>> i like mike's boy you put on the. excuse me facebook november, january call calendar. >> that does it for us on "options action. see you back here next friday at 5:30 p.m. eastern time meantime time don't go anyerwhe. "mad money" with jim cramer starts right now my mission is simple, to make you money i'm here to level the playing field for all investors. there's always a bull market somewhere, and i promise to help you find it. "mad money" starts now hey, i'm cramer. welcome to "mad money. welcome to cramerica other people want to make friends. i'm 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. tough days don't last forever, but when they come along, you need to know how to respopd. you need a game planned totally

developed and ready to see what kind of we are dealing with. the early days of the decline, we'll are never easy to navigate let's bring a line from tolstoy's ana carrenina. it is not so darn easy big declines and much harder because they could be the start of a bear market the beginning of something un-fa un-fathomable. you can figure out how to handle these moments of weakness without panicking. first, let me offer some

historically constructive works of relief. there has only been two selloffs i could have done the nasdaq crash, but the s&p does pretty well let's deal with the two big ones they are polar opposites black monday, the dow fell 22% in a single session. i was trading that day and even as the previous weeks was one of the worst weeks in history, monday hit fast and hit hard almost as if there were no buyers to be found it was selling off right into the close. i remember thinking saved by the

bell except not many to be saved. i mentioned the week before was one of the market's worst weeks ever a 10% decline. it encouraged bargain hunters. these souls thought they could flip monday morning into strength and that strength never developed. what we came known as terrible tuesday where the dow broke down the market simply stopped functioning. i was there. and i was able to calculate that bottom the actual bottom that occurred. and it was off another 338 points from where the market closed on black monday allen greenspan stopped it in its tracks i remember that green line when it came over your screen

and the market stayed a remarkable two-day rally that took us up more than 500 points. you know, it took almost 16 months before the averages were trading it didn't bottom until march 9, 2009 we didn't return to the 2007 level until march 2009 the stock market failed to be able to function it's instructive to play out black monday you may have heard theories

about what caused the crashes, but most are wrong all three started with futures in chicago overwhelming wall street new york, stock traders didn't understand the power of the futures market these days we accepted the futures are worth watching but it wasn't like that back then. they were new instruments found in five years before the crash they were initially a much smaller market than the stocks themselves the ease of which portfolio managers became in and out of them even more powerful than the actual performers of the underlying companies now, it is these futures that matters. even with a new impact of futures, black monday was unusual. we had a big run going into '87.

i left goldman sachs that year to start my own hedge fund it created such stupendous gains. insurance policies which could stop in gains. so-called portfolio insurance where these specialist said u s using futures you no longer would be exposed to risk the idea was that they let you side step the losses it is impossible to do that. unfortunately, much like communism, portfolio concedes in theory, but it doesn't work in life insurance didn't work. if anything, the future selling

from the insurance was a decline. the people who sold these policies were char llott charlos don't believe anyone whoever tells you any different. we didn't know that the power of the futures could cause a crash. we figure where there is smoke there is fire. there simply had to be a recession lurking. at least that is what we told ourselves. wrong, the economy was strong going and it was strong coming out out of it. it was between chicago and new york that set off the conflagration. it concluded that the futures

set off so much selling that specialist firms from the floor of the exchange and brokerage houses failed to step up the former was pose supposed to do it. i was fortunate enough to being cash on black monday, having liquidated my portfolio earlier in the previous week it made my career. i could show perspective investors that i could side step it for real. the truth is i was frightened of the market and wanted to regroup. it is better to be lucky and good sometimes crashes have nothing to do with the economy they are caused by the mechanics of the market. stay tune for more examples of this decline and the more

serious animal of the bear market of 2007 than two thou nine let's go to keith in texas. >> caller: how do you decide when a correction like we had bath in february had made a bottom and it is okay to get back into the market >> i like to try to get a sense of whether the selling has run its courses and what it takes to do that, is to be able to first, get a level where it bounces and then it comes back and tests that level if that second test as we call it holds, then it is more than likely that you have to come back from the sidelines and [ buy, buy ] knowing how to respond is essential to your money. on "mad money" tonight, don't miss my take on the micro

