conference call, jans heideman. >> shake shack, 77 price target, i'm in that camp there >> shake shack >> thank you, brian. >> by the way, that does it for us here on "fast money." 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 make you some money my job isn't just to entertain you but educate you. call me at 1800-743-cnbc or tweet me at cramer i say it over and over and over again, no matter how much you

make love of stock, no matter how you like the underlying company, if the rules say sell it, you sell it. one thing i've learned in my investing career no matter how much you might believe in something, you violate the rules of the road at your own parol but what in the heck do these rules come from? it's not like they were handed down from one high and carved into stone tablets not like the laws of physics, you can't deduce them from serving and gravity. no, the rules coal from experience particular my experience i've spent nearly 40 years in this business and in that time you better believe i've learned powerful lessons in many cases, i've learned them the hard way and because i don't want you to repeat my mistakes and because i want you to have the benefit of my career, tonight i want to layout my most important rules for investing,

the stuff i really live by some stuff may seem basic but again, you forget the rules. back at my old hedge fund, i would occasionally convince myself it was okay to make an exception to ignore my discipline just this once. it seemed compelling at the time and wherever i broke my rules, let's just say i got burned. it's like that old joke about the guy that goes to the doctor and says doctor, doctor, it hurts when i stretch out and shake my hand around to which the doctor replays don -- replies don't do that. what should you be doing let's take down my most important rules for investing starting with number one bulls make money the bears make money and pigs, they get slaughtered look, i say this all the time

because that's -- because so often in my career, i've seen moments where stocks went up so much that people were intoxicated with their gains of course, that's what geniuses do however it's precisely at this point you need to remind yourself not to act like a pig i first heard this phrase on the desk of the legendary stein heart partners i would be having a big run and the legendary michael stein heart told me i made too much money, perhaps i'd be a pig. i was grateful i caught a major gain not that long after we got a vicious sell off and gave back everything i made and then some. that's when i enshrined bulls make money and i got a barnyard full of sound effect buttons as i did, the bull, the bear, the pig. just to be clear, bulls don't

have a monopoly on piggishness the exact same idea applies to investors who press bets too aggressively on the short side we had major declines over the years but other than the .com burst, most stocks did bounce back quickly at this point, you made a killing if you went long at the lowest of 2009 but if you stayed short, if you were a pig you got greedy betting against the market, you got slaughtered. of course, it begs the question how do you know when you're being a pig? look, allegedly there is no such thing as stupid questions, only stupid answers but honestly, you dron don't need me to tell you when you're being a pig if you didn't feel greedy in 2000 after a 3,000-point run, you don't need investment advisors you need a psychiatrist. if it's a profit you sidestepped a huge decline if you let your winters ride you

lost a fortune the financial crisis is even more stark if you're walking around earning a huge amount of stock in 2008 as the bank started dropping like flies, you were beyond piggish. why is this rule so important? it's simple. one of my chief goals is to help you stay in the game the hardest part of investing is holding on through difficult periods. taking short term pain so you can havelong-term gains. the people that got wiped out by the .com collapse tend to be the ones who never took anything off the table. where did they live? >> house of pleasure. >> they never felt greedy in the house of piggishness they got slaughtered same for those who never came back from the financial crisis bei being cautious and ringing the registered kept you in the game. that's why i remind people every day, have you taken your profit? have you booked any gains at all

or are you being a pig you never know when stocks you own are really going to get crushed. you never know when the market could be just annihilated. if you assume stocks will keep going up forever in a straight line, i think you'll be in for a world of hurt. sure, there will be times stocks keep going and going and going when i coin the term fang a few years back for facebook, amazon, netflix and google, i loved them all but gave up on amazon after an amazing run it continued to move up and up and up and i felt like a pig after the stocks extremely profitable move but felt like a fool when it kept galloping. it bugged me that is the price you have to pay for following news reels you need to recognize for every huge pile of cash that gets left on the table with a situation like amazon, you're sidesteps gigantic losses like the kind you would have had if you had stuck with the market in 2000

