>> chemical space buy it i'm in it. it's been beaten up. >> danny >> just buy into g-20. i like buying those after money supplies >> join us, scott. thank you. ou thank y. >> thank you. >> thank you. >> thank you "mad money" begins right now my mission is simple to make you money. i'm here to level the playing field for all investors. there's always a bull market somewhere and i promise to help you find it. "mad money" starts now hey, i'm cramerers welcome to "mad money. welcome to cramerica other people want to make friends. i'm just trying to make you some money. my job is not just to entertain, but to educate and teach so call me at 1-800-or tweet at jim cramer i do this in order to help you be a better do it yourself

investor, or better client i do it with a spectacular team of people headed by any executive producer regina whos ha been with me since inception. with dozen of fabulous people responsible for everything from all the look and feel of the show to the research, we have a team that helps me with memos that back up the research. and we have a head writer who is really our only writer, has been our only writer since inception, when he was a freshman in high school, cliff mason. my sister nan and her husband todd's son, my never yu. my show after years and year has become a labor of love we've been doing it to so darn long, we take it for grant what had we do. i'm going to change that, i'm going to correct 2 iit tonight i want to talk to you about the show, its evolution, and how you can use it or worst miss use it. there is so much we throw at you that you might not be able to use it as effectively as we would like i know this because i talk to enough people about the show and

interact with enough people through email and callers as well, twitter at jim cramer. i have a good idea what you come here and what you really want. the show has evolved mightily from when we started the show was an outgrowth of a radio show, real money, where you heard booyah by the way. i started the street, still going strong, still write for it every day under the paid site also known as real money, and i manage my charitable trust from those auspices when we started the show people were thirsty for specific investment ideas and i was happy to comply. we got hit with a great recession which we challenged called the entire asset class of stocks, meaning stocks as a way to save and a make money we had many companies, big companies particularly in the financial world destroyed by the downturn, mostly because they had lent a lot of money and didn't have enough money in the bank to handle the losses that came from a dramatic decline in economic activity. it was a credit crisis

i am proud of the fact if you watched me you might have avoided a lot of the downturn because i shouted from the rooftop that the fed was nuts, they're nuts the situation was far worse than they realized. even the fed acknowledged in its minutes that i was the only guy saying things were falling apart. also the only guy in the mid i can't vilified for not telling people to sell damned if you do, damned if you don't. but that era is changing and it changed me. it changed the show. it was more of a metamorphosis i added language at the top of the show to describe a new manifesto, a new reason for being. i say every night the show is in some form or another to educate, to teach i say it in different ways each night. that is very important and different from the original show, a total break in a lot of ways i think it's not enough to give you stock ideas. in fact, we deliberately minimized them the last, well, decade we want for you to be able to understand the process and to

pick them for yourself or more important, we want you to understand the stock market enough for you to make a judgment whether you can do it yourself now, me, i love individual stocks have for years and years and years. i think they can be tremendous vehicles they can lead to great wealth. our show's identification with certain stocks from the get goh, stocks like apple, chipotle, pepsi co., sales force, bristol meyers, hasn't gone unnoticed. ever since we changed the show we have tried to leave behind the new ideas or hot ideas and instead tried to give you themes that allow you to invest in more fertile second forz versus others themes i hope can make come alive with analogy, sports, movies, whatever so you can do the homework on them themes like new frugality, post recession or eating longer through living habbitts, cloud connectivity and investments i've written many books. i know the confessions of a street addict before the show

began, remains a favorite. i have to tell you get rich carefully is designed to be this new show's companion a lot of what i talk about in the show, if you're having trouble get rich do, it. i'm cognizant the market is hard you've got time burdens. you've got demands you may be bewildered despite my attempts to make things clear. that's why i've emphasized i'm not just okay with index funds i insist that you use them i would not own a single stock until i put away at least $10,000 in an index fund either through your ira or your 401(k). i have addressed saving for retirement and saving for tuition and emergencies in many shows, i have not ever point blank warned you off individual stocks let me do this on tonight. i would actually vastly prefer you index in index funds than mutual funds mutual funds have not distinguished themselves to take the percentages they do. managers acquit themselves, but managers move on, records can change, past performance is no