crashes that could be short but have lasting events. you might know chicken little and the boy who cried rowoof in fai fairy tales. so stick with cramer >> announcer: don't miss a second of "mad money." follow @jimcramer on twitter have a question? tweet cramer, #madtweets send jim an e-mail to madmoney@cnbc.com or give us a call at 1-800-743-cnbc miss something head to madmoney.cnbc.com.

something is transforming and our world.. it's the longevity economy - americans 50+ driving 7.6 trillion dollars... of economic activity every year. right before our eyes, aging is unleashing exponential growth... ...in every industry. are you ready? we are. a-a-r-p is teaming up with business leaders and innovators... ...sparking new ideas and real solutions. so, what are you waiting for?

- 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.

this is moving day with the best in-home wifi experience and millions of wifi hotspots to help you stay connected. and this is moving day with reliable service appointments in a two-hour window so you're up and running in no time. show me decorating shows. this is staying connected with xfinity to make moving... simple. easy. awesome. stay connected while you move with the best wifi experience and two-hour appointment windows. click, call or visit a store today. welcome back to a special how to deal with all sorts of declines edition of ma"mad mone" so it was okay to buy stocks in that weakness, 1987 was a rare

opportunity that took a little bit of time to reveal itself it was the first instance of the s&p futures exercising its pernicious power sadly, it was the first of many which brings me to the fabled flash crash of 2010. one of its negative moments that drove away so many investors who never came back to stock because they didn't know their value could be destroyed so quickly. block up in the blink of an eye. what happened that afternoon, it was pretty much the same deal as black monday of 'eight even. buyers walked away it couldn't just be the machines breaking down. flash crash started at 2:26 p.m. and lasted for 36 minutes.

it was memorable for me because i happened to be on tv at the same time. some money managers had been speculating because of riots in greece others pinned it on newfound interest in the economy. another situation where the futures were overwhelming, stocks and the machines were breaking a gigantic error and sell order caused a tremendous fear they didn't want to wait around to find out what was the landslide. they wanted to get away from it as fast as they could. on air, i called it the phony sell off because decline had no basis of economic reality which made it a tremendous buying opportunity. >> what we are seeing right now,

i believe maybe i am -- >> it can't be there that is not a real price the system obviously broke down. we are going to find out there was a glitch in the staetape it obviously broke down. the market didn't work the machines broke down. >> it didn't work. the machines broke down and that's what happened more on that later some listened and actually bought stock many people didn't believe that equities could be that fragile i hope that i taught you that stocks are not hard assets subject to any sorts of whims that could reduce value in a heart beat the market quickly regained its equilibrium. left the asset class entirely and never came back. how about the august 2013 sell off?

that one was seemingly related to the fears that the feds were itching to raise the interest rate, what was happening in the chinese market many seemed to forget but back then the chinese market was the most dominant negative story out there. the whole edifice of the prc could collapse from too much leverage i find myself on air at all the right times to witness these events a fed official late in the afternoon suggested it was time to raise rates despite the chinese selloff. it was an aggressive move. when we came in on monday, we heard there were very large sell orders in places for major stocks we weren't ready though for the gap downs that we saw. big capitalizations were

shedding hundreds of dollars of value. like the crash of '87, it was hard to tell what was happening. decline of 1,000 points when the smoke cleared at 10:00 i and my partners were stymied at the time. in the midst of the conflagration, his reaction priceless. >> the dow is now down 1,000 points and the losses on some of these names, unh, verizon, ge, down 13%. >> i got to make some phone calls. >> you have to find out -- >> these are enormous moves. >> i got to make some phone calls. i mean, i remember what he said. i said yeah, that's it

