>> what would you say? >> i wouldn't say anything he's a handsome man. you ever see the guy drum? he's a genius. his vocals are tremendous. >> look at him >> he has no idea. >> ask now, ask how, ask sherwin-williams, mels >> thank you for wchating.

the smart -- it can be volatile, and downright difficult. these problems can derail any rally. things you might not have any idea about until they hit you in the face. that is why we are trying to make you a better investor so that when the market gets negative, when it gets hot, you will be prepared and you will know what to do. the things i teach you about when you join the cnbc investor club. sharing what has worked for me and what hasn't. i put together a set of rules. designed to protect you from

the worst mistakes you can make in good markets and bad. the investing club is really a guidebook and i'm sharing that with you. the truth is i'm all about discipline. you are going to make mistakes in this business. it is inevitable. if you stick to the rules, that will help you minimize your losses and maximize your gains. i'm always telling you to buy these companies. identifying the best stocks of the best-known companies. when you're shopping for a car, you get the highest quality you can afford. a good brand signifies

reliability. you can expect a high level service and quality of ownership that will help you. there are other ways to push your luck there. so many people seem to feel differently about the stock market. penny stocks that are constantly being talked about on twitter. so many people throw their money away buying garbage cryptocurrencies. it is a bargain. emphasis on the word perceived. if you're hunting for cheap stocks from low-quality companies. let me be clear, i love bargain- hunting. i only want genuine bargains. you know what is not a good

bargain? buying junk merchandise. if you like -- then you will love proctor and gamble. it will not give you any pyrotechnics. it is a long-term story that you can remember. like the late supreme court justice said about pornography. i know it when i see it. i'm talking about well-managed high-quality companies. that is fantastic. i want you to get something similarly great. to get them cheaper, they are not. at the end of the day, there are very few genuine bargains

out there. there stocks may look cheaper than the top dogs. they deserve to be cheaper. businesses are worth less. it may seem more expensive, in addition to being the better investment, you are buying peace of mind. nvidia is always super expensive. the stocks just continue to get higher like it has for the last decade. once you find yourself to be one of the best companies, there is another important role for you. companies represent value. i see so many people throwing in the towel just because there stocks are not working right now. it driving me nuts. if you believe in a business do not dump it stock because it is

not getting any traction for the moment. you're not a hedge fund manager, you do not have to show again every month or every day. you do not have any investors after you that you want to pay off. you can afford to wait for these stories to play out. you would be tempted to resell these stocks out in a short period of time. even with something you truly believe in. if you own a stock that is going down, you will feel compelled to give up. if you have done your homework and you have conviction in the underlying business, it will be a mistake. look, it happens to the best of us. apple stock had plummeted in a very short period of time. everyone gave up on apple.

i look at the service revenue stream and i said what is the heck of getting the stock of this company. history. it might sound like a no brainer. they are constantly arguing and saying they are out there. the survey of apples component suppliers is evidence that they are on the decline. they are proven wrong and they do not give up and do not give away. it turned out to be a fabulous call because the amount of negativity let you pick up apple on a discount. it is a high quality company. when the stock goes down, it is getting cheaper. you are giving up on value. missing one of the biggest moves. there are no apologies for those who downgrade.

at least that i know of. they made that mistake with nvidia. they are going through a terrible year. the stock actually tripled. these are the stocks of lower quality companies. do not let the bears scare you away. patience is a virtue. giving up on a value stock is a sin. >> how are you? >> i'm fine. how are you? >> thank you so much for taking my call. love your show. i watch it every day. i appreciate all you do.