guarantee, all that jazz which brings me to point number one of this show i am not a show or snake oil salesman for individual stocks i am a believer in the asset class of stocks as part of an overall way to save money for retirement, tuition, vacation, anything your heart desires. i do want you to have what is known as exposure, that's a technical term, to the stock market i try mightily to convince you it is worth it to do so because stocks have indeed created so much wealth over time. if you don't believe me, why don't you read warren buffett's amazi amazing golden anniversary report he makes a great brief for them. why do they work they represent the sum progress of business and process for business going forward they represent the wealth of companies in aggregate and sharing it with shareholders you get to be along for the ride and i want you to be along for the ride in a responsible way which is most definitely owning an index fund. i'm partially s&p 500. but i like a fund that gives you

a total return or encompasses all the stocks in the market and fund houses. if you aren't for one, then of course go to the s&p 500 for those who don't get it, here's my bottom line. the show has changed over time from one where we pick stocks for you to where we edge gate you on stocks and understand why index stocks might be worth 234678ing in there's only one problem you like stocks, too, or you wouldn't be watching or need to watch. which is why when we come back, we explain why we bother to delve into stocks at all after we have progressed -- professed, i mean, such dying love these days, for index funds as the first way to go. larry in massachusetts larry. caller: jim, i know i mentioned it before, but i just want to tell you how much your nightly focus lessons remind me of roosevelt's fire side chats. >> well, president roosevelt was a great man. larry, thank you sometimes my mom says, just say thank you. thank you, larry caller: we need you out here,

jim. >> at this caller: here's the question. when does an investment turn into a trade we don't accumulate too many stocks to have to monitor so how quickly and at what percentage gain do we unload a small position which has gotten out of control high-quality problem, and conversely how quickly and at what percentage loss do we admit that we got it wrong >> okay, i have a shorthand for these. i like to take off now, my rules have evolved when you're up 50%, you take off 25 when you're up 100%, you take off, yes, all of your initial investment and you play with the house's money and say thank you very much and you've got a goods gain investment into trade, but we don't do that. if something is an investment label investment, it is an investment if you didn't get enough in when a stock came down and moved up, you can kick that out for a trade. an investment becomes a trade when you didn't get the whole position on. greg in new york, greg caller: jim, i feel like --

every day. how are you doing? >> i'm doing quite well, greg. how are you? caller: i'm doing well me and my friends are young investors. do you think it's worth taking more risk when you're younger and you don't have enough money to kind of put more -- you know, put more money on the line than try to seek the higher profit? >> greg, listen to me, greg. yeah, i didn't start with much money, but i took big risk because i had my whole life ahead of me. you have your whole life ahead of you buy stocks they go down big, you have the paycheck coming. it's older people down the line who don't have enough paychecks left you take that big risk that's what i want chris in oregon. chris. caller: yes, jim, thank you for taking my question and thank you very much for all the great advice you've given me every position in my portfolio is captain cramer approved and doing very nicely. >> you're very kind, chris thank you.

how can i help caller: my question is i have a ira equity portfolio that i don't plan to draw on for five more years and everything is obviously reinvested into it my question is about dividends does it matter whether you reinvest those dividends back in the stock that generated them, or just reinvest them in the fund in general? >> any time you can reinvest dividends, reinvest dividends. hard and fast rule, always reinvest dividends power of compounding, one of the greatest single things that can happen to your money is to compounding of dividends okay, teach a man to fish, your fish has evolved. our mission remains the same, to make you the home gamer a better investor no matter what you invest in. i'm in your corner plenty of "mad money" ahead. how to plug into one of the sources of wealth in the last few decades. plus it can be a huge way to win, but also a massive catastrophe if you're not careful. don't miss this important advice and i'm taking your tweets "mad money" will be back after

the break. >> announcer: don't miss a second of "mad money." follow at jim cramer on twitter. have a the question? tweet cramer #mad tweets. send jim an email to madmoney@cnbc.com. or give us a call at 1-800-743-cnbc miss something head to "mad money".cnbc.com through the at&t network, edge-to-edge intelligence gives you the power to see every corner of your growing business. from finding out what's selling best... to managing your fleet...

