>> hxb, i think the homebuilders is getting ready to turn. >> did you not want one? >> happy memorial day, right and to all those who serve how's that >> that does it for options action catch us back next fday riat 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 if you want to make friends, i'm just trying to make you money. my job is to teach and educate you so call me or tweet me. tonight i want to share some of my accumulated wisdom, believe me, i've been doing this thing for a long time, because there are so many different things you need to balance in order a great

investor it can be hard to keep track of everything. a lot of this stuff is more important than the day to day action the right discipline, the right framework, the right, dare i say philosophy you'll get yourself into trouble. the big picture can be hard to process. a lot of it seems down right contradictory to most people >> sell, sell, sell! >> we tell you to have conviction, to stick with the companies you believe in, then be ready to change your mind on a dime you need to be cautious because it's so dangerous out there, but you need to be ready to pounce on opportunities when they present themselves >> buy, buy, buy >> you need to be skeptical but when to suspend your belief, your disbelief you need to avoid chasing stocks that have run too much but you also shouldn't care too much where a stock is coming from if you believe it's headed higher you know the rules it doesn't matter where a stock has come from, it's where it's

headed to. i get it i get it if you take all my rules literally you'll be running around in circles tearing your hair out how do you think i'm bald? tonight we'll take a step back if you pick your own stocks, the thing you need above everything else is good judgment. obviously, good investment judgment is not the kind of thing anyone can teach you in an hour of television or a year of television for that matter that's why i try to help you build good habits, try to teach you better ways to think about individual stocks a tnd whole market i try to give the tools you need to develop your own judgment all my best professors in college focused on teaching us how to think, not teaching us what to think. i've always tried to take my cue from them. i want to teach you how to be a better investor, not just tell you the stocks that i think are good investments the problem is, that's a heck of a lot to process so let's try to put it all into context. first and foremost, when you're managing your own money, for any

other consideration, you need to know yourself. i've said this before and i'll keep saying it because it's important. you simply can't know which stocks you should buy if you haven't taken the time to consider what your own personal objectives are and i can't decide them for you. you need to build up your wealth or make a major life purchase like a home, just trying to get a decent return, do you have money to burn you're more willing to take a risk those are all different mind-sets. there's no one size fits all for investing and anyone who tells you differently is misinformed or flatout lying to you. >> boo >> probably in order to sell you something. but far too often, people invest in the stock market with the simple poorly defined goal of making some money. everybody wants to make money. but how quickly do you want that return what are you willing to risk to

get there? how much can you afford to risk in the first place these are important questions you need to ask yourself before you try to pick any given stock. why? because without a cheerily defined goal, you have no way to determine which stocks you should be buying in other words, your 401(k) or ira or brother-in-law account don't exist in a vacuum. a stock like a netflix might not be the most appropriate place. if you have a decent sized nest egg and you want some capital, then netflix and amazon, google, now alphabet, they all seem a lot more attractive. in short, before you can start making judgments about individual stocks you need to figure out what your own internals look like. that's the foundation of good investing judgment, knowing what you need to find stocks that are suitable to your particular needs. another way, do you want to fly

across the pacific ocean, you do it in an airplane, a boeing 747, not in a ford fiesta if you want to pick up your kids from school, taxiing down main street from a 747 would be impracticab impracticable. you'd be much better off with the ford fiesta. how about home depot for a metric ton of lumber and tools and paint? the fiesta is too small. no way you'll fit it in a 747. but a pickup truck would be perfect. this may sound simple, down right obvious, but it's the same with stocks. saving for retirement, you want low risk holdings to give you a slow and steady return for those who don't have time to research individual stocks you can't really go wrong with the basic low-cost, s&p 500 index fund ♪ alleluia that times to mimic the performance of the broader

market index funds are phenomenal they help to democratize wealth creation that is the u.s. stock market america is a growing country it's very business friendly compared to the rest of the world, the developed world when you buy the s&p 500 index, you're betting on the long-term performance of the u.s. economy. you're betting on progress his or the kri that's been a very good bet. that's why i always say you need to invest your first $10,000 in an index fund, not individual stocks, until you have more money than that. first $10,000, index fund. if you're looking to make slow and steady money over decades, that's retirementing in a shut shell, you might consider specific stocks with big dividends because of compound. a 4% defensive yend yield might sound spectacular, but that will double your money in 18 years thanks to the manage of compounding. of course not every investor is

trying to fund their retirement. if you are, that may not be the only thing you want to to with your savings another important point. you can have multiple objectives you can ensure multiple pools of money. i like to break things up between retirement portfolio and discretionary, the extra money you won't need in order to support yourself after late stage capitalism has ground you down and you're no longer able to work. that discretion portfolio is where you can afford to take more risks and generate faster profits. make sense but for the vast majority of people, that discretionary portfolio will be less important than your retirement portfolio if you went to pay for a house, you want to send your kids to college, take a more conservative approach to mana managing that money. whatever account you put it in, it should look more like your retirement portfolio than that