and 2008 experiences the term two generations of investors against stocks, maybe forever. so never forget, bulls make money, bears make money and pigs get slaughtered and i'll keep on repeating it forever with the sound effects because it's that important. rule number two, hey, it's okay to pay taxes look, no one has ever liked paying taxes but like death, taxes are inevitable and unavoidable. yet, the aversion of paying taxes on stock market winnings often borders on the pathological so many times people have gigantic gains but they simply refuse to take any profits because they don't want to incur taxes. wall street is littered with broken hearts of investors that made this kind of mistake. couple of years ago for example, i went to a presentation from a prominent hedge fund manager that recommended buying the stock of macy's because of the real estate value. the stock had run a great deal and it was right for some profit

taking but i know people who had owned it for years with hefty profits and didn't want to ring the register why? they would have had to write a check to uncle sam next thing you know, the stock of macy's is obliterated, cut in more than half and wasn't a two for one split. the mall hit a tipping point courtesy of competition from amazon and the darn thing just got crushed. those who didn't want to share the profits with uncle sam ended up with no profit at all what kind of lesson is that? make your peace with the tax man. some gains are simply unsustainable, need to be taken. a profit on paper is not the same thing as a profit in your bank account gains can be a femeril when it's time to sell, you sell in short, stop fearing the tax man. start fearing the lost man you won't regret it. i'm not saying blow out everything i'm saying take some profits bottom line, remember my top two

rules, bulls make money, bears make money, but pigs and don't be greedy in and a very ration of the theme it's okay to pay the taxes don't be so worried about taking a taxable profit because you may end up with no profit at all. chris in ohio, chris >> calle >> caller: hi, jim, thanks so much for having me. >> sure, chris, good to have you. >> caller: so my question is, we have $1,000 of disposable income and neither of us have a 401 k match with our jobs, so we're basically just trying to figure out, we have a mortgage. we're trying to figure out what would be the best thing to do with that extra $1,000 of disposable income. >> that's what an index fund is for. i mean, yeah, you can take 10% of that and use it for mad money, buying a share of something and that's okay, by the way.

my first stock trades were one share, five shares, seventh shares but you need an index fund to get started to build wealth and then you can do it. >> caller: jilm, thank you for taking my call you talked about how first-time investors or younger investors should stay away from risky asset classes until they have $10,000 ol' allocated. >> yes. >> caller: now, my question to you is seeing all these crazy bull market we have going on, seeing the market ramp up and crypto currencies, if i don't have $10,000 in mutual funds, do i sit around and let opportunities pass and wait it out -- >> i totally understand a young person -- look, i want people to be able to save. that's my principle goal if you want to put some money aside, mad money aside and do what i think is basically doing

gambling with it, i'm not going to stop you. the thing i most care about is getting people to save if you're saving that way with risk, as long as you understand the risk, i'm okay with it but i cannot back away from index funds of how you invest. jeff in california, jeff >> caller: hi, jim this is jeff at lake tahoe thanks to you and your staff for your informative and helpful program. >> thank you. >> caller: i have a two-part question pertaining to interest rates and specifically yield curves can you explain to us home gamers how -- what a yield curve means and more importantly, why did analysts say when there is inverted yield curve that it is recession coming and the last part of my question is what happens if the ten-year t bill goes to over 3%, how will that affect the stock market in 2018 and grab your skis and come on

out and see us here in tahoe thanks. >> very kind i love lake ha ttahoe. an inverted yield curve, fed raised rates too high and the rest of the curve goes down out five, ten, 20 years. that has a curve that has shown in many cases to lead to recession but in other cases not. i'm not -- i am not hard and fast in that rule. i do think as rates go up, business does slow that's undeniable. but we are such a low rate and business is so strong that we can afford it. mike in california, mike >> caller: good afternoon, mr. cramer. >> mike. >> caller: listen, two things. one, first, thanks for taking my call number two, thanks for leading us 9:00 to 5:00ers down the path to extra money. >> that's all i want to do. >> caller: here is my question i know you're in a hurry. >> i'm fine. >> caller: it's concerning

dividends. i want to know, do you take the money and put it in your pocket or put it back in the stocks, and if you do, how do you make that work and set that up? >> you got to do dividend reinvest have to do dividend reinvest it's a check off basically but you have to. my travel trust are not allowed to got to give the dividends away and always hurt the performance. i always tell club members, please, reinvest take that money because there is nothing like the compounding of a great compounding that you get particularly with stocks that have good dividends. remember my first two rules. bulls make money, bears make money and pigs get slaugtd hterd please don't make money. please be disciplined. don't be afraid to pay the tax man on profits you earn. it's better than riding things to losses. take some off the table. >> putting my nearly four decades of experience to work tonight counting down the most important rules for investing to help you navigate the market

stick with cramer. >> don't miss a second of mad money. follow @ jim cramer on tweeter or send jim an email to madmoney@cnbc.com or give us a call at 1800-743-cnbc. m miss something head to madmoney@cnbc.com.

