"mad money" with jim cramer starts right now my mission is simple -- to make you money i'm here to level the playing field for all investors. there's always a bull market somewhere. and i promise to help you find it "mad money" starts now hey, i'm cramer. welcome to "mad money. welcome to cramerica other people want to make friends. i'm just trying to save you some money. my job isn't just to entertain but to educate and teach you so call me at 1-800-743-cnbc. or tweet me @jimcramer. every night i come out for two big reasons the first is obviously i like the attention but the second and more

important reason i want to help you build and preserve your wealth we live in a world that it's increasingly difficult to become rich if you weren't born that way and love it or hate it i believe the stock market is the best ladder we have in this country for social mobility. there are millions upon millions of people in this country but there simply aren't that many jobs that pay you a salary fat enough to actually make you rich even if you're a total cheapskate and save every penny you earn, if you want to become really wealthy unless you're born with a silver spoon in your mouth that menas planning for financial strategy for an entire lifetime as long as you can save a decent chunk of your paycheck and then invest it wisely year after year, you can make your wealth grow to the point where you become if not filthy rich then at least financially independent. meaning, you don't need to worry about your job security or where your next paycheck is going to come from and you'll be able to

retireesly without the need to rely on social security which might not be around when our younger viewers reach retirement age. i want to help you figure out the best way to manage your money in order to help to achieve real financial independence but in order to do that we need to talk about generational investing the kind of strategies that make sense when you're young and in your 20s are very different from the sort of things you should be doing when you're middle aged or a senior sit citizen. the fact that you will never get a better opportunity to make your money work for you than by investing in the stock market. even when we're in a bear market, when the action is treacherous and volatile and feels like stocks go down every single day, when you take a long-term view it's easy to see the stock market in by far the

most effective method of wealth creation out there sure, it might go down for weeks or crash upon occasion, but if you take the long view, the very long view, stocks tend, excuse me, stocks tend to go higher and i don't say that as some sort of pollyanna. when i got started in the 1980s the dow jones industrial average was trading in the 800s. and despite multiple bear markets between then and now the dow currently stands what you might call well above that mark, right? that represents a pretty fantastic amount of wealth creation ♪ hallelujah >> that's why i'm so adamant no matter how old you are, no matter how wealthy you are, you really should have some of your money socked away in this, in the stock market and for those of you who are concerned the market is rigged and dangerous and too unreliable or unsafe a place to trust your savings can i give you

historical perspective right now? if you go all the way back to 1928, that's right, before the great stock market crash through the end of 2014, the average annual return for the s&p 500 including dividends is about 10%. show me an asset class with a better average return. you can't do it stocks aren't just the best game in town they're the only game in town if your goal is to grow your wealth for some who want to get rich quick rather than get rich carefully that 10% average annual return for the s&p 500, i know, may not seem like such an impressive number, some are probably saying thanks for nothing. you're wrong forget the fact it's more than double what you can expect from a 30-year treasury or certificate of deposit they earn next to nothing. let's examine that 10% figure in absolute terms when you're taking a long-term view which is what we're doing tonight meaning planning for your entire lifetime racking up

a 10% return from an inexpensive s&p 500 index fund which i prefer starts to seem impressive sure, the market will have its up years and down years but over a long enough time frame that 10% figure including difficult depends has held pretty steady but to understand the value of an asset class that gives you a 10% return you need to view this through the lens of what's known as compound interest sometimes i'll talk about this as the magic of compounding. think of it like this, if you invest $100 in the s&p 500 and it gains 10% in the first year, then you've got $110 after another year of 10% gains you've got $121 a third year of the same gives you $133 the gains keep getting larger and larger because each year you're making additional money off the previous year's profits. eventually with a 10% average return you'll double your money in roughly seven years

for those who are really young right out of college waiting seven years to double your money, i know seems like an eternity and, listen, i've got more risky ways to if you stay tuned but the truth is as you get older an investment that can consiste consistently take it up in seven years' time and double it, it becomes pretty incredible. that said the magic compound works the younger you are. yet, sadly young people are the least likely to be impressed by that kind of steady capital appreciation that's why claimed economist george bernard shaw said youth is wasted on the young so let me do my best to make these numbers sound more impressive i'll walk you through it suppose you're 22 and just entering the workforce, you've got more than 40 years before you're expected to retire. so let's say you invest $10,000 in an s&p 500 index fund right now. and let's also suppose that the