i got to make some calls that's how confused we were. again, we figured it had to be something. that would be something going on with the economy somebody knew something we didn't something mysterious, something other worldly, something nefarious. maybe china collapsed. maybe something happened in europe i was suspicious because some of the hardest hit stocks were the recession proof names especially the biotechs that shouldn't be happening. if there was something wrong with the economy, that is where some people buy. those stocks are off in the safest of havens i suggested there were machines that were causing the problems and the computers they had gone haywire. by mid morning we learned that was the case and the stock market under went

a beautiful metamorphosis. the economy was gaining strength not losing it. a thoughtful fed was not about to tighten not with china teetering. why was there fear and confusion at the time? i think investors weren't ready for either flash crash the government put in what was known as circuit breakers, supposed to cool these declines. but they created a false sense of security. even if they failed to work properly on both occasion, and did very little. when you hear talk of circuit breakers, don't believe t fear can't be legislated or regulated out of the market. always be people who react horribly after a horrific event.

what is the baottom line, you might have an incredible buying opportunity. you have to figure out if the selloff is related to the fundamental economy. nobody made a dime panicking but boy, or boy, did they coin money taking the other side of the trade. going to jeff in florida. >> caller: it is an honor. >> you are very, very kind what's going on? >> caller: is there an equation, a formula or rule of thumb when to take a percentage of profits to take off the table when good gains are there to grab >> the show is in flux at all times and i try to measure these things and what i have come to realize is i used to tell

people, when things were really bad in the market, up 25%, take things off the table but i have learned to be more patient than that. a really good stock, goes up 50%, and then you take some off. up 100%, you take out your basis, how much you put in and let the rest ride. i am not anxious to recommend trading as i used to remember, nobody ever made a dime panicking if a selloff happened because of the panic in the market, you might have a buying opportunity. then don't get fed up, i'm breaking down the fed reserve's role in the market and a selloff versus a buying opportunity is a little something i like to call systemic risk. stay tune, and i will explain.

stick with cramer. ♪ a moment of joy. a source of inspiration. an act of kindness. an old friend. a new beginning. some welcomeelief... or a cause for celebration. ♪ what's inside? ♪ [laughter] possibilities.

what we deliver by delivering. at&t provides edge-to-edge intelligence, covering virtually every part of your finance business. and so if someone tries to breach your firewall in london & you start to panic... don't. because your cto says we've got allies on the outside... ...& security algorithms on the inside... ...&hat way you can focus on expanding into eastern europe... ...& that makes the branch managers happy & yes, that's the branch managers happy. at&t provides edge-to-edge intelligence. it can do so much for your business, the list goes on and on.

that's the power of &. & when this happens you'll know how to quickly react... az. here we are, back discussing what to do in a selloff and how to figure out what the right approach is. we covered the crash of 1987, one of the most horrific and quick declines imaginable. many thought we had to be on the verge of a recession because the stock market projects what is supposed to happen in the future kind of an early warning system. but not that time. it was a selloff full of sound and fury that signified nothing. same with the flash crashes that we had been through. 2009 was the opposite.

it was a multiyear decline that started when the fed raised rates 17 times in lock step trying to cool an economy. it is the most dangerous kind of selloff. what we call a systemic risk design and we have to spend time on fortunately it doesn't happen very often how about twice in 80 years, the first being the great depression we hear this great recession bear market invoked. lots of investors scurry out believing the sky is falling and they never come back and they lose money and it is breaking my heart. back in october 2009, the market peaked the economy after teeters for just a bit fell off a cliff.