. news flash, at the end of the day we're human. if you remember one thing about being an investor, that's it nobody is perfect. everyone is fallible and it's inevitable we'll make mistakes it's the nature of the business and humans that's why if you're going to own individual stocks, you need to follow a set of rules rules that are designed to protect you from yourself. rules that i learned the hard way and that brings me to my next commandment, this is a real important one. never pbuy a stock all at once. do not under any circumstances buy all at once. no broker likes to fool around with partial orders like i'm telling you to give.

no financial advisor has the time to buy stocks over time the game is to get the trade on at one level in a big way. make the statement get the position on the sheet or portfolio but from where i stand, that's all wrong. 100% wrong you should never buy all at once and you should never sell all at once instead, what i want you to do is stage your buys stage your sells use the term we use on wall street is work your orders try to get the best price over time and not necessarily in one day. maybe multiple days. why? when i first started out as a professional money manager, i wanted to prove how clever i was and how right i would be if i felt like caterpillar, i would buy it now, big at one price because i was so sure i was right. put me up on 50,000 cat i'd scream, which means buy 50,000 cat like i was the smartest guy in the universe doing it big when i think back about that young cramer with the mostly

full head of hair, by the way, all i can say is i was one arrogant son of a gun. i was arrogant and wrong what was my mistake? if you want to buy 50,000 shares of caterpillar, you don't pick them all up at once. it's dumb. what happens if it goes down you'll feel like a dope. my rule, never buy all at once instead, i should have been buying cat in increments of 5,000 shares it seems measly but believe me, i'm right. you buy gradually over time. you can put on a small business and cross your fingers and hope it goes down to get a better cost basis i know your trade and the institution guys are saying jim, 50,000 is nothing. you know what? i no longer trade in size as we say but invest with my travel trust and action plus.com and when we have a new name to tell club numbers, we buy at 500 shares at a time or smaller over

the course of but tmultiple day. you're declaring the stock won't go lower don't you think that's crazy nobody has that insight. buying gradually in stages, the judgment is fallible why don't investor ifs they want 500 shares in exxonmobil decide to buy and say 100 share increments because they want to be big, too. they don't want to waste the brok broker's time. your broker wants to get the trade done my brokers hated when i would place increate meantal orders bu to put your net worth into any stock, maybe it will go into free fall after. that's why you need to resist feeling like you're making a statement purchasing the stock i bought and sold billions of shares of stock. billions you know how often i got to the bottom, how often the last price i paid was the lowest and off to the races. maybe one trade in 100 i'm good at this game.

resist the arrogance, buy slowly as i tell members of the action plus.com club. humility beats it every time next rule, i want you to buy damage stocks, not damaged companies. let's say the malls having a sale and you pick up a piece of merchandise to find out it's broken when you get home, maybe it doesn't work. maybe it has a hole in some shirt. in the real world, you can return that and get you money back there are guarantees and warranties galore on main street wall street is different if you buy a stock and it belongs to a defective company, you have to eat the losses no money-back guarantee. you need to be careful to distinguish between broking stocks, names down for no particularly good reason, maybe macro cost and stocks that need to trade lower without you sometimes damaged companies can be easy to discern when value plummets from the 200s in 2015 combination of slowing growth, balance sheet fears with one of the pharmacies, it wasn't a good

sale to rush toward. it tumbled from 262 to the single digits for a bottom a lot of people valiant was worth 150 but meant the stock was down right toxic on the other hand, sometimes it will sell off that have no reasons to do with the underlying company efss, washington, greece because the stock is down, that doesn't necessarily mean there is anything wrong with the actual business so how do we distinguish between a broken company and broken stock? complicated question what i like to do is develop a list of stocks i like very much. i call this my bullpen when wall street throws the sale with the whole market coming down, i use that as an opportunity to pick up the stocks on my list that was designed in a cooler moment with a cooler head but the bottom line is that you never really know and that's why this rule works in tandem with the last one. you never buy a position all at

once because what you think is merely a damaged stock might turn out to be a damaged company. if you take your time, you're much less likely to end up with a large quantity of broken merchandise. stick with cramer.