next 40 years aren't too different from the last 40 year, in that case if the average return from the s&p 500 holds steady at 10% your 10,000 in four decades will turn out to be worth more than $450,000 that's enough to send multiple children through college, grad school, buy a nice house pay for a huge chuck of a ritzy retirement and that monster multiyear gain, it didn't require any kind of stock picking. it doesn't require you to trade or time the market or even do any sort of research into individual companies which i know is hard for most of you you just need to invest your money in a local s&p 500 index fund or etf and you wait granting you're waited for 40

years but $450,000 at the year you retire seems more valuable than the $10,000 investment you made when you were young and had your entire work life ahead of you to make money the regular way. so please, i'm begging you, think of it like this, a little money saved and passively invested in the stock market is the easiest way possible when you're young to turn into a massive fortune when you're old and have all sorts of additional costs and responsibilities and all you have to do after you initially save that money is let it sit on the sidelines. ideally 401(k) or i.r.a. so you don't have to pay capital gains or dividend taxes on your gains. the same logic applies if you're 30 or 40 or 50 but you get a lot more bang for your buck if you start when you're younger. bottom line, even if you don't have time to do homework, the stock market is still the best tool out there for growing your wealth and thanks to the magic of compounding, the earlier in your life you start investing in

the market, the bigger your long-term capital gains can be and, of course, it's not just capital gains but dividends, everythings get reinvested to brenton in new mexico. >> caller: jim cramer, big boo-yah. how are you? >> i am good how about you? >> caller: i'm doing fine, thank you. hey, general question, mutual funds and index funds claim minimizing single stock risk. >> right. >> caller: but inherently though isn't it fair to say mutual funds and index funds have other risks that you would avoid with a single stock portfolio >> absolutely. and i think that that's why i always suggest that there be two portfolios, there should be that capital preservation and somewhat appreciation fund that is going to be -- we put that aside for retirement and that should be in a diversified

fund preferred to be an index fund and the rest should be mad money. a sliver of it though. mad money would pick individual stocks that's why we call it "mad money. i don't want the bulk of your portfolio in individual stocks there's too much single stock risk but i want you to be able to pick stocks and i know you want to do it or you wouldn't be watching the show. brian in oklahoma. brian. >> caller: thanks for having me. first-time investor. how do you -- how do you value a company's -- one company versus another? measure of their value >> we spend a lot of time and get rich carefully talking about that and what you really are trying to do is measure the future earnings stream and if you can measure the future earnings stream you can figure out what you'll pay for that earnings stream now and what really matters is that if you thi take i alonger term view you can get a feel of what it can give you for dividends and capital gains. dividends tend to be for capital -- preservation and capital gains is for the

appreciation stream. i want to you have a little bit of both but you got to be thinking about what a company can earn in the future that's what dictates stock prices this show is helping you build and preserve your wealth the stock market is the best tool to do that. a lot more "mad money" ahead including the four-letter word of the investing world what it is and why the conventional wisdom about it is all wrong. plus, i'm not pulling any punches here what you absolutely must not be doing in your retirement account and i'm unveiling the rules you need to navigate in a bear market so stay with cramer >> announcer: don't miss a second of "mad money." follow @jimcramer on twitter have a question, tweet cramer, #madtweets send jim an email to madmoney@cnbc.com or give us a call at 1-800-743-cnbc miss something, head to madmoney.cnbc.com.

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tonight we're talking generational investing meaning how to handle your finances depending upon whether you're old or young or somewhere in between. as much as many of us might not want to admit it, the rules in this game can be totally different depending on what age you are. nobody would suggest that a retiree put all of his or her money into high risk speculative stocks that could either have thee normous upside potential or go all the way to zero and absolutely wreck your portfolio. >> oh, no, agghh