my question is, if you have $5000, how do you invest? >> for your first $10,000, put that in the snp investment fund. after that, you can start buying individual stocks. how about jerry in missouri? >> thank you for taking my call. >> you stress diversification all the time. my investment strategy is mainly growth. possession through stocks and dividend stocks have all backfired for me. i have been enjoying the ride on my tech heavy portfolio lately. 20% in cash and i saw a downturn i would like to buy

some more. i would like to diversify my portfolio because it is technology dominated. what are your thoughts? >> there have been times in our careers where that strategy has been very bad. if you are tech heavy and we get something like 2000 or we have had a couple others, in 2021 we started to roll over. i'm worried about your position. please do not be afraid to pay out for best stocks. do not let the bears scare you away. patience is a virtue. mad money tonight. if you're trying to get a handle, i like to look at one corner of the market to look at where we are headed. where it is and how you can learn from it too. i will give you my strategy for handling whatever the market throws at you.

easy steps that can help you design a more high-quality portfolio. stay with cramer. >> do not miss a second of mad money. follow jim cramer on mad money. send to jim an email or give us a call at one 800-743 minus cnbc you can go to mad money.cnbc.com. the biggest ideas inspire new ones. 30 years ago, state street created an etf that inspired the world to invest differently. it still does. what can you do with spy? ♪ ♪

help you keep track of a confusing market? here are a few things you need

to watch. let's start with the big picture. look, i know the job market is boring, and it is very important to the overall direction of stocks. when i was running my old hedge fund, i would be away from my desk. that is how much it mattered to me on a day-to-day basis. we had stock market investors forget all the time. they forgot about the federal interest rate 17 times. they paid little attention to when interest rates peaked in 2022. even the homebuilders.

it is not a surprise to you that long-term interest rates are rising. if you are paying attention. there is a yield curve, where the two-year is. the 10, 20. keep those interest rates in front of you. i was going to focus on bonds. that was the competition to stocks. the one that i most fear. when they go skyhigh you have to expect the dividend side. you have to expect they will sell off. they will give you high-heeled to go against the fixed income alternatives. who is doing that on the capital losses?

when long-term interest rates rise you have to start being weary that the entire stock market might be worth less. it is simple, if it gets more traction than this can become a giant to zero summit. especially with the long-term rates caused by the company's inflation in 2022. the future earnings streams having less purchasing power. higher interest rates do not make bonds more attractive. that puts a damper on the whole economy. lower inflation and lower interest rate. that is just fantastic. it is the worst inflation of 40

odd years. let me put this another way. if you watch the man with the ball and you do not watch what the other team is doing there is no way that you will get o the basket. keep your eye on the ball and the bondman without it. what else do you need to keep an eye out for? the micro level. this is by key executives. when the chiefs resign, you should too. when you see sco step down for a reason, you should assume that something is wrong. shoot first, ask questions later. the ceo resigned and if i turn out to jump the gun i would buy back the stock.

it is for undisclosed personal reasons. i need to come up with other examples but i can't because they are just so uncommon. why? simple. cfos do not do that for personal reasons either. you do not get to be an executive of a public company. nobody can give up what they enjoy about life. competition for these positions is so serious and fierce that when you finally land one you do not need to leave for the undisclosed personal reasons, it is because there is something wrong at the company. when a high level people quit,

a company is a cell. she did want to spend more time with her family. at some point, somewhere, sco does step down to spend more time with their kids. it is always the rule. there is always a time when there is a mistake to sell those stocks when high execs leave. most the time, selling will be the right decision. does this keep me in the game for my own hedge fund? this will help you avoid losses. one way to do that is not taking unnecessary risks. if it is for undisclosed personal reasons, you want to get a hand on the stock market, you will have to focus on what is going on the bike. it is something that people quickly forget. when you are looking at

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the type of thing that never happens. every time the stock market goes down, there is a huge group of people that are stunned. i totally by surprise. to me, crashes are like the rain. i expect the rain and i prepare for it. i have an umbrella. i stay indoors. that is how you address the possibility of a pullback in the market. be ready on the sidelines just in case that time is now. in recent years we have had many declines by those who have made lots of money.