if you want to build a portfolio of individual stocks, the big if since there is nothing wrong with getting all of your equity exposure from a cheap index fund that mirrors the s&p 500. you got to be rigorous about it which brings me to my next rule, do the homework. listen, growing up my kids hated doing the homework they thought it was punishment sometimes when i looked at what they were studying, i have to admit i found it easy to simp sympathize with their point of view what's the relevance of most things they teach in high

school how will it help you later in life why bother that's a term i just really should take that back but as a parent, i'd always encouraged my kids to study because you never know what you'll turn out to be interested in later in life but i bring this up because i think that many of you have the same attitude to the homework you need to do for stocks. you suspect that it might be as irrelevant to your portfolio as school work was to my kids when i tell people they need to listen to the starbucks call which is a good one or know what the analysts are expecting from netflix, which is subscriber growth if they own the stocks, they don't want to hear it. they just want to own them they don't have to do anything when i remind people doing the homework means listening to the conference calls, they really want no part of it they look at me like an old fashioned teacher asking for way too much in this busy 211st s 1 too much in this busy 211st s1s century world. that's wrong owning stocks without the proper

research is just plain lunacy. you never want to do that. people still do it they do it for a couple different reasons. on one hand, there is a buy and hold school of thought the idea you don't need to keep track of what is happening because you're in it for the long haul like that makes it okay on the other hand, you have people that don't have the time to be that diligent. for those of you that don't have the time, i have the solution. get someone else to manage your money or do the smart thing and invest in a low cost s&p 500 if you can't devote a few hour as week to your portfolio, you shouldn't be buying stocks back in the 1990s buying whole is the be all and end all of investing. i'll hold onto the cmgi. you got to look that up. google it. it has got to go back to 100 where i bought it. man, i could substitute vertical net. i have 100 things to put in that sentence the experts say if you hold

things for the long term, isn't everything supposed to work out for the best of course, this philosophy took a real blow during the financial crisis when so many people who practiced buying whole got wiped out. that's why i've always been buying and homework. what is the homework before you buy a stock down should listen to the calls you have to. that's the minimum go to the company's website and read the research and news stories and google everything is available on the web. everything you have so much more available now. so much more knowledge there really is no excuse. you aren't up there begging at the goldman sachs library for statements from three months ago. remember those plastic sheets, that was ridiculous. you had all this stuff at your fingerti fingertips if you fall back holding any group of stocks and don't pay attention, you'll be soundly beaten like and actually serving and all the time more pot point there is no

homework and the next rules and others cost and diversify and control risk the downside and upside will take control of itself and managing risk. what's the biggest risk out there? sector risk. stocks in the same sector they tend to trade together especially at kaextreme moments. 50% of the action in a given stock comes down to the sector in some of these areas because of etfs, it's higher i don't care how great a stock was in 2000. same thing with financials in 2009 and 2014 to 2016 and one thing you can keep from getting nailed by the sector risk and that's diversification that's why we played this game of am i diversified?

i've been playing since 2002 people make fun of me in the office because i say it so much. it's the only investment concept that works for evening if you mix up enough different sectors, at least five you won't be wiped out when one group gets obliterated. diversification is so obvious and such a no brainer, if every edadvisor has been telling peop to do it for years, how can anyone be undiversified. it comes back to the homework issue. a lot of people don't know what they own they couldn't tell you if you bumped into them they end with stocks that are similar. i feel quite a few calls from people that think earning fang is a diversified strategy. hardly with facebook, amazon, netflix and google now alphabet, you own veriuatioy uati variations of the same thing that's what i call faux diversification or another example, now matter how much i like the oil stocks at any moment, it's wrong i can count a portfolio with

exxonmobil and halliburton j and j, bristol myers and united health even as i like all four they leave you way too exposed to health care risks that could overwhelm the whole group at once having iundiversefied portfolio mistake, the way it works in this country. if you have all your bets in one sector, you beat pretty much everybody who is diversified out there. that's the nature of the beast a hedge fund manager that does that and gets lucky can market himself as a huge success and raise tons of capital from investors that don't realize how much risk they are really, truly taking on. whether you're an armature or professional, you need to do your homework and keep your portfolio exciting it may not be sexy but there is the routine maintenance stuff that protects you from monster losses down the line

