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tv   Mad Money  CNBC  December 26, 2018 6:00pm-7:00pm EST

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have a bottom you might not need gold as a safety trade take profits in that. >> you didn't call it the sully bottom don't talk about my bottom pete najarian that does it for 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. we too often invest for the day. i hear people talk about what is working. and in the old days when the late great mark haynes ruled the
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mornings around here each time i cohosted he would introduce me as reverend jim cramer there was an understanding that a stock could be here today and gone tomorrow and everyone was fine with it those days, those days are long over and if you recommend a stock for trade even if you say buy it today for the analyst meeting and sell it tomorrow, there will always be a youtube video kicking around saying you like the stock but never gave it the sell call. tonight i introduce you to the concept of suitability basically, what stocks fit you what investments are right for you. not for this week, or for this month but for your age and temperament. i first heard about it when i
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was in training at goldman sachs. i was buying individual stocks for myself and others before i got to goldman sachs the predecessor to cnbc, i would run over to the harvard business library. it is so nostalgic to what i would do next after i saw the stock i liked. i would ask for a microfiche you read the filings, and if you were lucky enough would only be six months old the imperfections in the market were lee jend. but now everybody knows everything i would find one stock that i
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thought would work, one stock that would be good for one week where anyone who wanted to invest would take the idea and run with it. i would take my answering machine and give you a 20 second rap on that stock. some companies, same with answering services for that matter, talk about jobs that aren't coming back i would say hi, this is jim, am not here right now, but i like the charts and the numbers from peoples express. my best one, a smoke show of the company of a red hot stock who was reason by zev. last ceo before elon musk. ended up with a big bid from
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microsoft advances and that was far down the road. believe it or not, jim is not home became a rally call for lots of people hoping i wasn't home so they could get the tip without having to deal with me after i got the job at goldman sacks, and told me to give him a call as soon as possible he asked me what suitability was it he asked me do i ever consider the many people that called me and got my answering machine might not be ready for the hottest semiconductor. i said i also thought people were pretty much caveat emptor
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situation. he explained to me, that you had to know what that person wanted. what he wanted out of the stock. you wanted to know if the stock was right for them and for their tolerance and risk monolithic memories he said. yeah, wasn't exactly the right for anybody other than bungee jumpers or k two climbers. let's start there. what is your risk tolerance? how much risk do you want out of a given stock. you buy a car and you know it is not worth as much as it leaves the lot. you buy a house, you get a binder with insurance if it does burn down, you get your money back but stocks, stocks, you buy a share of nike and the next day
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goldman sachs downgrades it you can't go back to your broker and says, hey, chief, i am down three bucks in 2,000 shares. i want that six grand. i want it back now it would have been incumbent back then to recognize that the broker would know this happens you can't get stock back and get the stock price, the same price that you paid because there is no real insurance although you could buy an expense put underneath suitability, the concept is incredibly important that's why for the next hour you are going to learn about a way to measure your own tolerance versus a variety of factors. these days, there is no real
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protection you know what you are getting into and you accept it to want, the bottom line, that stops here by the end of the show, you will know what suits you or your style. caveat emptor? no just be aware of what you might be committing your harder than dollars to when you pull the trigger and want to buy. ann marie in new york. >> caller: thanks for taking my call can you talk about trimming our profits. can you talk more about the trimming. >> what would happen if you kept doing that is you would miss out on some of the greatest stocks that you might actually own. what i suggest you do is move it up a little bit. i don't think you should start
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selling about 20%. wh you got to let it run. and if it comes back, you should buy some i don't want you to lose a great opportunity unless the story changes and then it is sell, sell, immediately. lito in texas. >> caller: hey, jim, how are you doing? >> good, how about you >> caller: my question is, as a recent early retiree, and one anticipating a possible market correction in the near future, should i allocate the stock index fund now from a stable index fund or wait until after the market is corrected? >> if you are in retirement stage, i don't want you to have as much equity exposure. people who retire tend to live
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te ten, 30 more years than they thought. you will put money back if the money really craters, otherwise i think you will be fine and you need to let it right marlo in new york. >> caller: jim, can you tell us the difference between index fund and etf. >> there is not much more. i default to what warren buffett says, he says you should buy the vanguard index fund. easy to get to i want to go with warren buffett, why what am i going to do? argue with him never a great call i am helping you form the necessary investment strategies that you need. from young to old, i am going to meet you where you are and take you where you need to be.
