around. the doctor says don't do that. let's take down my important rules for investing. starting with rule number 1, bulls make money, bears make money, and pigs they get slaughtered. look, i say this all the time,

because that's, because so often in my career, i have seen moments where stocks went up so much that people were intoxicated with their gains however precisely at this point of intoxication, you need to remind yourself not to act like a pig. i first heard this phrase on the desk of the legendary steinhard partners i had no idea what he was talking about. and i was grateful that i caught a major gain of course not that long after, we had a vicious sell off and i gave back everything i made. and then some. that when i made this as one of my rules i got a barnyard full of sound effect buttons to tell the whole story, the bulls, the bears, the

pig and of course the guillotine the exact same idea applies on investors who press their best on the short side. other than the dot com burst, most stocks did bounce back quickly. you made a killing if you went long on the lowest 2009. if you stayed short, you got greedy, you got slaughtered. how do you know when you are being a pig? look, aelgdsllegedly no such tha stupid questions you don't need me to tell you you are being a pig. you don't need an investment adviser, you need a psychiatrist if you took profits, you side

stepped a huge decline the financial question is even more stark if you were walking around and earning a huge amount of stock, you were beyond piggish. why is this rule important it is simple one of my chief goals is to help you stay in the game holding on through difficult periods and taking short-term pain so you can have long-term gains. the people who got wiped out by the dot com collapse, they tend to be the ones who never took anything off the table piggishness got them slaughtered. being cautious and ringing the register near tops ended up keeping you in the game. that is why i remind people every day, have you taken out your profit? have you booked any gains at all

or are you being a pig because you never know when stocks you own are going to really get crushed you never know when the market is going to be just enough you can't have certainty if you assume stocks will keep going up forever in a straight line, you will be in for a world of hurt. sure there will be times when stocks keep going and going. when i coined the word f.a.n.g, i love them all. but i gave up on amazon after an amazing run. it went up and up. and then i felt like a fool when it kept on galloping but that is the price you have to pay for following these rules. you need to recognize that for every huge pile of cash that gets left on the table like a situation like amazon, you are side stepping gigantic losses like the kind you would have had

if you stuck with the market in 2000 and 2008. never forget, bulls make money, bears make money and pigs get slaughtered. and i will keep repeating it forever with the sound effects because it is just that important. rule number 2, it is okay to pay taxes. no one has ever liked paying taxes but like death, taxes are inevitable and unavoidable the aversion to paying taxes on stock market winnings border on the pathological many times people have gigantic gains but refuse to take profit. wall streets is littered with broken hearts of investors who make this mistake. i went to a presentation from a

prominent hedge stock manager a stock from macy's. i know people who have owned it for years with hefty profits and they didn't want to ring the register and next thing you know, the stock was obliterated. the mall had hit a tipping point. and the darn thing just got crushed. those who didn't want to share their profits with uncle sam ended up with no profit as all make your peace with the tax man. some gains are unsustainable and need to be taken a profit on paper is not the same thing as a profit in your bank account gains can be ephemeral the last you need to worry about is tapcal gains taxes. when it is time to sell, you sell start fearing the loss man, not the tax man. i am saying take profits

bottom line, remember my top two rules. bulls make money, bears make money and pigs, and don't be greedy don't be so worried about taking a taxable profit becauseyou may end up with no profit at all. chris in ohio. chris? >> caller: hi, jim, thanks for having me. >> sure, chris, good to have you. >> caller: so my question is, we have $1,000 of disposable income and neither of us have a 401(k) match with our jobs so we are basically trying to figure out, we have a mortgage, and trying to figure out what would be the best thing to do with that extra thousand dollars of disposable income. >> that's what an index fund is. you can take 10% of that and use it for mad money that's okay by the way, my first

stock trades were one share, two shares but you need an index fund to start building well. how about jacko moin illinois. >> caller: thanks for taking my call $10,000 allocated in mutual funds or exchange funds. >> yes. >> caller: my question for you is seeing this crazy bull market going on, seeing the market ramp up, cryptocurrency go up if i don't have $10,000 invested in mutual funds, what should i be doing sit around and let opportunity pass and wait it out >> i young person, look i want people to be able to save. that's my principle goal if you want to put mad money aside and doing what i basically

think doing gambling with it i'm not going to stop you. as long as you understand the risk, i'm okay with it but i cannot back away from the index funds as the fundament of how you invest jeff in california. >> caller: this is jeff in lake tahoe, thanks to you and your staff for your informative program. i have a two part question pertaining to interest rates and specifically yield curves. can you explain to us, what a flattening yield curve means and why did analyst say that it portends a recession come and the last part of my question, is what happens if the ten-year t bill goes over 3%, how will that affect the stock market in 2018 and grab your skis and come on