to collaborating remotely with your teams. giving you a nice big edge over your competition. that's the power of edge-to-edge intelligence. i can't tell you anything about myself. as someone in witness protection, but believe me, i'm not your average consumer. that's why i switched to liberty mutual. they customized my car insurance, so i only pay for what i need. and as a man, uh, or a woman with very specific needs that i can't tell you about- say cheese. mr. landry? oh no. hi mr. landry! [ grunting ] liberty mutual customizes your car insurance so you only pay for what you need. liberty. liberty. liberty. liberty. ♪

we've started this show explaining why we teach what we teach and why you want to own index funds to capture the profits and opportunities of stocks in aggregate. for those of you who come away from the show saying we tout stocks every night and index fund are a waste of time, what can i say? we aren't going to ever change you over, we're not going to win you. and we do know you don't need to bother to watch. we can live with it. why do we bother to do the show other than i like to be compensated for doing something if i like index funds that much?

it's a terrific question actually surely i could have retired by now. i did well in a previous life, broker at goldman sachs, gave my investors one of the largest compound return after fees 24% when the standard & poor's gave you an 8% return during the same period i will come back to that number, so hold onto it. but i mention it now because i am lucky enough to do what i want to do at this stage of my life every now and then again i'm tempted to thinking maybe i should be a hedge fund manager whenever that occurs, my late father thought way much happier doing what i'm doing now and he thought the old life was too hard plus he thought the show was terrific and was really helpful and my bigger backer in what i was trying to accomplish here. thanks, pau. so why ever talk about individual stocks, then? first, we know that someone must want the information or we wouldn't have lasted as long as we have. in the end this is a commercial product and the market has judged this commercial product to be worth something. if it weren't, it would have

been canceled years ago. second i do it because of six stocks national video -- you don't have to write this down, this is history. national video, american agronomics, giant foods, heinz, and gantos these six stocks are at the core of why i think this show can play a role in your financial education and get you to the point where you make furorers and have more of a chance to make money longer term if you choose to invest in individual stocks as well as index funds, remember index funds are preferable for the vast majority of you you're going to want to buy individual stocks anyway or you wouldn't be watching "mad money. which brings me to the first of six stocks that are at the genesis of this show national video when i was growing up my father's broker -- sorry, my 0 father's brother knew a broker and that broker's name was jack. i met jack once. he played a lot of tennis. he had a really good backhand. my father worked hard. he started at gimball's, now

closed whenever he didn't get promoted he decided to strike out with his brother, first selling toy games, then gift boxes, you know what i mean, to retailers. those who have heard my father's eulogy delivered the day after he died november 2014, know that my dad had a really hard business life. he and his brother started the national gift wrapping box company to supply merchants with everything they needed to box, wrap and bag whatever they sold to their customers well, he never had much competition. his customers were always going under and he was on the road quite a bit trying to find those new ones i remember endless days of discouragement i was growing up, you know, those were the days my mom would tell me, go to your room, go to your room before pop got home because he had a hard day, didn't make any sales, or customers were cruel to him. it was tough for him to save he had money in a bank account and savings and loan, but it

didn't pay much interest and i knew he was always deathly afraid he couldn't pay the bills. so one day pop said he knew what he has, he knew what he was going to do. he was going to buy the stock of national video because pop's brother had heard from jack, the guy with the good backhand who was a good broker, that it was the next big thing the stock of the millennium, so to speak or at least the roaring 1960s. first the stock went up dramatically and pop was elated. he bought more of it because it was going higher in fact, that was a really about all pop knew about national video. pop didn't follow an intraday. he found out how it was doing by reading the five star evening bulletin one of the biggest papers that came out at the close of the market or he would turn on the radio and listen to a lot of closing prices on the station he put on including the heavily traded national video he would cheer he encouraged me to follow it. i told you in the past how i kept the journal of stocks i kept in the 4th grade. i didn't know more about the