it is just peachy. in february, the averages were obliterated. where practically everybody was making money because picking winners was so darn easy. the whole market rolled over and it took months for people to realize and know. there are some days in 2021 before everything fell apart. it is the moment when nobody else is concerned. that is where we get unexpected declines and everyone is euphoric. when i made 2% i knew i was too exposed. i knew that my portfolio would kill me. i made too much money at once.

i pulled back. sometimes selling for that down day just around the corner. sometimes i had to swallow my pride days later and buy everything back that i had sold. mike clients thought that i was a genius. it was not being a genius, it was discipline. i would use that money to buy all kinds of high quality stocks. we might not know when a storm is going to strike, we have data that can help us immensely. where should you get your weather report? i like to follow the predatory terry market edge oscillator.

this oscillator you can subscribe to through the investing club. it is to the point where it has gotten dangerous. you need to pull back aggressively. what do i mean by pull back aggressively? if you are nimble, you might want to bring the register on your portfolio. we spend hours teaching you how to sell discipline. you have a ton of cash on the sidelines that you can use to have these stocks on lower levels. even if you are not nimble, you should be selling something through cash through this hedge fund. when the oscillator hits my spot, the market will be oversold. yes, time to buy. it leaves the ability for the short term to be trade in.

some of our best work with the travel trust is down five on the oscillator. when it is -10, that is a week before the market bottoms. it will be massive numbers higher. this will help you spot bottoms and avoid tops. you sell something at a high level but there is a new storm insight. it means that you have too much cash on the sidelines. i will take that risk. look at it this way. using that same methodology that i just described that my hedge fund. i gave my investors a 25% annual returning compound. pretty strong evidence that awarding losses on down days is more than the partial gains from the up days.

you need to stop yourself from making investment decisions from the motion. whenever i hear the word hope that it will go back to where i where i bought it without taking a loss, i get angry. hope should never be part of the equation. do not hope for anything. it is an emotion, pure and simple. every stock that you own because you hope it goes higher is another position in your portfolio that is not being filled by a stock that you believe will go higher. i hear hope constantly. that's fine if we are talking about religion or sports. with men's basketball teams, they keep their players through hope. hope is a mistake. especially when we are talking about stocks to trade.

this is five. now it is four. i hope it goes back to five and then i will sell. then you will see a go from 4 to 5, right? wrong. no company will ever have a single digit stock. when you find something that sells for just a few bucks, the market has rendered a very harsh judgment. when you let hope become part of the equation, you are holding low-quality pieces of paper waiting for something that will never occur. cut your losses. move on to a stock that you can actually see go higher. with its own power, not because of hope. hope cannot be the reason. there are times when hope pays off. it is because there was so much easy money with investors. the moment that the feds took

away the easy money, the whole thing blow up in your face. and anyone who kept buying stocks or borrowed money got eaten alive. bottom line, it pays to be realistic in this business. it is like rain, it is inevitable. do not make the stock decisions based on hope. make them based on the real world and not the fantasy land. dennis in massachusetts. dennis. how are you doing? >> i'm doing fine. that is the question that i had over here. >> you're very kind. >> i had a question real quick if there are any common mistakes that people should avoid? >> people take too many thinking they explore the long

term. i think it is fine if you take flyers when you are in the teens or low 20s. have your whole life to make it back. with 401(k), you want standard and strict disciplines. being realistic is key. please, no hope in the investing strategy. why having -- for each of your -- should be a winning strategy. i will give you my take. one of my favorite parts of the show is getting to hear from you. we will answer some of your most burning questions. stay with cramer.