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>> we are kicking things off by beginning in the crib. here are the two stocks you should be buying to give a newborn a head start an important have investing lesson you get from teenagers. where your money should be sitting at any age stay 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. ♪ there's no place like home ♪
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argh! i'm trying... ♪ yippiekiyay. ♪ mom.
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♪ welcome to a special show about you. about knowing what you can and can't do because it is not right for you. welcome to a special show about suitability. the first kind of suitability we will discuss is age suitability. i want to start with infants kids who were born in their teens and if the parents listened to the show when they first started, they would be well on their way to wealth. you can give all sorts of things to parents who just had babies
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you can start the process of saving that you have to do here is my commercial for what everyone seems to have come around which is the notion of index. pretty much all stocks traded together and we have seen so many managers let go or fired because they can't beat the market you can buy shares in an index fund i am partial to the standards and poors 500. they represent the bedrock of the country. i like total return fund a mix of both is a good start. your broker or the broker rank
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funneled if you let it run, the money can build upon itself. you might be saying why am i watching a show about stocks more important is the kind of investing i am talking about this show is geared to people who are interested in their money and want to be more involve to make it grow or a curious and want to learn about stocks i believe that you can build a portfolio yourself that can do better than most managers. they can coexist i wish the pros lettizers weren't so fundamental about how bad everything else is i have had a career of picking stocks better than the markets and i have seen investors who never settled for average and
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didn't let's give both a try. i think you should pick two, one with a dividend. you get the power of compounding going for you. you can buy more stock with that dividend we hear the term dividend aristocrats. which one comes to mind that we have liked in the show three m. proctor and gamble f.a.n.g. why these? i think the facebook is a rapidly growing site where you provide the content they provide the ads. amazon, netflix. this is a company that
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intuitively recognizes what you want when you want it. game changer why do i still like this alphabet it dominates surge, so the advertisers love it. there is a balance sheet of beauty and people working to invent something new. and waymo. these are just examples. they are about growth. i know it seems rare commercial to do what i want done here, but given how poor income growth has been for so many people in the country, it is important to try to augment the other side of the lever. a highly unusual yet totally blessed by me idea is to buy
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gold or silver for people. i have bought some and have forgotten about them, and they may or may not increase. in crazy times where inflation could roaring back, there is nothing that holds up in value better than that selection if you do this, remember to put the gold or silver in the safe place and that does not mean putting it in a mattress or hole in the ground. time, the action you need to take today to set yourself or your kids up for financial success. then they have been the source of some of my greatest investing ideas of all time. you probably got the same resource, but are you paying attention? and unfortunately i don't look like anything i did in my 20 your money should change too and i will explain how stay with cramer for your heart...