"mad money" portfolio. so please get to know yourself before you jump down the rabbit hole of getting to know individual companies trust me, i get it when you get excited about a particular stock, you want to dive right in. i've been there. first, you need to consider what you're trying to get out of the market the answer to that question is not going to be the same for everyone but everything else stems from it you can't make judgments about stocks until you know what characteristics you actually value. let's go to paul in texas. paul >> caller: boo-yah, jim. i've noticed the companies, a lot of them will exceed on one and miss on the other in reference to revenue and earnings per share so as a share holdener the companies i'm looking for, if they're going to exceed one and miss one, would it be more important for them to exceed on revenue or would it be more important for them to exceed on earnings per share >> great question. i've done a huge amount of

research and thank you for asking revenue growth we want to see pure revenue growth that means there's demand for the product. the actual earnings per share may be in some case manufactured literally by tax rate, by buying stock back, but you can't rejigger sales know thyself always consider what you're trying to get out of the market before you dive into a stock we'll help you with the flexibility i'm talking about. i'll reveal what you should be doing to get your portfolio in order. then feeling verklempt about your stock picks why it's time to snap out of it. and how the late great maya angelou, maya angelou, offers some of the best investing advice i've ever heard so stick with cramer >> don't miss a second of "mad money. follow @jimcramer on twitter have a question? tweet cramer, #madtweets send jim an email to

madmoney@cnbc.com. or give us a call at 1-800-743-cn 1-800-743-cnbc miss something head to madmoney@cnbc.com. ♪ lower carbs. ♪ lower calories. ♪ higher expectations. the light beer you've been waiting for has arrived. corona premier.

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regular viewers know i've got a lot of rules the result of more than 30 years in the money management business first a broker, hedge fund manager. rules for investing, trading, what to do in a rally or a sell-off, picking winners, avoiding losers. a lot to take in as i mentioned, the point of all these rules is to help you learn from my mistakes and develop your own judgment. i explained why you need to have a clear understanding of your own objectives before you start buying stock, something more focused than merely trying to make some money. pretend you've done stop self-reflection and you know what you're trying to accomplish now you can start buying individual stocks enough to fill out a diversified portfolio of five to ten names, right hold on. before you buy anything, one more thing first you have to do the homework i've covered this before a quick version right now.

if you're going to invest enough money in a company for it to matter to your portfolio, you need to know what the heck the company does, how it makes its money and how much money it makes. the internet has made the process much easier. when i first started the show, holy cow, this is now a delight. you can go online, read the s.e.c. filings, you can listen to or read the transcripts of the conference calls, which i regard as the best way to get familiar with a business, and the key metrics that will drive its stock. feel free to read journalism, listen to opinions, anything to familiarize with the company and the way its stock trades and i've written a half dozen books about this topic, doing the homework the actual rnl is part of doing the homework after you've learned what you can and developed a theory about why the stock is heading higher, one final step you have to explain that theory to another living, breathing human being. doesn't have to be a professional you can talk to your mom, your

kids, a friend the important thing here is that you put your thesis into words that you can basically comprehend it yourself lay out why you want to buy this thing and why you think it's heading higher if there are holes your theory or you're relying on wishful thinking, a reasonable adult or teenager can catch that. once you've done that, you are ready to pull the trigger. for those of you tune megaout because you can't stand to hear another word about homework, i'm done that's it. that's all i'll say. tonight i'm trying to focus on the bigger picture let's fast forward once you've done the homework, you can build a dwefiversified portfolio of stocks. the idea is you should be able to do this in your spare time, not that you'll turn money management into a second or third job. so many stocks, i have two rnl