if you had paid attention and done talking and some homework, or at least paid attention to me, i ex-curated the fed for raising rates oblivious. >> these firms are going to go out of business, and they are nuts they know nothing. >> cramer. >> i have not seen it like this since i went five bid for a half a million shares citigroup he is shameful. >> they know nothing they know nothing. >> excuse me what did i mean by that? surely before i came out of the set that morning

i had been talking to the heads of actually 1 wall street firm about problems in the market knew that there were a lot of unsound practicing occurring it was jarring when i was told by this executive when he was talking about how many people are defaulting on their mortgages. he used a term that i had only associated with fine wine, just weren't money good something that only had happened once in our country's history and never supposed to happen again, the great depression. i was aghast i started making a lot of calls. i wanted to see if this 2005 vintage thing was in trouble everywhere i was ashen when i got off the phone. everybody said it. and that's when i went off so strongly on my rant.

oh well, the fed didn't listen i had to single him out in the rant years later i found out when the feds transfer for release in that period, that my rant was brought up and the fed had a hearty laugh about t we then had a series of defaults some thought were too big to fail two of the largest and favored brokerage houses i did my best trying to get people out including going onto the today show who needed money to take it out of the stock market lest it be lost. >> whatever money you may need for the next five years, please, take it out of the stock market right now. >> i don't think many listened and the market fell another 40%

before it bottomed if you had bought any type from when the stock market peaked it was cut in half by march nine, 2009, you did lose a fortune how do you know to avoid buying this kind of dip versus buying the black monday opportunity of '87 it businesses getting crushed? is the fed standing pat or even raising rates when there are signs of real cracks or big companies unable to pay bills? are there actual runs? not just in one area if the answer is yes, then you have a decline that could be deeply rooted and joined at the hip of the real economy. and that has as i mentioned systemic risk. that is how it was back then and

it is why i get angry when i hear people say this is going to be as bad or worse than 2007, or 2009 only twice in 80 years, you don't expect systemic risk to keep happening if you want to know if there is anything in place that can save the economy or turn it around, that's important too even if the government tried to intervene, none of those things happened what brought the market out of the funk was a statement by ben bernanke that he would no longer let any more banks go under in our country. it was unable to stop anything dramatic from occurring. were there ways to spot the bottom i have a couple of signs that could help one that i monitor is the

standard and pours oscillator. when you get a moin news five, that indicates there is too much selling. when it is a minus ten i like to see who has been pessimistic or concerned about stock but reluctant who has said anything positive but then changes his tune the best example is from mark haynes who said. >> i think we are at thebottom >> we call it the haynes bottom. it baottom.

before you say to yourself what happens if no one warns you again the next time, you know what, i have got some good news for you. sobering but good. if you waited long enough, six years, you did get back to where you were before the bear market began. all right, six years but if you had sat tight, you got back to even and since then, you made a lot of money yes, it would have been better to take something off the table. but one of the reasons why i am always stressing, it might pay to sit tight even in the worse stock market, and economic market of our time, you still did fine beware of the chicken littles of the world. tons of people who cry wolf every time the market is down. unless there is again, it is okay to do selling but otherwise maybe just sit tight and wait

for those signals to buy donna in pennsylvania. >> caller: hi, jim, my husband watches you all the time and trusts your opinion. >> fabulous. >> caller: i want to invest $5,000 for my grandson's first birthday i know it is a volatile market and i want to invest long-term, but i want to be defensive, so what is my best way to go? >> we are going to divide that 5,000 into 1,000 each time, put the 5,000 in 1,000 at a time wait every other month until it is all in. that way, if you do get a big selloff in the interim, put all of it in at once that is my rule and it has worked for me literally since

1979 jacob in florida. >> caller: my question for you sir, is when there is a bear market and i have a stock that has been performing well, what factors do you look at whether it is time to go out >> look at incredible balance sheets and can ride it out and then we will ride it out with them. selle sellers beware much more "mad money" left i am explaining how to handle sell offs in the wake of interest trading heights my strategy session continues. send your questions my way and of course stick with cramer.