fingertips. it was harder in the old days. it took real effort. the internet is great for investing. there are lots of problems. when we have problems, we have new rules. you have to be able to explain stocks to another human being. if you cannot explain it, you do not understand the stock in question. that is one of the most important breaks in the process. which is talking to another

human being about what you buy. you can talk to a broker to buy anything. without ever having to tell another person why you are doing it. even that, you do not have to pay a commission. it might not happen. why should you xplain this stuff to someone? anyone else? it could be anyone, preferably an adult. listening to you babble about the market. we are all prone to making mistakes. if you want to cut down on these mistakes, you should force yourself to articulate to yourself why you like that stock. do you know how they make the

money and how the earnings are supposed to look. if you don't, you do not know what you are looking for. i always see this problem in biotech. they have no idea what it does or how it can turn a profit. they just know that it is hot. that is a bad reason to buy. you should be able to articulate why you own every stock in your portfolio. that way you can know whether to cut and run or buy more. you'll get slaughtered on the next decline. when i was at my old hedge fund, they always told me to stop before pulling the trigger. why buy it? if you are in a position when you are picking stocks to sell, let you articulate your

reasoning. i always like to say, what will make this stock go up? what is the catalyst? if it is up 100% already. what is your edge? these are all important questions. look, the ability to make hasty decisions is not the only thing you need to be wary of on the web. there is nothing else you need to watch out for. it has increased the power of the wall street promotion machine. you do not have to like it. you do have to acknowledge its power and know what it is. it will go much further than anyone expects. they start to go public in 2021, 2022. basically big pulling money to make big acquisitions. in 2020, some gene is realized

that if you bring hot startups public will having the intense regulatory scrutiny, they will let you feel the adjacent back for 2021. it went down many years into the future. if you try to pull something like this with a real ipo, you will get sanctioned for all of this. if you try to borrow money with these projections. that is how these deals happen. the investment bankers want support. the company was asleep at the wheel. we should not close our eyes to what we know cannot work. they want the money, they do not care that you were -- they

did not tell us. the regulators did not see. we could not even spotted. eventually they got prosecuted. and the level of legitimacy here was ridiculous. it was an electric vehicle play and then we found out that it made outrageous claims that cannot be backed up. they rolled it down the hill for heaven sake. it was just incredible. i want you to do this. next time that you see potentially dubious merchandise. do not believe the hype. this is true of all media. both online and off. if you are watching tv, please

be skeptical. it pays to be skeptical. what you hear on tv is possibly right. but no more than that. you have to be a lot more careful. there is a lot of false information and uninformed commentary online. repeat after me, just because someone says something on tv, it does not mean that it is true. you cannot believe everything you hear. this is why we mostly talk to high-level executives on the show. they can still mislead you. if a public company ceo allies about what their business is doing. it will really start to add up. generally speaking you can see money managers coming on for a variety of legitimate reasons. here is a good rule of thumb

for you. if he is talking, you can presume it is bunk. do you think that sounds like a good opportunity? no. he must really be stuck in that one. is he talking about buying? it is awfully hard to tell. here is the bottom line. be able to explain your stock picks to another human being. do not take anything as gospel. especially not for money managers that like to come on tv and tell you that they are right 100% of the time. mad money is back after the break. coming up, let your flowers blossom and let your winners win. the key tenants to keep your stocks smiling. next.

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and how lucky, sooner or later you'll make some sub optimal investments. every portfolio manager has a few dozen. the difference between a good investor and a bad investor is how you handle your losses. professionals and amateurs alike hate doing it. i hate selling but somehow we keep hoping and operating under the assumption that the sinking stock will be fine if we hold on long enough. others will recognize the value of the stock in question. that is all well and good until you need money. maybe your portfolio has gotten a little too stock heavy. maybe you need to put together cash in a hurry. maybe investors want their money back.