>> some doesn't mean it's obvious or standard, that's why i'm taking the time to go over the really important differences depending where you are in your life cycle now, i always tell you, you need to have two discreet portfolio cash, one in tax favored vehicle like a 401(k) or i.r.a. and discretion far a mad money portfolio where you can start talking a few more risks once you've topped out your retirement fund. no matter how old you are, retirement objectives must always come first. i love to play with the discretionary mad money side of things but the truth is a bet on your retirement is a bet on your longevity. you want to live for a long time and shouldn't have to work your fingers to the bone. that means planning for retirement from the moment you get your first paycheck. regular viewers here know my rules, no matter who you are, the first $10,000 you invest in the market should go straight into a low cost index fund or

etf that mirrors the s&p 500 index funds are a fab way to get exposure without putting in the kind of time or effort that's necessary like what we do around here and, hey, if you don't have the time or inclination, all of your stock market exposure can come via the index fund i'm fine with that there's no reason this needs to be complicated like i mentioned earlier it's important you get yourself some exposure to the market because no other asset class can grow your wealth the way equities do. once you save more than $10,000 that means you have enough to start a diversified portfolio of five stocks. remember, anything less than five stocks in five distinct sectors aren't really diversified. take that money and invest it in individual companies for your portfolio. once you save a large enough amount once you maxed on your 401(k) that we start talking about that discretionary

portfolio where can you afford to take more risk. i want to make this point. a lot feel all i want you to be is in individual stocks. that's just wrong. index funds. and then individual stocks now when you're younger your retirement portfolio and discretionary portfolio might not look that like younger investors can take more risks than us older folks can't. when you're in your 20s or 30s and you invest in something risky you have a lot of time to make the money back. you've lost your whole working life basically you got the whole rest -- years and years of paychecks however if you're pushing or approaching retirement and you lose a fortune in the stock market that's a real problem and you're going to have very little time to fix it which brings plea to my first rule, not only can younger people afford to take risks with their money that older folks can't, but for those of you who are in the younger demographic it's imperative that

you take those risks you shouldn't go crazy that portfolio is off limit for your requirement is off limits invest some portion of it to betting on high risk long shots. i know i'm out there saying this stuff but i believe in it. smaller less well-known companies with massive upside potential. coupled with enormous downride risk the classic examples developmental stage biotech stocks which can fly through the roof if they get a big drug approval or a piece of positive data on a drug years away from hitting the market of course, by the same token they will get slammed if there's any negative news and their stocks can be very difficult to own in more negative markets because they don't have any kind of dividend protection or earnings protect we're talking about long-term investing looking for good opportunities that work regardless of whether we're in a bull or bear market and plenty of speculative companies that have nothing to do with the drug

business why do i insist that younger investors speculate, take risks that might scare older people? because the games here could be absolutely stunning. ♪ hallelujah >> it would be downright foolish to give that up. you should be investing like a young person when your 20s and 30s. take a few risks let me give you an example that sheds light on the situation when "mad money" initially came on the air way back in 2005 our first ceo interview was with dr. shyfler from regeneron at the time it was a biotech kicking around for 17 years, 17 years without ever really developing anything noteworthy that could move the needle since then it's become a powerhouse with the stock taking off into the stratosphere. its blockbuster macular

degeneration formula and other ones in its pipeline fast forward ten years and their stock had traded all the way up to $592 before getting slammed by marketwide sell-off for the sake of using round numbers in this example let's call it 500 bucks. ten years ago, you could have bought it, speculation, 5 bucks, okay what would happen with that 500 bucks for buying at 5, how about this a gain of roughly 9,900% not a double not a triple not a quadruple. no, regeneron is a ten-bagger but you never could have gotten in on that gigantic gain if you didn't take risk in 2005 buying a company with no profits and only the promise of a ceo that things would work out. it worked out in a many way but many similar other ones have lost you norml he aenormous sum.

that's okay. as long as you cast wide net if you take small positions in ten of these little biotech, nine of them have gone to zero as long as the tenth was regeneron you still would have made a monster gain. it should only be one small part of your portfolio but belongs there because the risk/reward absolutely makes sense when you're young for older investors, though, speculation is much more risky and only recommend playing it with excess cash that you absolutely can afford to lose. here's the bottom line remember to speculate while you're still young enough to be able to take the hit if something goes wrong as long as you're disciplined and only makes a small part of your discretionary portfolio not your retirement portfolio it's absolutely worth hunting for the next regeneron without hesitation much more "mad" ahead.