narrator: he claims to be an education reformer, but marshall tuck's failed record managing actual schools won't work as superintendent of public instruction. as ceo of l.a.'s partnership schools,

the teachers gave tuck a vote of "no confidence." and tuck's total mismanagement of l.a. charter schools caused financial problems that cost taxpayers thousands. tony thurmond. the only candidate endorsed by classroom teachers. holding all our schools accountable and always protecting neighborhood public schools. tony thurmond. for our schools. and tonight's special survival guide edition of "mad money," we are discussing how to deal with brutal selloff

i have told you not to be glib about the systemic risk selloffs that involve the potential collapse of the u.s. economy, but those are easy to spot but now i want to help you game out the other less dangerous kind of crash. the best way to deal with these sudden declines is to recognize there is a bottoming process i like to look for what is called accidentally high yielders i used to call them ahys on the show their stocks have fallen so low that their dividends are giving you an outstanding returns as well as the rate, the ten-year rate gives you. if the stock is suddenly paying double, that means the stock went down, you are looking at

what we call an accidental high yield. as long as the stock has been going down for no reason second, if the yield level isn't constructive or giving you opportunities, i would use a mechanical sell off. that is what i recommend during the 2010 flash crash pick a premier stock and buy some using limit orders only frankly you should never use market orders. i like this method because if the market does come right back, you have picked up terrific merchandise at amazing prices. and you can flip the stock if you want to. take a look, i demonstrated how to do this in the flash crash of 2010. >> 49 and a quarter bid for 50,000 proctor this is a good opportunity.

>> that's -- nothing has changed in the past four-minute. >> it is at 47, that is a different security entirely. you to have use limit orders it just jumped seven points. >> that is the craziness i am talking about. and a lot of people did that proctor trade. now we have covered how to recognize systemic risk and how to side step it. how about the rest of the selloffs we are experiencing, the garden variety pull backs. what causes these declines they are a bunch of different varieties. first you have selloffs caused by the federal reserve and that is the most frequent reason for stock dumping. when the economy is weak, the federal reserve job is to try to restore growth

it is that way since the time of business the fed has a different man date its job is to temper growth in order to stop inflation. the fed has a right to be worried. makes it so your dollars buy fewer and fewer goods and your savings is less likely to cover your long-term needs here i am talking about the b-r-e-a-k kind now there are plenty of times when the stock market wasn't crushed because the economy wasn't crushed some prognosticators will come out of the wood work to tell you the market has crashed do not panic, fed rate hikes don't necessarily lead to crashes. i have seen plenty that do next to nothing but there are rational reasons why the stock market should and

does go down when the fed raises rates. first, stocks are -- there are gold, real estate and bonds. i like gold as a safe haven, but if not, then the gld is a hedge against inflation. gold hasn't been able to protect you against much in the last two decades. real estate can be a good hedge, but most people don't have the money to invest in the kinds of real estate, the big institutions can buy we do have real estate investment trust but they are not reliable as a proxy for real estate finally, we have bonds and they are a source of the problems when the fed raises rates. as the fed tightens, bonds become more competitive with stocks you will notice as the feds jack up high, high yielding stocks are going to be the performers so please, be careful of these

stocks as safe havens when the selloff is from the fed. the second reason why stocks can go down legitimately when the fed raises rates because the fed isn't perfect. the fed isn't perfect. the fed kept tightening and tightening long after it should have stopped they raised rate when they should have stood. or even cutting rates fast because of what was happening underneath you get that kind of pullback and you know you need to be extra careful not to be aggressive buying any stocks especially the defensive high yielding bond marketing. here is the bottom line. garden variety pullbacks can be gained sell offs can be trickier, all

they can lead to opportunities and stick with the accidentally high yielders that might give you that delicious bounce when the fed is done tightening "mad money" is back after the break.