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nearly a dozen highly-rated life insurance companies, and give you a choice of your five best rates. duncan's wife cassie got a $750,000 policy for under $22 a month. give your family the security it needs at a price you can afford. we're going over knowing thy self we discussed the importance of suitability and the essence of
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what is suitability for the newborns what about suitable for the kids this is when you make your move and decide that you are going to get them involved in what stocks are, pieces of companies they might like as much as i love sports, we had world series tickets for the 64 world series of course we blew them all and didn't make it in my house, stocks were supreme. my father had gotten a tip from his brother who knew a stockbroker that played tennis to go buy shares of a company called national video. if it started right now, it was a total bust that cost us fortunes he wouldn't give me the sports section, he would give me the
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business section i would try to anticipate based on moving averages of how stocks were doing a lot of times i knew the stocks only by their abbreviations and the agate type i kept a ledger. polaroid, ibm, xerox, national video. i had texas gold sulfur. a host of other companies that have disappeared i also had a lot of airline stocks eastern, national, mostly brand of two they were household names because of advertising i liked the stock picking process so much, i got the whole fifth grade class to pick stock and keep track i was doing the exact opposite
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of what i should be doing. how fast they were climbing and backing away if their climb seemed extended. that is called momentum investing. i should have picked stock in companies and asked to buy the shares in them let's go over what should have been right and would have been wrong in the picture i presented. goofus would never have thaen a t tip from his brother from his tennis partner pop had no idea what national video was or did you can find out more from google now national video made picture tubes. in the old days, when you had a problem with your television, it
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was usually a tube had been blown. he averaged down too many times to tell, but many a silent meals because of that day's decline of national video stock there was a host of stocks to choose back then there were dividends to be had and what we needed more than anything else was income me, the idea of picking stock because they were going up was antithetical to buying stocks and is more suited to dart throwing many were defense contractors and we were beginning lyndon johnson's defense. i learned from stocks from board games called stocks and bonds. my father sold games from three m back then. and stocks and bonds was about
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accumulating wealth through stocks it could hold up to this day and let's go back in time and think about what i could have done first, when you are a boy or girl, you play with toys it would have been natural if you looked at some of the financials i am not asking kids to know shares in the companies. a company can be owned by the public and you can own the share in a company they know toys i bet you they would pick hasbro instead of mattel. can you imagine if my father bought 3m for me if we had just looked at the spine, speaking of dividend
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aristocrats, we had a box of cheerios, we could have bought general mills. and then the easy ones who didn't want to go to disney world? it is that factor. and not how many people cut espn in the end the intellectual property, the library alone should make you want to own shares in the company. but the theme park, come on. i don't know about you, but johnson and johnson baby powder and shampoo were staples in our house. these are things that are not taught, they are embossed and imprinted. and finally fast food. mcdonald's may not be something that you want to invest, because of the quality of the food but let's face it, the whole food chain would be unended if they switched their policies buy a name brand something they can see, and hear or touch or
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like put it away. stocks may not always work out think of what you liked when you were little or your parents liked when they were little. if it trades, you more than likely have a winner bottom line, if you want to get your kids investing, buy a brand name something they can see and hear and touch. and even like. yet, just own it the stock won't always work, but think of what you liked when you were little. and remember, that you may have a long-term winner on your hands. let's go to judy in texas. judy. >> caller: hi, jim, how are you? >> i am good, how about you? >> caller: great my son william has been interested in buying stock and he is calling with me now. and my dad gave him some money to purchase some stock so we are looking at his very first stock purchase and wondering how we look at what stocks to buy
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where should he start? >> he should look at common household things that he sees and you see. and then what you want to do is figure out how much money you want to put in it and put a quarter of it in a quarter in because if the market goes down, he thinks this is a sucker's game if not, put the rest of the money to work by the end of the year make it in household name brands that everybody knows carol in florida. >> caller: hi, jim, how are you doing? >> i am good, how about you? >> caller: good. i read and enjoyed "confessions of a street addict." give kudos to mrs. cramer. i want to know your opinion about buying a gold and silver.
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>> cash is the best hedge against the market against the monetary system, you are right with gold. i like actual physical gold and like buying gold coins if you can't afford those, the gld is good. stocks will not work because they don't i think you are dead right about the idea stocks don't need to be abstract certificates or numbers or letters. still "mad money" ahead. te teenagers, i will explain next and i am taking your questions tweet by tweet, so send them my way @mad tweets. and stay with cramer (toni vo) 'twas the night before christmas,
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and all thro' the house. not a creature was stirring, but everywhere else... there are performers, dancers, designers the dads and the drivers. there are doers of good and bringers of glee. this time of the year is so much more
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than a bow and a tree. (morgan vo) those who give their best, deserve the best. get up to a $1,250 credit on select models now during the season of audi sales event. ♪
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we all know that teenagers are incorrigible the last thing they want to hear about is stocks. they have bigger fish to fry i am not going to tell them what to buy i am going to let them tell me people who watch this show has been beneficiary of the wisdom of my two daughters. why do i say i like dominoes i did like that whole line of advertising and told you i
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thought it was a good speck. but my kids they like the track and they like joes they were local. most pizza is local. i tried it and i liked it. so sure i recommended t but that is not what made this stock a crown jewel, it was the technology because dpz my kids most likely like your kids hate talking on the phone they think it is for losers. but apps, they love them and when my kids discovered the dominoes app, they loved it. and a no cheese option for the vegetarians, the ones who ask twice about the no choice. finally the joy to be able to pay online kids don't want to pay with money either in short, i was not like the
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target audience. that is why i called dominoes a tech company that sells pizza. many of you know how i found the stock apple. because she wanted another color. they were fashion accessories. personal computers, come on. my kids are kids and they would rather be caught dead than have a nonapple brand as they get older, they start knowing about the cost the iphone is more controversial. they don't like change what they don't want really is the samsung. pay to have all of their millions of pictures stored.