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it's time to address a major issue that i have to admit i don't spend enough time discussing on "mad money." i'm talking about the question of stocks versus bonds now there's good reason why you don't hear me recommending you invest in bonds very often it's not just because the show is about stocks. the fact is ever since the great recession, interest rates have been held down to incredibly low levels and therefore bond yields like the return you get from owning say u.s. treasuries have been absolutely paltry both by historical standards and versus what you can get from safe dividend paying stocks in general, for the last few years, even when the stock market has been getting absolutely pounded, bonds simply haven't represented good values versus equities. that's why i've so often castigated you about the idea that excessive prudence can be the most reckless strategy of

all. because if you invest too much of your money in safe virtually risk-free u.s. treasury bonds you've been ensuring you will get a low return on your investment for many years to come all in all if you want to grow your capitalndsupposed to be ab i've said before, stocks are still really the only game in town, even after, well, can i say so many years? however, i don't want to make it sound like i'm poo-pooing bonds altogether there is a play for them in your portfolio. it's an essential place as you get older. here's the crux of the issue even though i believe they're the best way to grow tap tall over the long term evening in moments when treasury yields are historically low stock investing and bond investing about two entirely different things, stocks are the tool you use for capital, appreciation, turn your money into more money. but bonds are all about capital

preservation they protect your money and give you a nice and steady small return you invest in stocks so you can risk your wealth you have to generate even greater wealth okay, that's what it is. you invest in bonds atever partu simply can't afford to lose. there it is. which brings me to the generational investing aspect of the question depending on how old you are there is a huge different of how to put it into bonds when you're young invest something all about taking risks so you get better returns and explained how people in their 20s and 30s can get away with that attitude because you have the rest of your working life to make back any potential losses but as you get older you'll have more and more wealth that you simply can't afford to lose it especially in your retirement accounts now bonds are a staple of savoring for retirement because u.s. treasuries are the closer to risk-free investment but you need to own a lot more bonds, a lot earlier in your lifetime

that i think is truly necessary. you never get rich from owning treasury, though even if you invest in 30-year u.s. treasuries the highest yield, lower terps don't produce up in the way of capital appreciation let's say 30-year treasury bonds have 3.5%. that's higher than what we saw in the first months of 2015. as long as you reinvest your coupon payments back into treasuries you might double your money in 20 years. remember the average historical return for the s&p 500, the benchmark for u.s. stocks is 10% annually which will let you double your money in a little more than seven years so if you're under the age of 35 and you own a bunch of bonds, with the idea that they'll slowly but steadily make you money, see, i think you're being way too cautious i know it puts me out there but you know what, i've been around. that's how i feel. even in your 401(k), your i.r.a.

you want to be very heavily weighted towards stock while you're young because these tax advantage retirement vehicles allow to you adescribed paying capital gains taxes and allow them to compound year after year but as you get older owning treasuries in retirement funds become essential because unlike the stock market where you can lose enormous amounts in the billick of an eye bonds are really safe. once you've used the stock market you want to funnel more into u.s. treasuries where you know your investment won't vanish overnight ideally in a cheap bond fund that mirrors the yield you get from long term ones. how much of your retirement portfolio should you keep in bonds versus stocks? again, that depends on how old you are. my rule of thumb i don't think your retirement fund should have any bond exposure until you turn 30 if you own bonds at the age of that you're wasting your youth

at 256789 in your 30s i'll let you keep 10% in bonds or 0% if you're on the conservative side. excuse me. once you're in your 40s i think can you go up you to 20% to 30% bonds, 50s, 30 to 40% and 60s, all right, take it up to 40 to 50%. that's right 40% to 50% bonds after you retire i still think you should keep a substantial chunk of your portfolio in the stock market post-retirement recommendation is you increase bond exposure to 60% to 70% because once you stop working, you really can't afford to take too many losses with your investments especially since you're going to need to start spending the money in your retirement accounts. excuse me. but that said, i still think keeping roughly a third of your money in stocks makes sense even for a retiree because you're going to live off your investments for the rest of your life