assistants you're doing it yourself let's assume you own shares in a bunch of companies you genuinely believe in you have a thee tis for each one. there's no sector overlap, you have five to ten companies in distinct industries that don't tend to trade together, diversification. in short, you have what in theory is an ideal portfolio what's the most important thing for you to keep in mind? above and beyond everything else, you need to know that your perfect portfolio won't stay perfect for long those five to ten stocks you thought were winners, unless you're certainly lucky, not all of them will stay winners. some will be losers. some will do nothing and some of the companies that you liked pest will inevitably disappoint you what can i say the game is full of heartbreak which brings me to my next rule. always please, please try to stay flexible. you have to be flexible because business by its very nature is dynamic, not static. things do change markets change new competitors will enter an

industry, undercutting existing players on price to take market share. previously, well-run companies will start executing poorly and we've seen that time and again customers cancel orders, unforeseen events happen that make some category of stocks seem less attractive to the big institutional money managers who dominate the market. when something like this occurs, a story of a company that you own shares in changes you have to be willing to acknowledge things are different if the reason you gave for buying a stock is no longer valid, you need to sell. this is why you need to explain to another person. when your original idea has stopped being workable, for decades so-called experts have peddled the idea when you buy a stock, you need to be prepared to hang onto it until the death of the universe. how many times have you heard someone say buy and hold, buy and hold that's nonsense. don't get me wrong i would to buy a stock and hold

it from here to eternity because the story pans out and the darn thing keeps going higher but if it doesn't pan out or after a long time there are pig changes in the industry, you have to be willing to sell or sell some. that v it's buy and homework, not buy and hold we'd save people a lot of money. i bring this up because people hate admitting when they've made a mistake or hate selling anything worried about taxes once we decide on coca-cola, we don't want the facts to get in the way. but you can't afford to fall in love with a stock. when you buy shares you you don't swear to stick with it in sickness and health, richer or poorer, you don't need to go to a judge to get a gorse, it's a piece of paper acknowledge something has cha e chang changeded. if it fails to do something,

don't move the goal post on yourself, for your reasons to hang on, just get out of there you must be willing to recognize that companies can take a turn for the worse. managements make mistakes. ceos make bad errors every day let's pick bed, bath & beyond. spent $5.4 billion buying its own stock back from 2013 to 2017 an attempt to boost earnings per share by shrinking the denominator, taking the stock price up but it didn't work. they kept losing market share to competitors like amazon and the buyback accomplished next to nothing. they had a market capitalization of $2.7 billion. they spent twice that amount on the buyback. if they put that money in a mattress the company would be worth twice as much. their mistake was, the guys running bed, bath & beyond weren't flexible

they believed it would help. don't make the same error. when something goes wrong with a company you own, be ready to stop hoping and start selling. being unwilling to recognize a turn for if worst leads to much larger losses than you've already accrued. the bottom line, let's put it all together, before you buy a stock, do some homework and come up with a thesis, a reason you think that stock is headed higher once you own it, stay flexible if the thesis doesn't play out, sell the darn stock. don't keep bashing your head against the wall recognize things don't always go your way and then -- >> sell, sell, sell! >> move on liam in massachusetts. liam >> caller: boo-yah, jim. >> boo-yah, liam >> caller: a quick question about index funds. you say buy certain stocks at certain times like monthly or quarterly or at a good price does that apply to index funds

you say to purchase $10,000 -- >> yes, but what i'm trying to do is make it so you don't come in all at once i like to space things out, maybe try to catch when you get a real downturn, if you put all your money in before then, you can't take advantage of it flexible mike in texas. >> caller: thanks for taking my call >> of course >> caller: jim, i'd like to own some individual names in the tech space >> okay. >> caller: but i'm finding that the prices of these stocks are just too expensive so i've started looking at some etfs and mutual funds as an affordable way to gain exposure to these names and i'd like to hear your thoughts on the matter what do you think? >> one of the things i don't like about the mutual fund industry is they don't have to tell you what they own so they might be pie bying the same stocks you think are too pricey. you're marginalizing the same

deal you need to decide the market is too rich or the group is too rich, take a long-term view and i'm not going to game it and maybe don't buy it all at once but space out your buys. matthew in arizona >> caller: hey, jim. this is matt how's it going >> doing well. how you doing? >> caller: couldn't be better. i have a thing for you is it a good idea to invest in the government if so, should bit a short-term investment or a long-term investment >> look, cash is short-term investments, longer term you may want to be able to take advantage of higher rates and get in there and use the power of compounding i think a conservative investor who is older should be thinking about treasuries some young person, you sound young, they don't fit. you need to take on more risk, not less you have your whole life to make up that money if you lose it come up with a thesis on why a stock is headed higher once you own it, be flexible

much more "mad money" ahead. i'm telling you why it's time to take emotions out of it when it comes to picking stocks. then how maya angelou gave me some of the best investing advice i've ever heard i say there's a bull market somewhere. tonight i'm telling you where to find it. stick with cramer.