mike in south carolina, mike >> hey, jim. it's mike in south carolina. >> thank you for calling. >> caller: i was just wondering. i'm a new investor and i'm going to invest $100,000, how many stocks should be in my portfolio? i started with 30 and i don't know if that's a lot or not enough. >> well, i would tell you that after ten you're kind of a mutual fund and if your real stock chunky, you can take on many more and if you have help, you can. 10 is the max. don't do more than that because you won't be able to do the homework roberto in texas, roberto? >> caller: hi, jim boo-yah. >> boo-yah. >> caller: i just had a question about -- because i'm a new investor and i'm 29. i have a small amount, about $1500 and i'm wondering how i should invest it in index funds or -- >> s&p 500 index fund.

1500 first $10,000 there then you can do mad money index funds keep you diversified and we like to diversefy, diversefy. homework isn't fun but losing money is worse you want to avoid monster losses, homework and diversification is key stick with cramer. at cdw, we get that modernizing your it infrastructure requires deep thought. so quit staring out the window, and give cdw a call. they'll assess your infrastructure needs, then design and implement a modernization solution using fast hpe gen10 servers, with security features built into the hardware. and provide hewlett packard enterprise proactive care services, 24/7 monitoring and support, to keep your infrastructure agile, healthy and reliable. for modernized it infrastructure, you need hewlett packard enterprise and it orchestration by cdw.

man: stand up if you are a first generation college student. stand up if you're a mother. if you are actively deployed, a veteran, or you're in a military family, please stand. the world in which we live equally distributes talent. but it doesn't equally distribute opportunity, and paths are not always the same. i'm so proud of you, dad! man: i will tell you this, southern new hampshire university can change the whole trajectory of your life.

look, i don't want to go zen but when it comes to managing your own money, you're often your own worst enemy don't take it personally i'm myown worst enemy, too what do i mean if you want to invest wisely, you need to be fighting off your own worst impulses we're not robots we have emotions that can throw your off your game that's why the theme of tonight's show is discipline trump's conviction you obey the rules to do the smart thing when your emotions are telling you to do it opposite which brings me to my next rule. nobody made a dime panicking panic, repeat after me, frankly.

it's not a strategy. panic is not a strategy. you see it over and over like it is a stock gets hammered and investors sell and the market gets crushed and people bail in short, people can't take the pain so they bolt. panic is the operating instinct in the cases there is something basic and instinct about panic and the desire to flee if you're a stone aged hunter gatherer that stumbles into a family of grizzly bears, panic can be helpful but tells you to run away but it's not a useful emotion analyzing the stock market running away when you should be running toward the truth is there will almost be a better time to sell than in a panic. a better time to leave the table than whatever moment inspired you to panic in the first place and don't i know it. back in 2010 i was on the air for the flash crash. i watched the monitor for the

tick e ter and the crawl and couldn't believe what was happening and didn't know why. that's what a panic looks like that's textbook. viewers right there on the set to pick the stock they loved and buy it using limit orders so you wouldn't have to accept a price you didn't like. the result to this day people still come up to me and thank me for that advice during the flash crash but i simply put my rule into practice realizing that nobody made a dime panicking and tried to help you profit i did the same thing back in 2016 when we had 1,000 point sell off over two days i told people to buy down but only using limit orders and that's what we did for the travel trust, which you can follow by joining the action alerts plus. we got outstanding buys because we stayed calm and took advantage of everyone else's panic. so the next time there is a big market wide sell off and you feel like fleeing and never touching a stock again, i want you to do something for me i want you to take the opposite

side of your emotions, the opposite side of the trade when you see one of those high-speed routes of a sector, individual stock, why not buy a little get a feel for it. see what i mean. the most rewarding trades you can make is where decks have been cleared out by terrified folks using market orders. who they don't get that the exit doors aren't as big as they think they are mind you, i'm not absolutely saying you buy every stock and every panic and every sell off they are not all worth buying. often when people freak out about an individual company, it could be with good reason. but i am saying that it's a rare moment when you won't get some sort of bounce after big decline so the next time you want to dump everything, take a deep breath and wait for the rebound before you sell rather than rushing to jointly fleeing masses you could get trampled hey, speaking of hideous down days i got another rule to help you ready? when the stock market gets negative, remember that he who