tonight we are talking selloffs specifically during this block, what causes garden variety pullbacks many times the problem is the feds but sometimes there are other issues there is the issue of margins. when the stock market goes down, they don't have the capital to meet the margin clerk's demands. in 2018 when funds had began to borrow money they got their heads handed to

them and geagainst them, they used t s&p 500. these managers were forced to sell their s&p positions causing some severe market wide losses these break downs occur after several days when the market is down i am reluctant to tell you to be aggressive in the first few days of decline always going to be clerks who buy stock with borrowed money. how do you spot these declines and when they are going to be over i use the clock. so margin clerks demand the collateral is put up, raise some cash or sell you out of your positions. i consider the margin clerk the butcher and the butchering occurs between 1:00 and 2:00 and yes, i find it to be that specific, then i think you have

a decent chance to buy safety stocks the kind of stocks that don't need the economy to be strong. you might also want to buy the stocks for the fastest growing companies with great secular themes that work with any environment and i talk about them every time. what else? selloffs from overseas i can't tell you how often i hear commentators who scare us i always tell you to ask yourself do these woes impact the stocks of the american companies we invested in and do they make you want to pay dramatically less for an individual stock usually the answer is no unfortunately you can't just start buying hand over fist. you need to assume that there are people who don't understand how worried they are after you would have thought they know better

that is why these international declines often last for three days the best thing to do is watch the clock. remember, at the end of the day, stock markets are markets first and foremost and markets are controlled by supply and demand. so if the bankers start rolling out lots of new ipos, you could end up with a situation that there is too much supply and not demand focus on the stocks that are down because of collateral damage you need to be more nimble with ease you want to buy stocks after earnings and pullbacks there is no reason to be a hero here, people, buy stocks who have been hit by must browder selling that have nothing to do with what went wrong and the trickier risk, political

risk whether there is strife between parties or all out war, money is the last thing you need to worry about. does this can have direct earnings risk when it comes to washington if not, then you have nothing to worry about. i know political risk is enticingly negative and fearful, so many pundits waiting to scare you. tune it out. look for companies that have nothing to do with the political fray i have seen politics used as a reason to sell stocks. may be a reason to sell some stocks but rarely enough to sell everything there are all sorts of selloffs but unless they involve systemic

risk, they are going to be buying opportunities take action to buy not sell and never to panic stick with cramer. state of the art technology, makes it brilliant. the visionary lexus nx. lease the 2019 nx 300 for $339 a month for 36 months. experience amazing, at your lexus dealer.

you know me, i always say i have the smartest audience in television let's get to some of your tweets first up, hi, jim, i am in a

dilemma, my "mad money" is 25% allocated but i know i should have more cash what should i do this is really important do not sell until we get some lift i know that a lot of people feel there will never be lift, there always is. and then after the second day of a lift, the second day you sell at the opening next up, a tweet from todd palli. hey, cramer, welcome to "mad money. i am trying to make some money >> kid's got horse sense next up, trucking with the jim cramer and audio book that's

gotten a lot of use. next up, a tweet from @mike house. can you talk a little bit about how rule number 1. if this is bedrock money for retirement, you do not touch it. if it is money to put away for kids, do not touch it. i am talking about mad money that should be traded and taken off the table. not the basic index fund that is to be run for as long as you can stand it stick with cramer.

300 miles per hour, that's where i feel normal. i might be crazy but i'm not stupid. having an annuity tells me retirement is protected. annuities can provide protected income for life. learn more at retireyourrisk.org annuities can provide protected income for life. it's not what champions do. it's what champions don't do. they don't back down. they don't settle. and they don't quit... except for cable. cable? oh you can quit cable. because we are cougars and we don't quit!! unless what?!?!?! [team in unison] unless it's cable! quit cable and switch to directv and get the most live sports in4k more for your thing. that's our thing. 1-800-directv

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." ♪ and i'm cameron cruse. and we're the co-founders of r. riveter. cameron and i are both military spouses. we met when we were in georgia while our husbands were stationed with the army. being a military spouse can be difficult. you move on average every 2.9 years, which makes it very difficult to find a job or build a résumé to be proud of. -hey, guys. -hey. -good morning. a big purpose behind our company is empowering women. and actually we named our company after rosie the riveter. she's a world war ii icon that encouraged women