tonight we're zooming out and talking about the big picture, the stuff you have to do if you want to manage our own money in the stock market. before i get back into it, let me say if you don't feel like reflecting on what you need from the stock market, if you don't want to do the homework, watch the underlying companies and give up on their stocks when something goes wrong, nobody's forcing you to do that there is no gun to your head it's okay if stock picking is

not for you. that's why vanguard invented index funds. so if you're going to play the stock market, and i use the word play pretty loosely, you should put in the effort to do it right. don't you think? i think stocks are the greatest engine of wealth creation in history. and you can harness that engine, make it work for you, if you know what you're doing all right? a lot of this comes down to this -- the stuff i've been talking about all night. call it the emotional side of the equation you need the right attitude toward the market because without the right attitude, stocks will break you. i mean, this is a brutal game and you need to make sure you have the right head space if you're going to play it. i cannot stress this enough. for many of you managing your emotions will be the hardest part of your investing, harder than picking winners or identifying new trends or knowing when to cut your losses. because the market is a harsh

mistress at times stocks can be like an abusive relationship but we keep coming back because long term it is a great way to try to make money. the thing is, unless you can perfectly predict the future you're going to make lots of mistakes it's inevitable. and when you -- when mistakes lose you money, that can be very tough to handle. you need the patience, the patience of the dali lama to not get upset when you buy a stock and it falls off the cliff before i mellowed out, i was the opposite of the dali lama. when i got something wrong, i would flip out you did not want to be around me on a down day. especially if i was way too long so i can tell you from experience that this is not a productive attitude. you know what, if you didn't read this, you know exactly the wrong attitude somebody made a lot of money but i was hell to live with. i know better than anybody you

need to try to remain calm because getting mad at yourself not sustainable. you beat yourself up, it's crazy, you run out of patience and give up on the asset class i'm not telling you to be the dali law ma. it's okay to get mad or sad when the market punches you with its behavior i still do and actually, that stock my travel trust owns, if it gets really hit, i feel awful i do i can't get it out of my stm but i have to. you can't afford to punish yourself the market's brutal enough on its own. in other words, get your head on straight your head matters in this. you need to have it on right every day to spot opportunities. so many of us approach the market with an inferior attitude or state of mind our heads are clouded by negative thoufgts that genuinely throw us off target, makings us do the wrong thing you will be in the wrong frame of mind to spot the next

opportunity. let me be your stock market analyst for a moment the worst of the worst, when you think to yourself if only, if only, as in if only i acted sooner or pulled the trigger or if i'd staged something, i could have made a fortune. don't get hung up on the would have, should have, could haves this is wasted damaging emotion. it's destructive to the positive psychology you need making investment decisionings. for a long time, i would be mesmerized by the big miss it wouldn't be just be over. i can put it out of my head now in a couple hours. i'm talking about days on end. not anymore. i don't do that. took me a long time to learn but eventually i was able to see how destructive playing the would have, could have, should have game could be

if you're emotional guy like me, you may need to trick yourself into a more productive pattern of thought i've had to build in all sorts of methods, like removing the stock from my desk top and mobile desk top, just going in and taking it off. you look at it every day, you scroll down and see it, it brings up that bad thought get rid of it. clear it out if you like it so much after you sold it, buy it back, but don't tell me what you could have done or should have done. you didn't whether you walked into a big loss or missed out on a big gain, it's irrelevant. stop beating yourself up the stock market can be punishing enough you don't need to make things harder by punishing yourself if you need help curbing this destructive thinking, take the stocks off your mon store our

cell phone, you'll be surprised at how much better your decision making comes when you stop the would have, could have, should haves. devin in florida >> caller: how's it going? >> really good how about you? >> caller: good. good >> what have you got >> caller: i'm 25 years old and i have a roth ira and you suggested in investing in row cost index funds my question is should i be 100 per in my portfolio in a s&p 500 index fund or use multiple index funds to build a diversified portfolio? >> i actually think what you ought to do is think of it like this i think you recollected put the preponderance in an s&p 500 fund, terrific, low cost, and after that, pick one or two. don't go mutual fund to mutual fund that makes it harder bedrock s&p then a couple of others, maybe health care or tech that would be my choices michael in california, michael >> caller: hey, jim. thank you for taking my call >> of course