defends everything defends nothing. now it was true when frederick the great said it 250 years ago and now. he was talking about battle plans and but portfolio plans but the point stands he defends nothing what does that mean? it's how you evaluate holdings when the markets fly, many stocks in bull market mode, you don't need to worry about most positions and more exposure for the bull, the better when things get more difficult, when you're on the defensive, you need to recognize many stocks you bought during better times might not fit the new environment. when the economy is slowing and market is getting slammed, you can't hang on to everything you want to own. if you try to defend all of your positions in a market that turns against you that's a recipe for you to get blown out of the stock market. and when i say defend, i mean you can't treat a declining market like it's a bieg opportuo -- buying opportunity and keep chipping away. you will run out of capital

leaving you unprepared to buy more if we go lower. yet, when the market gets negative, you need to get more selective and focus efforts. that's why i rank all my stocks at all times for my actionalertsplus.com members ones are stocks i buy now and threes are stocks i sell that way i'll know which stocks to defend when things get tough. i make this plan not in the heat of battle and then i know which ones to cut or use the sources of capital to buy the ones let's say tech is getting hammered but you think it will rebound. it's important you don't try to hang onto the complex. pick the best text stocks and toss out the rest to raise cash. use as reserves to buy the stocks of higher quality tech companies at lower prices. that's right, the non-essentials and ones that have no catalyst and you only own because you want an exposure of a bull market they get to do it when things turn bearish karen cramer worked for me for

years and used to call this circling the wagons around your best names the first few times you do it, you'll curse yourself because you'll slaughter stocks but eventually after you experience a number of rough markets, you'll realize how valuable this process is because over time you'll end up with great cost basis on the stocks you like the bottom line, great investors know how to ignore emotions when they get in the way of making money so the next time the market gets slammed, don't panic. nobody ever made a dime by panicking. but also, don't double down just with your eyes closed and the whole portfolio. vicious negative markets can give buying opportunities but focus on your absolute favorites rather than chasing bargains in lower quality march kherchandis they weren't bargains at all rich in new york, rich >> caller: hi, mr. cramer. it's a pleasure. >> how are you >> caller: can you please explain -- i'm good. thank you.

could you please explain the technique of buying calls and if it could be or should be used by us home gamers to boost our pad our portfolios >> it's a great question i don't know if you've seen the brothers that have done fabulous work on options and also opinions, actions on friday afternoon. they could be a low risk way to be able to limit your exposure and if you get the book, getting back to even, i have 100-page ex position of how to use calls to limit your downside and get maximum upside exposure. getting back to even david in california, david >> caller: boo-yah, jim cramer thanks for having me. >> well, i'm glad you called >> caller: thanks. all right. quick question for millennials who are knowledgeable about the market, where should they invest their money other thank fang >> you know what there is a lot of different

fang-like names and industries for instance, i like aerospace that's a long-term bull market i like a little foreign exposure and i think that that's not such a bad idea, maybe an etf that has europe because europe is way behind where we are and will be that way for multiple years. and then i think that if you're really young, why not look at some riskier biotech stocks. you got your whole life to make that money back. >> emotions have no place in investing. they get in the way of making money so the next time the market gets slammed, please don't panic, nobody made a dime by panicking sell offs can give you big opportunities but do your homework, don't chase and don't buy damaged merchandise, just damaged stocks "mad money" is back after the break.

♪ ♪ welcome back to tonight's check yourself before you wreck yourself edition of "mad money." i'm a big believer once you get money saved up, you're in

control of your financial destiny but that means you need to be careful because you're the one with the most power to derail your financial future look, mistakes will always be part of the investing game you can't rule them out and out law them i want to be sure that you don't make the same mistakes twice or three times or endlessly for that matter and that's why i have rules rules for investing to protect you from misjudgments i used to make when i was young and inexperienced. rules like for example don't own too many stocks. back at my old hedge fund, i would spend three hours every day analyzing mistakes of the day before and you wonder why i retired. made myself sick to my stomach every day. that was my major task i would do it between 4:00 a.m. and 7:00 a.m some people are night owls, i'm an early morning owl i would analyze every losing trade. you don't need to analyze the winners. they take care of themselves