redemption. this is the tendency to hold onto loser showing its signature side. it is better than the worst performers. they will sell the winners to subsidize the losers. that is where it is wrong. they usually keep going down. this is particularly dangerous for a hedge fund. where they will get more redemptions. if you keep selling winners to get your money back, it becomes a nightmare. you only have a finite amount of capital to invest. many people remain in denial. you've done it, i've done it. never subsidize losers with winners. the tradition is simple, sell the losers. go back the next day and by

them. you will be tempted to bring them back. if you want to hang onto a low quality stock if you're hoping for a takeover. there is a lifetime worth of games waiting for the takeover. these include buying a lot of bad companies hoping that you might catch a big one. in reality there are great companies that get stocks. they seem cheap. so many people buy this junk merchandise and they think that a takeover is going to save me. never speculate on companies that have bad -- it can go down much more than you thought. eight takeover might be coming at a much lower price than you

paid for the stock. their stocks tend to go lower. as they should. you are better buying a company that is in good shape then buying one that is doing poorly. it makes sense. not many ceos can turn bad companies into good ones. do not wait for the company to be taken over. you'll be waiting forever. some regulators have gotten more aggressive about blocking mergers. if you are betting on well-run companies only. if the deal does not happen, there are other ways to win. when a good company goes down, you can buy more. not for a company that is going from bad to worse while you are waiting to strike. please never sell your winners to subsidize losers. if you need to make money for whatever reason, take the darn loss and sell something that is

under warming. if a possible takeover is the only reason you have the stock, you should not have it in the first place. coming up, the wise man and the whiz kid to have your back. the power of the cnbc investing club to answer your questions. next. >> jim cramer. >> my five-year-old grandson loves to watch her show. new vr world is a better place with you in it. to trust me on this one. [inaudible] wow! yeah! it's time to take control of your investing education. cut through the noise with best-in-class education resources that match your preferred style of learning. learn your way. not theirs. td ameritrade. where smart investors get smarter℠.

(bobby) my store and my design business? we're exploding. learn your way. not theirs. td ameritrade. but my old internet, was not letting me run the show. so, we switched to verizon business internet. they have business grade internet, nationwide. (vo) make the switch. it's your business. it's your verizon.

my favorite part of the show with my partner in crime. for those of you that are part of the investment club and those of you who are not, i hope you will be soon. we go back and forth helping do a better job for you. we do this sort of thing well we are in the monthly meetings. there you have it. we would love for you to be joining the investment club.

we advise people to take out their cost basis and at what point do you suggest people taking profits? i find this one a little difficult. i want people to take the cost basis out. i do not want them to miss out on things so i still favor making sure they do not make out the game. and then let it run. >> nobody ever got broke taking a profit. the stock that we own and what was a really tough year. because of is doing so well, a lot of jobs are being approved and we are taking profits every 20% or so. that is a good way to look at it. >> it is not a science. that worked well for us.

jim has been talking about battling the stocks that are down. what does that mean for me? the stocks are up and down and finding a good point to sell the stock. thank you. >> this one is so tough. yes, the stock is down that we like. we want to scale out and let it grow rapidly. again, jeff, we go back and forth. when we are battling, we are playing a little too much defense and we get stuck. >> we are trying to understand if you have a broken stock where it is not being fully recognized by its value in the market or it is a broken company where there is something fundamentally wrong. broken stock, gotta have patients. >> yes.

next, let's go to michael. can you invest in young children for the children or grandchildren, that would be helpful. >> there would be a time where i would say by some disney. i find disney troubling. by some of the serial stocks. something that goes on the dinner or breakfast table, i think that a young person should own technology. maybe what you do is you try to find some kind of new technology that would be really exciting years from now. >> use companies that the young children will use every single day. that is a great way for them to learn about the company and if they have an investment in that

company, it is a great way to get started in investing. it is never too early to get started with investing. >> that is true. it is no longer the way i like to -- >> apple. things like that. people use apple every single day. they will be acclimated to it when they are white young. all welcome to "last call. i'm contessa brewer in for brian sullivan a brutal heat wave and wild storms grip the u.s. and sending one stock soaring. is commercial real estate turning a corner there is hope for the battered industry and opportunity for investors. ryan seacrest takes the "wheel of fortune" but can it avoid a messy handover from pa