>> caller: i had a question about 401(k) plans my company just put out their 401(k) plan and being a novice when it comes to those kinds of things, i just wanted to know what percentage of my paycheck would be a good starting amount to contribute. >> whatever the maximum you're allowed because what happens is this, if you use the power of time, the power of compounding, you will have so much more, but you have to put it all in. and i always advise people, take the max, take the max, take the max. enough with the would have, should have, could have, people. don't play the if-only game. much more "mad money" ahead. to quote the great cyndi lauper, i see your trues shining through. it's not just a great song it's investment wisdom i'll help you find the bull market where are it eewherever g

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heartache back when i was running appropriationly but i didn't ot know it from the late great maya angelou. when someone shows you who they are, believe them the first time i know she wasn't actually talking about publicly traded companies but if the shoe fits, wear it. i've been trying to hammer home important bed rooks of investing and this is another one. when a company shows you who they are, believe them the first time when a ceo tells you the business is bad, take their word for it don't make excuses or bend over backwards finding justification to keep owning the stock of a company that's not delivering. get the heck out, at least until the smoke clears and you can better assess the damage the better i do for my charitable trust it's because of this rule. the worse i do, you know what i'm talking about. the rest of the quote, because there's another valuable insight

in here, she continues, people know themselves much better than you do that's why it's important to stop expecting them to be something other than who they are. all right. same thing holds true in the corporate world. a company's executives are almost always going to know their business better than you will, unless they're being ridiculously negligent they have access to information you don't. they can spend 80 hours a week or more running their company. you have your own job and there aren't enough hours in the day for you to devote time to a single stock in a diversified portfolio. that's why it's important to listen to what the ceos and cfos have to say on the quarterly conference call or when they visit on our show or someone else's show. high-level executives are the best resource. i wouldn't have them on if i didn't think that. don't get me wrong, you can't take everything that comes out of a ceo's mouth as gospel plenty of executives are excessively promotional or talk

like they've had rose colored glasses welded on to their face. i find what i'm really looking for are people who aren't wearing these, okay? these are actual rose colored glasses. anyway, i try to ask more skeptical questions whenever my cockeyed optimism alarm goes off during interviews because i can't have you get snowed by watching the interviews i do ceos can be misleading, almost never flatout dishonest, though, because lying about material information is a crime so sometimes you need to take what they say with a frain of salt if not a full carton of morton's i dized but the more cynical among you would be surprised by how many straight shooters you'll find at the highest levels of corporate america. i believe that i don't want to be cynical when we have someone on the show with a track record of being extremely candid or reliable or both, i try to point that out. it matters when honest, smart executives

tell you something's going awry, you should believe them and when they say it's going incredibly well, it might be a reason to buy. this could be a profitable stratify if you get it back. when mark benne came on the show during the depths of the great recession and told us his company would be just fine, we had to grit your teeth and buy it from november of 2008 to july of 2018, sales force gave you a 1,900% gain, and you had to get it in when he said things were fine he was bankable. when patty doyle, former ceo of domino's pizza, came on in february of 2010 and said how he was going to trade things around, it was trading at 10 bucks. when he retired, it was at $282. these guys deserve the benefit of the doubt if you didn't trust them, you missed out on some monster moves. and look, i don't want to be too proud here, but i said, hey, listen, i believe this guy and that's what helps.

it helps to have me say it because i've thought about this a lot and talked to a lot more ceos than pretty much anybody in the world. more important, if management tells you something is wrong, you should take that extra special seriously, preannouncing a shortfall, wait 30 days to buy that stock they're pummeling on to bad news to new lows. in practice, i found that other than some rare exception, the opposite is the case when business is so ugly a company is forced out to come out early and cut numbers there's typically more bad news ahead or they wouldn't say anything why? it comes back to maya angelou. when someone shows you who they are, believe them the first time the preannouncement is the first time when management preannounces a bad quarter they're not just looking at the past but the future if there were any hope that business would get better, the company wouldn't have to cut numbers between regularly scheduled quarterly reports.