company behind the stocks than pop knew i wasn't playing with real money. he was after he put a sizeable amount of his life savings in on the way up, it started to go down. like many people pop didn't know what to do he would check in with his brother who checked in with jack who told his brother who told pop that all was well and he should keep buying national video, which he did. well, all i can say is i'm glad for two things one is that pop never borrowed money to buy national video and two, stocks blessedly stop at zero on the way down pop lost everything, everything. i didn't notice the changes back then, but let's put it this way. we didn't take much vacation and we sure didn't stay at the ritz carlton or the four seasons when we went away remember ritz mock apple pie with crackers. this is the takeaway people are going to be tempted to own individual stocks to save

or augment their paycheck. one of the precepts of "mad money" is to know how to invest in individual stocks if you are going to do so think of the mistakes my father made with national video and you will know why this show is set up the way it is first he didn't know anything about it so he had no idea how the company was doing, how risky it was, how it could go down as well as up and how it could go under. he relied on the stockbroker friend of his brother. he had done no work on it at all. so he was at the mercy of the movement of the stock and he only knew to continue to buy rather than to cut his losses. that's right he had a tip he bought the tip up and down after doing no work and he lost everything substantial chunk of his life savings. let me give you the bottom line. here are the many take ways from the national video story tips are for waiters if you can't own stocks go in an index fund stocks can go down as well as up

as was the case with national video. which by the way i still don't know what it does. i can google it, but that's for another chapter in tonight's story. after the break, i'll try to make you more money. plus special access to "mad money" 101 with rules and techniques to break down the market for all investors >> the red flag that makes me drop a stock immediately -- >> announcer: it's everything you need right when you need it. the new "mad money".cnbc.com

welcome back to a real special show of shows, meaning a show describing what this show is about

and why i do it to begin with. first we covered that i don't even want you buying an individual stock until you own a diversified index fund, so it's always going to be a biggest part of your savings, never stocks we don't call the show "mad money" for nothing we're using "mad money" only to buy stocks the rest goes into index fund. how not to invest, buying national video ignorantly from a tip from a broker via brother and riding it all the way up and then all the way down. that wouldn't happen with an index fund, but we respect the right everyone has to try to invest in individual stocks. even as we recognize that my father, had he diversified -- didn't know it existed back then, or at least a basket of stocks might have had a lot more to show for it which brings me to the second stock lesson of the night, american as gronomics. i covered sports and government in tag haas ee

i made $153 a week. i didn't make much money either there, but i knew to open an ira and to save money. my dad told me to do it. whatever money i had automatically went to the fa dealt magellan mutual fund run by peter lynch, the best investor of his day. like my dad, i was determined to try to augment that mutual 23fud and my paycheck buying individual stocks for personal account. i was going to do it the right way, researching the stocks, not through the brother, through the broker, all that stuff where was i going to get that edge why not read all the periodicals covering stocks. i started a magazine called american lawyer devoted to the trade of professional law. because of the esthetic sister who let me crash in her village for the bit, i was able to save some money in fact, i saved more than $200 beyond my contribution s to my ira and decided to use that definition of "mad money" to buy

the stock of american agrinomics this orange grower was doing incredibly well and i would be on the ground floor if i bought it i picked up ten shares of this $9 stoke ten shares i was in on the ground floor all right. you know what ground floor i was in on? i was in on the cheaply knoll yum ground floor that i ended up sipping the cutie sark on. the frost wiped out the crop and destroyed my investment. i should have given up right there. i didn't i just changed my m.o. what i did give up on, though, was the idea of buying the stock off a well researched article. i got a call from an old 23re7bd of mine, high school friend, who said a local steel mill which made precision steel called sps at that point, was hiring. if i was looking for a high-paying job.