out and see us in tahoe. >> i love lake tahoe rest of the curve goes down, out, five, ten, 20 years, that is a curve that has shown in many cases to lead to recession. but in other cases not so i am not hardened fast in that rule. i think as rates go up, business does show. that is undeniable we are such a low rate and business is so strong. that we can afford it. mike in california. >> caller: good afternoon mr. cramer thanks for taking my call. and number two, thanks for leading us 9:00 to fivers with extra money. it is concerning dividends

i want to know, do you take the money and put it in your pocket or put it back in the stocks and if you do, how do you make that work and set it up. >> you've got to do dividend reinces reinvest my travel trust not allowed to got to give the dividends away i tell club members, please, reinvest, there is nothing like the compounding, the great compounding that you get particularly with stocks that have good dividends. bulls make money, bears make money, and pigs get slaughtered. don't be afraid to pay the tax man on profits you earn, a lot better than riding things to losses i am putting nearly four decades of experience to work tonight. counting down the most important rulings for investing to help

you navigate the market. stick with cramer. >> announcer: don't miss a second of "mad money." follow @jimcramer on twitter have a question? tweet cramer, #madtweets send jim an e-mail to madmoney@cnbc.com or give us a call at 1-800-743-cnbc miss something head to madmoney.cnbc.com. i'm ken jacobus, i'm the owner of good start packaging. we distribute environmentally-friendly packaging for restaurants. and we've grown substantially. so i switched to the spark cash card from capital one. i earn unlimited 2% cash back on everything i buy. and last year, i earned $36,000 in cash back. that's right, $36,000. which i used to offer health insurance to my employees.

my unlimited 2% cash back is more than just a perk, it's our healthcare. can i say it? what's in your wallet? this is john, and i'm with pactel cellular in los angeles. well, welcome to the demo... (danny dichter) in 1989, a new wireless technology was being tested for the first time ever. it allowed more users to connect at the same time while on the move. other wireless carriers considered the tech too expensive, but we saw it as the birth of reliability and the backbone of a company we all know as verizon. so we were the first to commit to the cdma system and the first to build our entire network around it. today, once again, we're transforming reliability as we know it, building america's first and only 5g ultra wideband network-- with unprecedented capacity, enabling faster speeds and the lowest latency anyone has ever experienced on a wireless network. which is crucial, because we'll be relying on it more than ever.

(man) it's really quite impressive, uh, what y'all have put together here to, uh, to show the quality of the system. thanks, janet. it's welcomemy happy place. store. you can learn how to switch to xfinity mobile, a new wireless network that saves you cash. and you can get 5 lines of talk and text included with your internet. and over here i'm having my birthday party. dj fluffernutter, hit it! ♪ dj fluffernutter simple. easy. awesome. ask how to get $300 back when you sign up for xfinity mobile,

and purchase a new samsung phone. visit your local xfinity store today. news flash, at the end of the day, we are only human if you remember only one thing about being an investor, that is it no one is perfect. everyone is fallible and inevitable that we are going to make mistakes. that's why if you are 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. never buy a stock all at once.

no financial adviser has the time to buy stock methodically over time. make the statement buy get the position on the sheets or in the portfolio, but where i stand, that is all wrong you should never buy all at once and never sell all at once instead i want you to stage your buys, stage your sells the terms 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 a professional money manager i wanted to prove everybody how right i was. if i wanted to buy caterpillar, i would buy it all at once as if i was the only guy in the

universe and smart and doing it big. when i think back at that young cramer with a full head of hair, i was one arrogant son of a gun. if you want to buy 50 shares of caterpillar, you don't pick them all up at once that is done never buy all at once. instead i should have been buying it in increments of 5,000 shares you buy it gradually over time trying to get the best price you could. you can put it on a strong position i know institution guys are saying, 50,000 is not, but you know what, i know longer trade in size, but i still invest and i invest in my travel trust and you can follow along

over the course of multiple days, it makes sense when you buy at all once, you are declaring that the stock won't go lower buying gradually in stages is all about recognizing that our judgment is fallible why don't people do it my way? why not buy it in 100 share increments i think because they want to be big too. your broker wants to get the trade done my brokers hated it when i would place incremental orders it maybe it will go into free fall right after. you need to resist like you are making a statement i bought and sold billions of stock. how often the last price was the lowest and then off to the races? maybe one trade in 100 and i am good at this game. so resist the arrogance.