some part should always be trying to create more wealth in case you live longer than you expect and need more money to support yourself in other words going all in on bonds once you've rye tired is a bet against your own longevity who wants to take that kind of bet? here's the bottom line, for younger investors putting your money in bonds is a fool's game but as you get older gradually increase your retirement fund's bond exposure to where 40% to 50% is in u.s. treasuries by the time you're in your of 60s because that will be protected but even if you retire, you should keep owning some stocks so that some piece of your capital can continue to appreciate over the long term. best case, you live a very long time and that extra money, it comes in handy let's take some questions. nasir in pennsylvania. >> caller: boo-yah, jim. >> how are you >> caller: i'm good. big fan of the show. thank you for taking my call and i love your book "get rich

carefully. >> thank you. >> caller: i'm looking for advice today on how to determine an empty price for a stock especially if i'm looking to get a core position given how important cost basis averaging is >> great question and the reason why a lot of people feel like they want to draw a line in the sand they want to make what i call a statement buy or just want to be in a position where they kind of got rid of it. they bought it and they put it away that's why i say take into account human frailty. the most i ever like to buy at one point is half of my position i prefer to buy a quarter. if the stock goes higher, well, what a terrible high quality problem. if it goes lower you got room to buy. i like to buy in stages. in all my books i talk about stage buying because i don't want to be overconfident don't you be overconfident do it in stages. brian in new york. >> caller: hey, jim. how are you? >> i'm fine. how are you doing? >> caller: i have a 401(k) from a previous employer and i'm

trying to decide whether to put it in an annuity managed by an insurance company or if i should just put it in a traditional i.r.a. >> i want to you run it yourself you watch the show i think you can do it yourself the annuities have fees. i'm not against anything that makes it so people can build wealth but my experience has been a lot of annuities have fees that eat things up, maybe there's some that don't but i believe in self-directed investing. if you have to put it in an index fund if you don't have time i do like to take control of my investments and an i.r.a. lets do you that. investing in stocks and bonds are two different things as you get older you can gradually add exposure to bonds but young investors, you just don't belong in bonds. much more ahead. when a bear market takes a bite of your money. plus, i'm not kidding around if you want to ensure a strong retirement you'll want to listen to my advice and take action tomorrow morning

i'm answering the questions you sent on twitter. why not stay with cramer >> from the time the whistle blows to the last play of the game -- >> market's getting hammer today. >> i know it's not easy but i promise to keep fighting for you. >> jim cramer, leveling the playing field for all. >> the road is a tough one but the payoff can be your greatest win of all >> announcer: join "mad money's" training camps weeknights. your brain is an amazing thing. but as you get older, it naturally begins to change, causing a lack of sharpness, or even trouble with recall. thankfully, the breakthrough in prevagen helps your brain and actually improves memory.

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he's a bit more brave. ♪ oh. look. ♪ ♪ ♪

tonight rather than focusing on the day-to-day vicissitudes i want you to take a much longer time horizon take a to, 30, 40 or even 50-year view you can't hold a stock for the next decade or two my mantra, buy and homework. not buy and hold

no matter how confident you are, you need to keep checking up on it, make sure nothing is going wong with the story. however, just because you can't pick a few stocks and ignore them for the next couple of deca decades, you need to zoom out a bit and when you start examining stocks over a multidecade time horizon, one thing becomes readily apparent, if you know what you're doing a bear market can simply be a different kind of opportunity that's right when stocks are getting slammed, when they're getting hit everywhere you look and seems like the losses will be endless and when shares can't mount significant rallies in the face of incredibly positive news, definition of a bear market you have to recognize you could be getting a terrific opportunity to pick up some high quality stocks for the long run into the weakness now, understand i'm not giving you a license to buy them indiscriminately but when faced with a bear market when the average is down more than 10%,

let's use that as the parlance in the show from their highs and they seem like they could go even lower it probably makes more sense to start buying most stocks rather than selling them as long as you're willing to take shortt pain for long-term gain when you buy during a bear market, that means you never buy a position all at once pure arrogance just ask yourself to look like a moron if that goes lower gradually lay into your favorite stocks buying small increments and humility and use wider scales meaning after you make a purchase wait for it to go down pretty meaningfully and substantially before you buy more over the very long term you'll probably find you've taken advantage of a terrific opportunity people were too afraid to pounce on but think longer term. something we didn't do at the beginning of the show but way past that now, aren't we don't believe me look at the chart of the s&p 500 over the ten years starting in the fall of 2005