they had a lot of order ands and they were desperate for workers. my friend dblt know i was struggling for extra money and i needed a job those calls in the middle of a recession from a friend can be like gold. no, i was happy where i was, but i decided why not look into sps and see how it was doing as a company, as a stock. i went to the mid town library in new york, that's where they had all the periodicals. and read up on everything that was sps which changed to st technologies they had everything, value line, business research. here's what i discovered first there wasn't much known or written about sps. what was written was pretty darn negative my first thought was to say oh, well, it's not doing that well, bummer then i realized, hold it, my information is the most current possible i got a guy telling me a they can't handle the business they have and need to add additional shifts of unskilled labor like me, but the periodical saw negative about it. i had insight nobody else had.

i was ahead of the story these days it's hard to get that kind of edge everybody pretty much knows everything at once edges do exist and we do our best to present them every night. interpretation of news can augment edges and analysis is important. back then i had the pure play. i took everything i had, everything i had saved and i made a ton of money as the sps story unfolded, enough money that i decided i would look around the office for more ideas where i had an edge. i was writing about mergers and acquisitions back then all the public ones. it was pretty clear the hot field for m & a was oil and gas. they were being gobbled up why don't i find one that hasn't been gobbled up yet. back to the library to read about the industry i found a company called natomas which discovered a large find in indonesia. i took another chunk of money, say 300 bucks, and bought that stock. i don't think i had to wait very long before i caught another take overbid at that point i was hooked that changed everything for me, changed my whole career plans. yep, i put money into a mutual

fund, but anything left went into individual stocks and i made enough to pay for my first year of law school and i went back to become an attorney i know there are people out there, wait a second, none of this is possible today first the research that was scan at this is everywhere now courtesy of the web. second, anybody can google a company and know how it's doing in a nanosecond. you would have known sps was taken over by precision gas parts which got taken over by warren buffett hiring doing well there are rules so it's hard to get any sort of edge because companies have to have full disclosure otherwise they'll be prosecuted by the government you can't possibly game stocks as well and you might as well buy an index fund. i am not against that. i was investing in individual stocks alongside savings in the best mutual fund at the time you can stud and i pick worthwhile stocks that might be doing better than the average stock and that can indeed augment your 15i678 beings provided you do it right have some edge and stay current on the company so here's the bottom line.

remember american agronomics and sps if you only know what one person says in the media, me, the writer at foeshds, buy i'm telling you, that's not good enough it's a start better to have genuine insight others might not have especially if it's against the grain of the consensus. then you increase the odds of the investment succeeding. it is in the end about the odds. anything you can do to increase those odds in your favor is going to make it more likely than not that you will succeed as a do it yourself investor which in the end should be the exact reason why you watch this show joe in new york, joe caller: booyah, joe, in kings park, thank you for taking my show thank you for sharing your wisdom with your viewers we appreciate t. >> well, i have a great staff that helps me. thank you. caller: my question is this, if i want to diversify and add three or four companies to my portfolio for the long term, but by diversifying, i would only be able to buy two or three shares

of each company, or would it be better to buy ten shares of one of them, basically what is the least amount of shares you would invest >> ten shares is -- i've done many times, i've owned ten shares i've done two or three shares various times in my career remember i favor an index fund for your first nchlzs. only after you buy a fund then individual stocks. it requires genuine insight, time and hard work on your part. but don't worry, you know what, we'll do it together so stay with cramer. >> announcer: from every corner of cramerica, we want to hear from you drop us a line on "mad money."

tonight i'm telling you how to increase the odds of successful individual investing using stocks in my personal

history as a metaphor to tell the whole story. we have gone over why we start with index funds we have seen the wrong way to invest by examining a failed investment of my dad's, national video. and we have seen the right way through a couple of stocks i bought before i went to law school, all of which were ahead of the publicly available data curve back then. now while at law school i managed to invest daily and going to the harvard school business library which had everything available at the time that you could dream of, including the research from pretty much every major brokerage house as well as what we called microfiche of s.e.c. filings of individual stocks so what if it was about a month old when we got them it was certainly better than nothing. during that time in law school we saw the indexing of individual stocks. that was a influential research firm at the time, still around ultimately the s&p 500 i didn't think much of the way they bundled the s&p 500 back then i didn't i was more interested in individual stocks. i had big scores, what you can