buy slowly even buy over a couple of days humility beats hub rous. wall street is different if you buy a stock and it turns out to belong to a defective company, you need to eat the losses that is why you need to be careful to distinguish between broken stocks and names that are down for no particular good reason sometimes damaged companies could be easy to discern when valeant started plummeting,

it wasn't a good sell to rush toward they tumbled from 262 down to single digits before it bottomed the ongoing problems that the company meant that the stock was down right toxic on the other hand, sometimes stocks will sell off for different reasons. just because the stock is down, doesn't mean there is anything wrong with the actual business how do we distinguish between a broken company and a broken stock. i call this my bullpen 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. the bottom line is you never

know you never buy a position all at once what you think is a damaged stock might turn out to be a damaged company. if you take your time, you might end up with a large quantity of broken merchandise stick with cramer.

if you want to build a portfolio of individual stocks, the big if since there i nothing wrong with getting all of your equity exposure, you have to be rigorous about it my next rule is do the homework. growing up, my kids hated doing the homework they thought it was punishment what is the relevance of most things they teach in high

school how would it help you later in life why even bother. of course that is a terrible attitude i should take that back. but as parent, i always encouraged my kids to study you never know what you will be interested later in life you suspect it may be just as irrelevant to your portfolio as my kids did. if they are going to own these stocks, they don't want to hear it they think i am being a skull. reading research reports, they don't want any part of it. a schoolmarm who is asking for way too much in this busy world.

but that is wrong. i regard it as just plain lunacy people still do it and they do it for a couple of reasons. there is the buy and hold school of thought, the idea you don't need to keep track of what is happening in the company because you are in it for the long haul. on the other hand, you have people who don't have the time to be that diligent. either get someone else to manage your money or invest in a low s&p 500 index fund it is the buy and hold premise that is a lot more pernicious. back in the 1990s, buy and holds became the be all and end all investing. i am going to hold on to that cmgi you have to look back to that, google it. the experts say if you hold

things for the long-term, isn't everything supposed to work out for the best of course this philosophy took a blow during the financial crisis that is why i have been an evangelist for buying and homeworking. before you buy a stock you should listen to the conference call you can go to the company website, read the research google it, everything is available on the web you have so much more knowledge, that there isn't any excuse. you aren't begging at the library for the microfiche statements from a month ago. if you fall back on the buy and hold strategy and don't pay attention, i can assure you that you will be soundly beaten who are searching for high quality stocks all of the time

i am certain that any index fund will be certain foranybody who doesn't do homework. the next rule is a rule i harp on diversify, diversify and then diversify more if you control the down side, the up side will control itself. control the down side means managing risk. what is the biggest risk out there? sector risk. they tend to trade together. especially at extreme moments. about 50% of the action of the given stock comes down to its sector some of these areas because of the etf it is higher. if you had your eggs in that one group, you just got scrambled. and there is only one thing you can keep you from getting nailed by this sector risk and that is diversification, that is why we

play this game am i diversified. it is the only investment concept that works for everyone. if you mix up different sectors in your portfolio, at least five, you won't get wiped out. if it is such a no-brainer and every adviser and commentator has been telling people for years, why are so many people not diversified. it comes to the homework they end up with stocks that are frig frighteni frightening. you own variations of the same thing, they trade together that is what i call faux diversification. no matter how much i like the

all stocks -- i say no to the portfolio to j and j, eli lilly, bristol-myers. they leave you too exposed to risk having an undiversified portfolio is a mistake if you concentrate all your bets in that one sector and that takes off, you beat everybody in that sector. get profile by every magazine and raise tons of capital. here is the bottom line. when you are an amateur or professional, you need to do your homework and keep your portfolio diversified. this is the routine exercise

that protects you from monster losses down the line monster in south carolina. >> caller: i was wondering if i am a new investor, how many stocks should be in my portfolio? >> after ten, you are kind of a mutual ton if you are a real stock junky like i am, you can take on more. and if you have help, it is not that bad but ten is the max don't do more than that. because you won't be able to do the homework roberto in texas. >> caller: hi jim, i just had a question about, because i am a new investor, i am 29. and i have a small amount. $1,500, and i am wondering if i should invest in index fund.