if they thought maybe something could get better, not worse in the next 30 days, they keep their mouths shut and wait that's why i recommend waiting that 30 days to see if anything improves before you think about buying that kind of stock. this will keep you out of trouble because i can count on one hand the number of times when things got better within a month. sure now you'll miss some great opportunities, like i said, maybe miss a half dozen and sometimes the stock bottoms early, but most of the time after 30 days you'll have sidestepped another brutal leg down 30 days sounds arbitrary, but i've done the home work and it usually takes at least a month for the bad news to get fully baked into the stock price if not longer the bottom line, sometimes it can seem like we live in a posttruth world where it's impossible to believe on any particular issue, but the most skeptical among you should believe executives when they preannounce a shortfall. they don't like slashing their own numbers.

they do it because they don't see much hope of things improving by the time their companies are scheduled to report the next quarter. in the wake of a shortfall, presume is stock won't be bouncing back anytime soon for the next 30 day, treat the thing as a falling knife even if you're not a huge fan of maya angelou's poetry, stick with her advice. stick with cramer. hurry into sam's club for serta's memorial day mattress hot buy for just $498 get a serta pillowtop queen mattress and free boxspring that's premium serta comfort without the premium price for a limited time only at your local sam's club - 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

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i spent a lot of time tonight talking about the many ways in which you can make mistakes and to guard against them but know when to admit it. the market can be as wrong as any individual investor. the market makes mismakes every day. don't assume that the action necessarily makes sense. a lot of times stocks go up or down for the wrong reason or no reason or a stupid reason. when a company reports earnings and a stock goes down, there's a natural impulse to believe the company must have disappointed,

must have been a bad quarter while is the stock going down? you know what, often that will be true. but it's not always true sometimes there are other forces at work. stocks will go down in the initial earnings release and bounces back when management explains things on the conference call or vice versa, so don't jump to conclusions until after you've listened to the call, a huge drag but it must be done in the middle of earnings season, the market makes a ton of mistakes. it's not just about errors in judgment the truth is stock prices to not always reflect the underlying fundamentals, how the business is doing the fundamentals are big part of it over the long term i say the most important part, which is why i spend so much time focusing on them and how to understand them. but they're not the whole picture. the stock market is first and foremost a market of stocks. and just like any other market, it's prone to all sorts of distortions. when adam smith wrote about the invisible hand of free market

capitalism he forgot to mention that it's the hand of someone with bad reflexes, lousy coordination and possibly some kind of neurological disorder. in short, stock prices do not somehow reflect, v reality all the time by magic. they're as much of a product of wall street. by the way, this is why it's possible for you to beat the performance of the average base investing in individual stk stocks if the market worked perfectly, you'd never be able to exproit opportunities because the whole point of the game is to spot stocks that are mispriced. why do i bring this up when the action is irrational, it can be frustrating. take advantage of these moment where is stock prices are simply wrong or at the very least, i don't want you throwing up your hands in disgust and ging up on the enterprise because nothing makes sense.

stocks, greatest wealth engine ever created i spend a lot of time talking about the etfs of stocks and this has become a major issue for the market for most of my investing career, about half of the stock's performance came from the sector depending how the sector was doing and the others came from the fortunes of the company itself, management your average company was in control of about half its destiny. that was okay as long as you avoided sectors out of favor you could do pretty well by researching companies, trying to predict which would do better than their competitors but the rise of etfs have changed the equation although there's been a resurgence of the power of individual stocks, even the stocks of incredibly well run companies can be driven down by etf rip tide

when netflix catches a cold, the other three stocks sneeze. even if netflix has little to do with the advertising business of facebook you'll get situation where is sellers throw the baby out with the bath water if the worst company in an industry reports bad numbers, the whole group tends to go down even if everyone else is doing well and thoelz are your opportunities. you have to pass sometimes the market is just obtuse you'll see companies reporting good quarter after good quarter to no real effect, something money managers figure out, yes, things are going well so the next time that business reports a strong number, the stock soars. in those cases you just need to be patient the cav yet is that sometimes when the market makes a mistake, it's not worth trying to fight it because while markets are often irrational, they can remain irrational for longer than you can remain solvent john maynard canes, an important economist, also a very good

money manager, your goal is not necessarily to be right. it's to make money sometimes that means being a little cynical about other people's expectations. here's the bottom line don't just assume that stocks that go down deserve it. in the immortal words of clint eastwood in "unforgiven," deserves has got nothing to do it with. your job is to recognize when it's doing something wrong and to try to take advantage of it stick with cramer. ♪♪ ♪♪ ♪♪