read about in confessions of a street addict. at no point did they cool the auger for individual stocks. in fact, the heyday for stocks was beginning while i was at law school hence why i put a stock a week on my answering machine which made money thank goodness. the 30 year treasury peaking in the low teens, that's right, interest rates was four times, five times what elongated bonds are now. let's say it was all beginning how do i know this simple when i started on commission in 1984 at goldman sachs, i used to get a call every day from none other than my mother who absolutely loved the stock market and would call for quotes on her favorite stocks i had gotten her interested in stocks in the early '80s and she chose to invest in the way peter lynch had started to teach all of us back then. buy what you know and stay on top of it. she had been shopping in giant food which was a very progressive super market chain at the time and she asked me if it were publicly traded. she bought 35 shares and was

itching to buy more. what i would do i often tell you to do. i would read up on the wall street research and marry her experiences at the chain, right, personal insight, with the fundamentals of the grocery business goldman had at the time what was the ax, best analyst on the street on super markets. i would read what he had to say about giant versus other firms that liked it. those days i had a friend tommy tish from the lowe's corporation who would send me a big gym back of research on other firms including firms that wrote about grocery stores every week. here was the process of homework back then. you like an idea through pirnal experience giant food you read up about it with the best research. you match those insights with those of other firms if the ax liked it more, you might have a slight imperfection as other analysts got on board started recommending it. it was particularly helpful if the ax were to trace out the game plan. if there was terrific growth, especially regional growth going to national growth, investors would only pay more for other

companies in the sector, meaning the multiple which is the price we pay -- we are willing to faye for toucfuture earnings or the could go higher. giant food was bought by a dutch company. it had everything you could want including a stock price which is available everywhere no need to call the broker any more the negative years, everyone has the same info. you can get public information the original insight by my mother was the starting point. you can't substitute for that, no as an aside, my late mom never lost her interest in stocks. she took sick with cancer in 1985ing and she would call me every day to get her quotes on giant and other stocks she followed when the market opened. she did it to stay alert and to stay connected to me goldman sachs only gave me as much time off as i needed to spend with her before she died but i never forgot how easy it was for a parent and son or daughter to talk about stocks, which is a major reason some of you watch the show and i pledged to my mom that one

day i would do something more creative than just make money with money, something fulfilled years later by this show now, it is important to know that despite all these different inputs, the process of picking winning stocks can be up ended by events by the great reinvestigation or the execution of the company itself and the power of its competitors to knock it off in stride which brings me to the 5th stock in our saga, gantos. anybody remember gantos? here was a women's apparel store goldman sachs had a relationship with, was heavily devoted to the firm my father wouldn't buy it. we had the best analyst in the street i told him no one goes there i said that's not possible it was way too highly rated by goldman. my father said, all right, let's take a trip to franklin mills, a giant outlet mall outside of philadelphia my father used to go as he called on merchants to see if he needed any of his boxes and bags there was a gantos in one of the

malls. my father said, here's what we're going to do. sit on this bench, we had to camp out in front of gantos and see if anybody goes in and buys anything only about a dozen people entered the darn store i couldn't recall if we saw one guy, one woman coming out with a bag. i shorted the company that monday and stayed short pretty much until the whole thing went to zero and got liquidated another lesson learned gantos made me skeptical i never forgot that exercise to put it in perspective, this show can bolster the process i try to imagine my mother being a caller i try to keep the gantos lesson my father taught me. i try to figure out how i can show you the giants and the gantoses to understand the process of good investing. i want to show you it isn't reckless to pick individual stocks those who say it is just don't understand the process of

firsthand experience, marry with research, buttressed by skepticism it all increases the odds of successful individual stock investing while minimizing the risk of single stock ownership here's my bottom line. my mom was no genius at stocks but she did have a genuine interest my dad was a genius of retail. i like to think some of that rubbed off on me stay with cramer thank you so much for coming in.