>> index fund no matter what, don't forget index funds keep you diversified. and we like to diversify diversify. homework isn't fun, but losing money is worse homework and diversification are free stick with cramer. ♪ ♪ my ambition is to show my kids the world. ♪ ♪ the one in three dimensions. ♪ ♪ so they can look up and see the place they live. ♪ ♪ and prove that the real world beats a post. ♪ ♪ ambitions live everywhere. synchrony helps make them happen with customized rewards and financing available at over 350,000 locations. synchrony. what are you working forward to?

more range of motion. i'm fine. okay, well let's see you get up from the couch. i'm sorry, what? grandpa come. at cognizant, we're uniting doctors, insurers and patients on a collaborative care platform, making it easier to do what's best for everyone's health, every step of the way. you may need more physical therapy. ugh...am i covered for that? yep. look. grandpa catch! grandpa duck! woah! ha! there you go grandpa. keep doing that. get ready, because we're helping leading companies lead with digital. get ready, because we're helping leading companies lease the 2018 rx 350 for $439 advana month for 36 months. experience amazing at your lexus dealer. at fidelity, our online u.s. equity trades are just $4.95. so no matter what you trade, or where you trade, you'll only pay $4.95.

fidelity. open an account today.

look, i don't want to go zen in the art of portfolio maintenance. when it comes to making money, you are your worst enemy if you want to invest wisely, you constantly need to be fighting off your own worst impulses we are not robots. we have emotions and those can throw you off your game you obey the rules so you do the smart thing even when your emotions are telling you to do the opposite my next rule is nobody ever made a dime of panicking. panicking is not a strategy.

panic is not a strategy. yet you see it over and over as if it is a stock gets hammered and investors sell after the hammering. people bail at the end of the day. if something gets annihilated and people can't take the pain panic is the operating instinct in all of these cases. something basic instinctive about panic. if you are a stone age hunter gatherer who stumbles into a family of gristly bears, it tells you to run away. but it is not a useful emotion when analyzing a stock market when you are running away maybe you should be running toward there is always a better time to sell than in a panic a better time to leave the table. back in 2010, the market fell

1,000 points in less than an hour i couldn't believe what was happening. people were dumping stocks because everybody else was dumping stock. and that is what a panic looks like i urge viewers right there to pick a stock they love and buy it using limit orders so you wouldn't have to accept a price you didn't like. to this day, people come to me and thank me 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 limited orders and that is what we did in the travel trust we stayed calm and took advantage of everyone else's panic. the next time there is a big market wide sell off and you feel like fleeing, i want you to

do something for me, take an opposite of your emotions. when you see a high speed route of a sector, why not buy a little, get a feel for it. see what i mean. the most rewarding trades you can make are those of the decks that have been cleared out of those folks using market orders. i am not absolutely saying that you should buy every stock in every panic, every sell off, they are not all worth buying. when people freak out about an individual company, it could be with good reason but it is a rare moment when you don't get some sort of bounce after some big decline so the next time you want to dump, take a deep breath and wait for the rebound before you sell speaking of hideous down days, i have another rule to help you handle big declines. when the stock market gets

unrelenting, he who defends everything, defends nothing. granted he was talking about battle plans and we are talking about portfolio plans but the point stands what does it mean? it is about how you evaluate your holdings. when the markets fly, you don't need to worry about most of your positions, the bull the better, right? when things get more difficult and you are on the defensive, you need to recognize that many of the stocks you bought during better times might not fit the new environment. when the economy is slowing and market is getting slammed, you can't hold on to everything you want to own. that is a recipe for you to get blown out of the stock market, when i say defend, i mean you can't treat a declining market like it is a buying opportunity and you keep chipping away if you do that, you will quickly run out of capital

yup, when the market gets negative, you need to get more selective, that is why i rankle my stocks at all times ones are stocks that i buy right now, twos stocks that i buy in weakness i make this plan not in the heat of battle. and i know which ones to cut or use the sources of capital to buy the ones let's say tech is getting hammered you about you thi hammered but you think it is going to rebound pick the best techs. that is right, the nonessentials, the ones that have no cat tallist.

karen cramer used to call this circling the wagons. the first few times you will curse yourself, but after experiencing a number of rough markets, you will realize how valuable this is over time you will end up with great cost basis great investors know how to ignore their emotions. don't panic, nobody ever made a dime by panicking. and don't double down just with your eyes closed vicious negative markets can give you sbibuying opportunities but you need to focus on capitals rich in new york >> caller: hi, mr. cramer, it is a pleasure >> how are you >> caller: will you please

explain, the technique of buying calls. and if it could be or should be used by us home gamers to boost or pad our portfolio great question, and the najarian brothers, if you get the book, getting back to even, i have 100 page exposition of how to use calls to limit your downside and get maximum upside your exposure david in california. >> caller: booyah, jim cramer, thanks for having me i am glad you called for millennials who are somewhat knowledgeable about the market, where should they invest their money other than f.a.n.g. >> there are a lot of different

fang like names. for instance i like aerospace. i like a little bit of foreign exposure and i think that is not such a bad idea maybe an etf that has europe because europe is way behind we are. and if you are really young, look at some riskier bio tech stocks emotions have no place in investing. they get in the way of making money. please don't panic, nobody made a dime by panicking. you need to do your homework don't chase and don't buy damaged merchandise just damaged stocks ma "mad money" is back after the "mad money" ♪s back after the

a hotel can make or break a trip. and at expedia, we don't think you should be rushed into booking one. that's why we created expedia's add-on advantage. now after booking your flight, you unlock discounts on select hotels right until the day you leave. ♪ add-on advantage. discounted hotel rates when you add on to your trip. only when you book with expedia.