look at the hideous declines during the financial crisis in 2008, 2009 if you use that weakness to very gradually build a position in the cheap s&p 500 mutual fund on the way down then within a couple of years you made a killing or how about thats thatty bear of 2011? we snapped back from those losses more rapidly this is why warren buffett seems so sanguine, he has a long time horizon and can take any level of short-term pain in order to get hands on long-term gains if you have a shorter time horizon or a hedge fund manager that needs to be up for the year or day investors will flee your business you cannot afford to approach a bear market as a long-term buying opportunity f a hedge fund manager buys into weakness you'll lose enough money that the fund will likely go under go read confessions after i street addict when things got tough for me although we were able to pull out of a tailspin

you don't need to make money every day or even every month or year what you need is a long-term strategy to let you rake in massive multiyear gains over the rest of your lifetime so you have enough to retire comfortably, send your kids to college. you don't need to be so concerned wi concerned with short-term performance. not an excuse to hang on to loser stocks because you hope one day they'll turn around. my point is that the ugliest most vicious markets that send everything down, the good with the bad will always create opportunities for smart investors as long as you're patient enough to take advantage of them slowly because if you pounce too quickly you will end up buying too close to the top the other caveat, not simply playing with an s&p 500 fund you have to be careful what stocks you pick you need to do the homework. make sure you own the stocks of ones doing well or at least the companies doing okay but could do better in a stronger environment. during a bear market you must not buy the stocks that are right in the blast radius of

whatever is causing the decline. think the banks in 2008/2009, oil and natural resource plays that started going down literally in the fall of 2014. you don't want to own the companies that are causing the weakness instead you should search for collateral damage stocks that are going down simply because everything is being taken lower by the s&p 500 futures and the etfs that crush entire sectors if you own anything in the blast zone don't hesitate to -- >> sell, sell, sell. >> and swap into something safer. one pore important point if you want to take advantage of a monster decline to do buying you need to have cash on the sidelines. in order to make your move otherwise, you'll just be shuffling money between different stocks all which are going lower. i'm adamant you have some cash and the better the market is doing, the bigger your cash position should be that's right, the better, the bigger that way when things go wrong you can use the weakness to buy the stocks of company you like at bargain basement prices

when you approach the stock market with a truly long-term time horizon you have to remember big bear market declines can turn out to be excellent buying opportunities as we've seen since we started the show as long as you only purchase high quality merchandise in small increments on the way down stick with cramer. >> what's better than "mad money" how about more "mad money. follow it on facebook, twitter and instagram to go one-on-one with cramer. >> what other questions do we have ah, i always tell people you have to start with an index fund because i need you to be diversified. >> announcer: get more with guests and go behind the scenes with the most interactive show on television. >> if you can't explain in three bullets why you're buying a certain stock, don't buy it. >> announcer: follow "mad money" today. - stand up if you are first generation college student.

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i that's the retirement plan.e, with my annuity, i know there is a guarantee. it's for my family, its for my self, its for my future. annuities can provide protected income for life. learn more at retire your risk dot org. all night i've been telling you about the best way to approach investing from a long life, long generational

perspective. how to manage your money when you're young, when you're middle age, hey, when -- haven't you heard 60 is the new 50 and even once you've retired but there's another aspect of generational investing that really i got to stress, the need to get your kids interested in managing their money and learning about the stock market particularly. i say this to parents of children of all ages while i love the public school system you cannot rely on public schools or ritzy private schools to teach your kids about money they can do a bang up job with english, calculus, whatever, you want them to become fluent in a foreign language, great. they can teach you french, spanish. even chinese but it you want them to become fluent in the language of finance do it yourself i get the sense personal finance is viewed as being too simple. too quotidian to even bother with, it's like beneath them your typical high school health class will help kids put a

condom on a banana but nobody will explain why it's dangerous to maintain an outstanding balance on your credit cards at most institutions of higher education, students get bombarded with credit card offers that can seem irresistible if they don't know any better i took five of them. they could be in the hole for decades which in many cases mean you, the parents will need to bail them out. yet raising financially responsible children is not about being a good parent but not getting hit up for cash even when they're well into their 30s. that's why if you want them to learn about money and what parent doesn't want financially responsible children, at this point you need to do it yourself that means you need to have some long boring conversations about the danger of higher interest rate debt like they can easily rack up and the need to save