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we're talking tonight about the notion of individual investing and recognizing how i try to teach you how to analyze stocks you might pick. if you have the time and inclination. again, if you don't, you can keep watching, but i want you to invest in index funds, not individual stocks. why? because i can't have you buy a stock on a tip and do no research i want you to have an edge or a catalyst or a personal experience where you can match that experience with homework. principally research and acknowledge glean from the company's website. now let's get to the final piece of the puzzle that eludes so many of you and make the process far more mystical than it seems. let's talk about heinz, the ketchup company bought not that long ago by a consortium that includes warren buffett. when i decided to leave goldman sachs to start my own hedge fund, the first stocky owned was heinz. why? because i was looking for a call and great management team that could deliver earnings through

thick and thin it was a gross stock from the first to the third well before it became a developing economy and had a clear growth path ahead for multiple years when japanese companies were nipping at our companies and chinese were becoming a world power, i was confident we would never have asian ketchup on the picnic table that proved to be right. what i didn't count on were performance demands on the hedge fund manager class as long as i was at goldman sachs recommending stocks i needed to find those that i could always suggest my clients buy more of in case they went down that way it wasn't wrong, so to speak, and would run the risk of losing a client. i could reiterate my buy performance manager has its own set of rules it was learning them on the fly that really got me, i should say, down on my luck just buying stock because you knew it was terrific didn't matter to my new investors in my fund they wanted performance, often daily performance. and i started my fund at a time when the economy was just

beginning to heat up heinz was a staple with a good dividend what i didn't understand at the time when the economy heats up, people dump these kinds of stocks for something more cyclical and they do it in a blink of an eye. i watched as heinz and another best of breed, bristol meyers, drop and drop some more. i didn't realize it was a rotation in the stocks of companies that were diversified industrial machinery, businesses, with earnings that would heat up, start popping i didn't get that if i wanted to perform daily. i realized i'd have to dump my heinz and my bristol meyers. start buying reynolds metals and phelps dodge mining and mineral companies nevertheless i had this clause in my contract with my investors. it was a silly one in retrospect if my fund dropped by more than 10%, i would have to open the doors and let people out of their contract with me i noticed each day my fund sank and sank and sank because it was filled with best of breed and not what was fashionable

identifiab finally when i followed the 9%, we booted the phase and started the rotation game and kbot to even and more so it was a sobering lesson i never forget if you want to perform on a daily basis you have to take action you can't can't just own best of breed companies. this rotation a game is not one you can play at home without being a full time professional here's why as the year progressed the economy got hotter and hotter and the stocks kept getting higher and higher. at a certain point, though, things got too hot people started worrying about interest rates going higher. don't we know all about that next thing you know, the stock market, it crashed all the cyclical plays were decimated. so were bristol meyers and heinz initially. but you see, they snapped right back and that's what happens to best of breed well managed companies. let's come back to the show itself remember i have now told you to use an index fund to matter what and only buy individual stocks with "mad money" using the right

way not the wrong way. here, though, i have detailed how a rotation can derail the best of the best for a short period of time what we do on "mad money" is try to explain right up top why your stocks might not be following the fortunates of the companies underneath things like rotations and things like macro events. i tree to show you as a home gamer you can use the flailings of hedge fund performers by picking up best of breed companies. i do that through the longer pieces that use stocks as an example of what's happening. and bring you on executives to learn about the stories to see if they fit into what's right or wrong in the "mad money" world view i've seen the best of breed always does win out in the end, though whether it be after the great crash of '87, great recession of 2007, 2009, my job is to keep an eye on that price for you and to explain why the market may not be reflecting accurately what's going on at actual companies and that's your chance to get in at reasonable prices. i augment these views with my other works and my writings of