i love hearing from the smartest people in television, you, cramerica first a tweet from mike, jim, why when a caller named richard calls in, you and his staff say his name in a high pitch that's a reference to the movie "tommy boy," chris farley and david spade. when we have a caller named richard, we say -- >> richard >> a tweet says hi, jim cramer, investing for the newborn child, tax resave, so many options out there, but do something to state by state plan, but by gross stocks they've got their whole lives

ahead to make the money back buy high quality growth stocks the likes of which we talk about all the time on this show. next up, she says, i work with male teens and they think you sound like yoda. i'm learning and so are they thank you, jim cramer. master yoda, you're awesome. @j @j @jimcramer okay yeah that's why my wife loves me so much and, jim, over than banks who benefits from raising interest rates? you know what, not really many other companies. i think that as a corollary, when rates go up, people think that the economy is really strong and therefore people buy the industrials. but the banks are the ones that benefit directly because they're able to charge you more when you go for a loan.

they make more money from your deposits and lend them when rates are going higher and now another tweet, jim, i absolutely love get rich carefully. will you be righting another book anytime soon? very interesting question, because the economics of book publishing as changed radically. i'll work my butt off on something like this and work most nights and almost every weekend, then i'll read the book and it used to be a very lucrative business to write books. now it's just a labor of love. and i have other labors of love i want to perform. including my garden. a tweet from amy, and she says, i may not always watch "mad money," but when i do, i take notes so i can do my research later. #investing i have to tell you, whenever i'm out with people, and i will say this, references, because my late dad would say this, too,

please some people who are elderly who play the stock market, they come out with these long lists of what they took down and i love it, whether they like this or that, and it happens all the time to me it's terrific. younger people don't know how to write down on a piece of paper anymore. that's difference. they're immediately putting it into their cell phone. they have no pencil or paper another tweet, love the show, jim, can you explain i annuinui investments? they're better off i would say and my friend kim fisher, i would say pick individual stocks, pick ets and term insurance is a fantastic buy. no fees whatsoever just buying individual stocks. and here's a tweet asking, what

is really going on with inexpensive stocks with high yields a $7 stock with an 11% yield thank you, love the show >> what's going on is a classic red flag, meaning that people have gotten way to complacent and when a yield is -- when a dividend is that high, a distribution is that high, it is often unsustainable. be careful another tweet, can you suggest some reading for a young first time investor? i want you to go to amazon and i want you to hit up the name peter lynch. okay and look at what up on wall street that's the book i cut my teeth on it's the book you can cut your teeth on all right. that's all our tweets. so stick with cramer i'm working to keep the fire going

for another 150 years. ♪ to inspire confidence through style. ♪ i'm working to make connections of a different kind. ♪ i'm working for beauty that begins with nature. ♪ to treat every car like i treat mine. ♪ at adp we're designing a better way to work, so you can achieve what you're working for. ♪ onmillionth order.r. ♪ there goes our first big order. ♪ 44, 45, 46... how many of these did they order? ooh, that's hot.

♪ you know, we could sell these. nah. ♪ we don't bake. ♪ opportunity. what we deliver by delivering. that's what happens in golf nothiand in life.ily. i'm very fortunate i can lean on people, and that for me is what teamwork is all about. you can't do everything yourself. you need someone to guide you and help you make those tough decisions, that's morgan stanley. they're industry leaders, but the most important thing is they want to do it the right way. i'm really excited to be part of the morgan stanley team. i'm justin rose. we are morgan stanley. i like to say there's always a bull market somewhere and i promise to find it for you on "mad money." i'm jim cramer see you next time.

(male announcer) tonight on "undercover boss," bryon stephens, president and coo of marco's pizza, goes undercover in his own company. can not be out delivering like that. - okay. - got to look proper, man. got to fit the style. yeah, looking good. (tyler) fill your hands with cheese. your hands aren't gonna smell good at the end of the day, but you're gonna get the job done. (announcer) this big cheese, who's hoping to clobber the competition... - oh, that's bacon? - that's bacon. yes. - so it's pizza bacon? you ain't gonna give up on me now, are you? i can't tell you yet. (announcer) will found out that he's spread too thin. we don't hear too, too much from corporate a whole lot. they don't market as much for us. you know, a lot of people out there, you know, they don't know marco's pizza. (announcer) along the way, he'll find the employees who keep his company raking in the dough.