money coupled with the power of compound interest for generating wealth like we talked about earlier but in my view the best way to make all this dull personal finance medicine go down is with a spoonful of stock picking sugar. in other words, starting at a fairly early age i recommend giving your children gifts of stock in high quality companies that resonate with young people. my classic example i've been using it since the show started is disney. give them a couple of shares a year for the holiday starting when they're hold enough to appreciate the big movie franchises, "frozen," "star wars," whatever. because they have so much planned over many, many years in the future not to mention the terrific theme park business, by the time your kids are teenagers i think their disney holdings will show a nice gain. there is no better way to demonstrate the power of saving money and investing in stocks than having your children actually make money in the stock market themselves and follow it along and look, as much as i like disney you don't have to go

with mickey mouse. it could be any high quality here's the bottom line the point of getting your kids interested in stocks early is simply you need a better way to teach them how to view money. you want your children to learn that money is something that can be saved and invested to create still more money at the earliest possible age and, look, if you don't want to do it for your children do it for yourself because kids who can manage their own finances are kids would won't be begging you for moolah even after you've gone into retirement. into retirement. stick with cramer.

but in my mind i'm still 25. that's why i take osteo bi-flex, to keep me moving the way i was made to. it nourishes and strengthens my joints for the long term. teo bi-flex - now in triple strength plus magnesium. he's a bit more brave. ♪ oh. look. ♪ ♪

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okay, cramerica it's time for me to check out the twitt twittersphere. let's catch up with viewers at home and see what's trending first up, we have @fridge93, you talk in your book about research for a new investor what are a few pieces of information we should look for when stock picking? the first thing i want you to know the product and what it does and i want to you like it the reason why is because a lot of times stocks go down after you buy them and if you like the product you'll be more inclined no the to panic and get out. then after that you can read and get rich carefully i do comparisons, tell you how to rate a stock but can you do

it on a number basis and just figure it out where should it stand versus others but you've got to like the company first or i promise you in the first big sell-off you'll become a seller, not a buyer. i don't want that. okay the next question is from patrick, it's @patsutera for retirement is it best to dollar cost average index funds or wait and buy on market downtournament/mad tweets? is this is important i try to do it 1/12 a month if i can each month do 1/12 but if there is a big break in the stock market i ago sell rate some that i would do later in the year and put them to work in that break even up to a third of it so in other words i like to take advantage of the declines and accelerate what i put in and i've done that for years and years and it's worked for me otherwise divide by 1/126789

next up is larry bloomen @jimcramer my wife said this morning what would they do without cramer my wife said the same thing. all right, now, look, you know, i'm a teacher. i got some books i've tried to come out here every night but important to know what you need to do -- what would you do without yourself? see, this is about empowering you, it's not about giving you ideas. it's about how to look at them a lot of people look at the show who haven't watched it over the evolution and say he tells you to trade in or out of this or that i hope that you know that it's the opposite loaner term investing is the way to ma make money index funds and then "mad money" and doing homework and how to do it yourself. last is jeffrey hope @jimcramer. would you share your sunday stock routine? i have -- i get this thing from the -- from standard & poor's pushed to me via email

it's hundreds and hundreds of charts i go over each one, i do -- i have a file that says good, bad, question mark, try to figure out why that went up and then story idea for show. and i write down each one and where they are and where they fit and then when i'm done i tend to do a piece for real money, the paid side of the street where i look at which trends i see and then for the rest of the week i send my staff which stocks i don't understand and why and some theories about why we should be doing certain pieces and it takes up all sunday except for when the eagles are playing. stick with cramer.

i like to say there's always a bull market somewhere. i promise to find it for you i'm jim cramer and i'll see you next time.

>> narrator: in this episode of "american greed"... 29-year-old raffaello follieri is at the top of his game. he's got a successful real-estate business pulling in millions. he's hobnobbing with world leaders. >> so let's give mr. follieri a big hand. >> narrator: and he's found love with hollywood a-lister anne hathaway. >> he had this beautiful girlfriend, $100 million -- he had all the credibility in the world. >> narrator: but this italian is about to see his american dream fall apart... when his fraud is exposed. >> he wanted to live the lifestyle of the rich and famous, but he wanted to do it with everybody else's money.