welcome back to tonight's check yourself before you wreck yourself edition of "mad money." i am a big believer in the idea that once you get your money

saved up, you are in control of four financial destiny that also means you need to be careful. mistakes are always a part of investing. 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 is why i have rules rules for investing. rules like for example don't own too many stocks. back in my old hedge fund, i would spend three hours analyzing the takes of the day before that was my major task i would do it generally between 4:00 a.m. and 7:00 a.m i would analyze every losing trade, you don't need to analyze the winner, they take care of

themselves tried to figure out how to make more money or lost less money. i was for lack of a better word, maniacal about it. in short, when we own fewer stock, we tended to make more money. it was axiomatic and that is why i won't buy a stock without taking a different one off the table. i try to do that with my travel trust. you don't just buy shares in more and more companies, you need to limit your holdings. all the bad money market managers i know have hundreds of positions. all the good money managers have a few names. which means they can buy confidently on the way down.

don't own too many stocks. you will end up selling stocks for stocks that aren't as good it is far more likely you will be selling marginal companies in order to get bigger and better ones that is portfolio management by the time i lost the most money, my sheets, my positions were thick as a brick. when i made the most money, it was one sheet of paper double space. whether you are a pro or an amateur, almost always possible that you have too many positions. if you're just investing for yourself, and you own more than ten positions, that's right, if you own more than ten stocks, maybe pair back a bit. you can have too many stocks, but it is very hard to have too

much cash. which brings me to my next rule, cash is for winner at times cash is such a perfect investment that it drives me crazy how few people recommend it only 95% long instead of 100%. or they think the market stinks so short a few high flyers that is the wrong way to approach things. you don't like the market, any sectors then raise cash. the odds do not favor you winning on both stocks, the short and long it is a strategy whose goal is immediate i don't ca mediocrity i can tell you when i bought put options to hedge my positions i

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 what i thought short calls. if you dislike the market, you don't need to bend yourself. sell stock and go in some cash people talk about how little cash earns, or they say can't be in cash, that's for losers no cash is for winners. especially if you think there is a major disaster ahead i grew up in a different time. i shorted when i had an edge back when i could, i didn't short stock for the sake of having shorts on or against the long i cared about not losing money if you don't like the market and you think there is nothing compelling to buy into any

weakness, i suggest you sell stock and raise cash go sit on the sidelines. wait for the position to improve. it is never the wrong call when you don't like the tape. always be careful not to own too many stocks and not too have too little cash. stick with 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, we'll help your kid's kid prepare for the future. looks like he hooked it. we'll do anything... takes after his grandad. seriously anything, to help you invest for the future. ally. do it right.

the tweets are piling up

let's start with quintin at what age should i put stock in my retirement funds i don't want bonds until very late not until you are in your late 50s do i want to see bonds bonds don't generate enough return how about higher yielding dividend stocks. moving on, he says i would like to see from you a show entitled typical errors of emotional investing. that is a great idea and i am going to do it i do know over and over again emotional investing produces major mistakes that lead to great losses you got to check them at the door and i will do them for you.

another tweet, booyah, what other types of index funds do you recommend besides the ones at s&p 500 there is a place at vanguard, they have a thing of total return funds of all stocks that is one of my absolute favorites. stick with cramer. >> announcer: the earnings are relentless but cramer has burned the mid nooip night oil. join "mad money" for must see interviews you can't afford to interviews you can't afford to miss fidelity. open an account today.

fidelity. - 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. 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 will see you next time!

>> welcome to the shark tank, where entrepreneurs seeking an investment will face these sharks. if they hear a great idea, they'll invest their own money or fight each other for a deal. this is "shark tank." ♪ my name is barbara lampugnale, and i live in west hartford, connecticut. i am a mother of six girls, two of which have gone off to college. (chuckles) my girls and i absolutely love doing fun things together, so on sunday nights, it's become tradition that we all get together and paint each other's nails. do toesies. it was on one of these nail nights where my idea just hit me. wow.