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when my kids beg me for a s samsung, you might hear me say different things about apple what they will know is how to feel guilty that they feel about the amount of phone charges they rack up. do you think i have been recommending ve recommendi recommending verzone for nothing? how about this, google it, dad when i got the word from the kids that they weren't allowed to google something at school because it was cheating, that was something. we had access to the houghton library. they had to go to the stacks and find out things that you
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wouldn't know where to begin with i wonder what happened to those jobs my kids are not into sports. they get their news from the iphone and their entertainment is it the simple interface, the desire for them to watch what they wanted to watch all of them. i reluctantly signed up so we can watch things together. facebook, like i said, i went to harvard, when you were a freshman, you got a face book. my youngest went to instagram which facebook made it something that older people just discovered a click on something that as my daughter said it wasn't an ad at all, it was just a link.
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does anybody else dream that their ad is just a link. all right, how about chipotle? kids, my youngest returned early on after the food illness. all right, nothing is perfect. but they their picks, they will do what if the picks themselves are not any good what if they are errant. a device that takes pictures or fits on your wrist it happens go pro, or it happens fit bit. you see, it is a beautiful thing about teen investing, you can lose it and no one may end up noticing, you pull the same
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thing at my age, it has consequences invest with them and you won't regret it. "mad money" is back after the break.
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>> announcer: lightning round is sponsored by td ameritrade
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so how be the rest of our lives, what are we thinking about suitability from them. things get less and less suitable when you are in college, i don't expect people to put any money at all, it is too expensive. once you are out in the real world, it is imperative that you save preferably through a 401(k) k plan or self directed ira. this is where you have to begin to mix of index funds and individual stocks.
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there is too much risk of individual stocks to put together a portfolio at your choosing at minimum put in an index fund. now i know that some will argue with that, i see them arguing on twitter, i don't care. i know the truth the possibility of one bad stock hurting your nest egg as early as your 20s is too risky but with the rest of your money, i do like stock and i want you to be diversified. we play am i diversified here. we created a club to show you how to invest. the trust is only aloud to invest inside club members the restrictions are that great to protect you if you went index stocks that we
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talked about in this show and daily updates, and once a week updates. i set it up because i talk about buying homework. you need to buy a stock but you need to keep up with it. remember earlier in the show when i discussed how hard it was to do the homework those trips to the harvard library. now it is so easy. i had to scrap one of my earliest tenements you no longer need to spend hours a week you get articles and research pushed to you along with charts that i would have only dreamt of at one point in my career. whatever makes you most comfortable to be able to take charge of your money confident. good managers of your money or a
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good client. i don't have a preference. at this stage, it is important to know thy self until you get to this age, i want you to take all the risk you can. i would like to think i have more knowledge of what you can tolerate than you do when you get to your 20s, i would like you to think about what you can do in a sell off. will you buy more or will you cut and run. does it sicken you and wish you had no exposure. can you expect stocks go down. these are crucial questions that only you can answer. i would like you to take more risk and more individual stocks that have growth characteristics once you have put away that $10,000. that is my preference. i would hate for you to commit more money to individual stocks. as you get older, i want you to capture more income by owning more stocks that capture have
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dividend don't be too quick to do so. i would not advise that until you are 30s. only in your 40s do you want you to introduce bonds in your portfolio. you should have put enough away that bonds would protect some of your protected capital in the old days that would have been harassy the problem is two fold. that's why i favor higher yielding stocks to most bonds although i recognize as you age most bonds do have that caveat emptor provision it is easy to see how you put up to 50% of money in your bonds. that brings us back to the notion of suitability. if you can't handle the risk
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you think the stock market is not as legitimate in asset classes as it once was, or flash crashes for that matter, then you have to decide yourself if cashing out or taking stocks to minimal levels is right for you. the bottom line it is your life not mine so get comfortable of what you can live with, but risk, at least in your middle years should remain a friend stay with cramer >> cramer, you are super, you are awesome. >> i am a first time investor. thank you for inspiring me for getting in the game. >> i want you to know that you have transformed me. thank you, cramer. ritrade lets you trade select securities 24 hours a day, five days a week. that's amazing. it's a pretty big deal. so i can trade all night long? ♪ ♪ all night long...