mine mostly my book get rich, as well as my blog on real money the street and charitable trust. that's the way to show you how big money works by playing with an open hand it's more of an exhibit with emails than performance fund with tough restrictions. that's okay. it can help you understand the rotations better than anything out there while producing good profits for charities. i'm proud i've given you $2.3 million since the charitable's inception i have your heart at the best of the show i want you to understand how a home gamer should invest a product of my more than 35 years of trying to figure it out myself i know the show is not perfect i've made my share of mistakes i favored companies that didn't work out or didn't do my own homework correctly i know that i have a reputation not really deserved, i feel, for being too bombastic. all i'm trying to do is keep you informed in an entertaining way. if i didn't do that, try to make it a little bit of fun, it would have failed commercially years

ago and i would have let down my mother, my father and all you home gamers years and years ago. the education is what it's about. as long as you know what the bottom line is that i'm doing my job and hopefully doing it right. stay with cramer you are coaching three generations of my family >> thank you for being the greatest in the world. >> i'm here with my son jonathan 9 years old and watch your show. >> i love your show. >> i love it when kids are involved >> thanks for everything you do for us >> thank you for all the wonderful advice you provide us. >> we're going to get through this together. we're going to be constructive, not going to be pessimistic, we're going to be realistic. we believe in the s&p 500 and the index fund still the best single diversification method ever invented. >> our world is a better place with you in. >> we thank you for all you do me tremendously. ld the flexible class schedules

allowed me to go to work full time, run my catering business and be a mom and parent. when i reached this accomplishment, it was like, it's here, it's happening, it's now. we at southern new hampshire university are the ones who succeed. we are the ones who break through.

hey, everybody i get your tweets all day, try to answer as many as i can today i felt i'd give my hands a break and dig into your tweets here on "mad money." at dirk syndrome, in real money, he means the book, you said to be aware of firms heavily with debt is there a debt ratio to avoid #mad tweets? if you go to stay mad for life, the main thing you have to do is

make sure the debt they have, the interest that they have to pay isn't overwhelmed, doesn't overwhelm the company. can the cash flow pay for that interest cash flow versus interest. number two, i at jim is there any virtue in playing gold standard? no, i think that owning some gold is always a good idea you can do it through the bullion or the gld or periodically i might recommend a stock but those are the best ways check this way we have at dolan brian j. who said at jim cramer, great morning on the west coast. teaching my 5 day old the value of investing early on cnbc what can i say you know what that kid has horse sense. at jim cramer #good qualities, can you share good debt moment, what is the

quality? everything gets sold it's best of breed high quality company means it is acknowledged to be the corporate leader in its sector that's what i want and if the sector is a good one, the best of breed in a sector, i think you're going to have a good long-term investment i prefer for you to wait until, one, we get these periodic moves down caused by exogenous event buy good quality prices. at jim, we he know money wants to sleep, do you i've always had a sleeping problem. i had a sleeping problem, my father had a sleeping problem. we cannot stay asleep as long as we'd like. that's why you see me tweeting at 3:40. next, who are short sellers and followers learning from? what i'm looking for is the best shorts, not the best short sellers because what i found is that periodically the best short sellers are in the wrong stonck. they're all shorting the same stock. here's at laz maniac

amazing coverage i still like the nightly news, i appreciate that. i'm glad you watch it when it's on air you get the scoop on the people who tape it and watch it later now, up we have at cjp underscore tjo at jim cramer professor, so glad you're helping us i read axa alert very helpful, thank you for the extra tv hours never miss one thank you. it is a companion newsletter to my charitable trust. it's my own money in a trust which i then send to a charity and write about it while i'm doing it to analyze it stick with cramer. ♪

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i like to say there's always a bull market somewhere and i promise to try to find it just for you right here on "mad money. i'm jim cramer and i will see you next time.

>> welcome to the shark tank, where entrepreneurs seeking an investment will face these sharks. if they hear a great idea, they'll invest their own money or fight each other for a deal. this is "shark tank." ♪ are jeffrey simon and marc newburger, with a business to help make sure that nothing ever slips through the cracks. howdy, sharks, i'm marc newburger... and i'm jeffrey simon, and our company is... (together) drop stop! we're here today seeking a $300,000 investment in exchange for a 15% stake in our company.