i would try to figure out how to make more money or lost less money. i was for lack of a better word maniacal about it and i had an epiphany good performance could be linked to having fewer positions. when we own fewer stocks, we tend to make more money. that's why ever since, i won't buy a stock without first taking a different one off the table and i try to do that for my travel trust, which is the only way you really can do it these days you don't just buy shares in more and more companies, you need to limit holdings that's a great discipline and one you should adopt pronto. all the bad money managers have hundreds of positions. they can't keep track. i don't know how you stay on top of more than 30. all the really good money managers have a few names that they know inside out, which means they can buy confidently on the way down when the market goes awry. that's why i say don't own too many stocks.

now i know it could be constraining you sell stocks that are good for stocks that aren't as good i know that. hindsight is 2020. take it from me as someone who owned stocks for 40 years, it's far more likely you'll be selling marginal companies to get bigger and better ones that's how to make a portfolio work for you that's portfolio management. you don't want to be a mutual fund manager you want to give it to an index fund the time i lost the most money, my sheets, my positions were thick as a brick when i made the host money, my sheets were one sheet of paper double space and i ran hundreds of millions of the dollars please remember, whether you're a proor am or armature, it's pl you have too many positions. rule of thumb, if you're investing for yourself and you own more than ten positions, that's right, if you own more than ten stocks, maybe you ought to pair back a bit you can have too many stocks but you know what it's very hard to

have too much of cash which brings me to my next rule. cash is for winners. the wide spread aversion to cash in this business breaks my heart. at times cash is a perfect investment it drives me crazy how soon few people recommend it they hate the market so they are only 95% wrong instead of 100 and they decide to short a few high flyers against their position they own. no, no, and no as an investor that is absolutely the wrong way to approach things, you don't like the market and don't like sectors, sell stock, raise cash. don't buy put options on the stocks you own or find stocks to short against your current position the odds simply do not favor you winning on both stocks, the short and long it's a strategy whose goal is mediocrity if you have cash at lower levels, that's the best way to protect yourself let me tell you a story, i was one of the biggest option traders on wall street for a time and i can tell you when i bought put options to hedge positions, i always ended up

losing money when did i make money? i bought put options to profit from low quality companies that were going to have i thought short falls or stocks that seemed hopelessly over valued versus the fundamentals. if you dislike the market, don't bend yourself into pretzels. sell some stocks and go into some cash which is literally short term treasures people talk about how little cash earns although it's earning more than it did awhile ago or they say can't be in cash, that's for losers. no, cash is for winners. especially if you think there is a major disaster ahead i grew up in a different time. i only shorted when i had an edge i can't short it all by contract, not even for the travel trust but back when i could, i didn't short stocks for the sake of having shorts on against the longs. i don't care about not having enough exposure, i care about not losing money if you don't like the market and think there is nothing compelling to buy into any

weakness, i suggest you sell stock and raise cash go sit on the sidelines. there is nothing wrong with that wait for the situation to improve. believe me, it's never the wrong call when you don't like the tape or can't find anything that truly makes sen for you. bottom line, always be careful not to own too many stocks and not to have too little cash. stick with cramer.

your tweets are piling up.

holy cow, at what age should i put bonds into my retirement account? currently 25 years old slash mad tweets i don't want bonds until very, very late. i like to actually extend it a little here and say not until you are in your late 50s do i want to start seeing a lot of bonds. why? because people live longer than they used to and bonds don't generate enough return how about higher yield and dividend stocks? that's what i go with. moving on, could a be a next producer i would like to see from you a show titled "typical errors of emotional investing. well, that's a great idea and i'm going to do it because i do know that over and over again emotional investing produces major mistakes that lead to big losses you got to check them at the door and i will do that for you. another tweet, this one from

steve daniels who says @jim cramer, boo-yah, what else mirrors the s&p 500. there is a place called van guard and van guard is terrific and have a thing called the total return fund. of all stocks. that one is one of my absolute favorites. stick with cramer.

i like to say there is always a bull market somewhere and i promise to find it for you here on "mad money." i'm jim cramer and i'll 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." ♪ who set out to solve a problem she faced as a mom. ♪ hi. i'm ginelle. i am the owner of cool wazoo. i'm here seeking $65,000 in exchange for 25% equity in my company. when my daughter was younger,