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is that lionel richie? let's reopen the market. mr. richie, would you ring the 24/5 bell? sure can, jim. ♪ trade 24/5, with td ameritrade. ♪
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here on "mad money" we love to see families investing together often locking in a best in breed stock. we are kicking off this edition of mat tweets with cramamerican families first we hear from risko z it is time
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rico z. hold up under pressure next we have a tweet from david. oft awesome game sat next to you and your dad of course i was a vendor at phillies sometimes we come across families that are cadre to the show and kids that have horse sense nobody is going to stump at pounds the poodle kid. >> aero electronics. >> facebook. >> mark zuckerberg. >> twitter. >> jack dorsey. >> and your favorite on the opening bell >> jim cramer.
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>> well that's it. that should be a show on its own. >> are accounting issues pretty much at some level of shadiness. or can honest mistakes be made the answer is, honest mistakes can be made and a lot of times my rule will keep you out of a situation where there is an honest mistake and then the stock takes off. there are other cases where it is not honest and you lose everything so i am going after the maximum risk situation and i can't tell from the outside which is which, which is why i am so cautious. >> my brother is 26 with no 401(k) offered at his job. you have repeatedly said you
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prefer individual stocks, do you have a write up explaining why. >> i do want an index. i want an s&p 500 fund and continue to use that as your retirement vehicle try to pick some of the best stocks that would be in the et f. i trust you. you watch this show. let's do it together saying let's own some stocks as a "mad money" situation. up next is a tweet from cs boles who wrote at jim cramer, just bought "get rich carefully," the reason i like that book is because it is an in-depth look at how to pit stocks against each other and the mistakes that i made and
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i detail them all embarrassingly so you can learn from them what percent would you call heavy? 10%. i sense something could be wrong. got to do your work. they often are, but that is what the percentage is that i look for. tweeting what do you recommend to keep squirrels out of the garden i got triple fence i have boxes i have underneath i have more fence and chicken wire we have the whole shooting match and they don't get in. but you know what, my other box they get in. and i have to throw the stuff away do what you can. i spend way too much time thinking about fencing it is a preoccupation of mine. writing it would be great if you could shed lights on the age targeted 401(k) portfolios. >> i think the index funds are
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better and you can lower at times and lower how much index fund exposure and raise cash i think that is a much smarter and modern way than trying to assess what may be in an age related fund stick with cramer. [leaf blower] you should be mad at leaf blowers.
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[beep] you should be mad your neighbor always wants to hang out. and you should be mad your smart fridge is unnecessarily complicated. but you're not mad, because you have e*trade which isn't complicated. their tools make trading quicker and simpler. so you can take on the markets with confidence. don't get mad. get e*trade and start trading today.
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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! . from universal orlando resort,
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the holidays are here. - ah! announcer: and "deal or no deal" is celebrating. - i've never been part of something like this in my life. announcer: for luis green, family comes first... - you changed my life in a way that nobody in this world could've done. announcer: and he knows how one bold decision can change everything. - my mom has never steered me wrong yet. and for you, no deal! [all exclaiming] announcer: will his faith in family bring him the ultimate gift? - this is the holiday spirit. announcer: it's an unforgettable holiday special... - believe! believe! believe! no deal! [all exclaiming] - oh, my god.

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