sell it. >> my parents have seen 90% of the "fast money"s i have been on in the last 13 years. qqq still a seller. >> hasn't miss a show 17 years annccohiis, . gd kp. >> right now, hi nathan family. 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 i'm just trying to make you some money. my job is not just to entertain but to educate and teach you to be better investors. call me or tweet me @jim cramer. tonight i want to share some of hi accumulated wisdom, and there's a lot to accumulate in

this business. there are so many different things you need to balance in order to be a great investor that it can be hard to keep track of everything. now, a lot of this stuff is much more important than the day-to-day action in any particular session. this stock went up, this stock went down. without the right discipline, the right framework, the right dare i say philosophy, you're going to get yourself into trouble. and that's why we're all about discipline when we manage the travel trust for the cnbc investing club. it's why we constantly fall back on the rules, our investing guide to guide our decision making for every kind of market, and tonight, i'm going to share some of them with you. >> but i know that the big picture financial advice can be hard to process. a lot of it's down right contradictory. that's a keyword. we tell you to have conviction, to stick with the companies you believe in, and then we say you need to be ready to change your mind on a dime if the facts change? you need to be cautious but you

also need to be ready to pounce on opportunities when they present themselves. you need to avoid chasing stocks that have run too much but you also shouldn't care too much where a stock is coming from if you believe it's headed higher. believe me, i get it. if you take all my rules literally you're going to be running around in circles while tearing your hair out. so tonight we're going, can't resist. tonight we're going to take a step back, try to put all of this discipline stuff in perspective. now, if you pick your own stocks, which you know i love, in addition to having a healthy balance of index funds which you know you need, the thing, well, let's just say what you got to have is good judgment. but obviously good judgment, investing judgment is not the kind of thing anyone can teach you in an hour of television or a year of television. that's why i tried to help you build big habits, try to teach you about individual stocks and the whole market. i try to give you the tools you

need to develop your own judgment, and why i focus on guiding you through the whole process more intensely, in my investing club. all my best investors focus on te teaching us how to think. i try to take my cue from them. i want to teach you to be a better investor. otherwise i would have stopped doing this show years ago. the problem is it's a heck of a lot to process, so what do we got to do? we got to try to put it in context. first and foremost, when you're managing your own money before any other consideration, you need to know yourself. now, i've said this before, and i'll keep saying it because it's so important. you simply can't know which stocks you should buy if you haven't taken the time to consider what your objectives are. you need to build up your wealth to make a major life changing purchase, like a home. are you just trying to get a decent return as you save for retirement? do you have enough money to burn that while you're taking a risk

on speculative positions it won't hurt you? so many people don't do that, they put all of their money in speculative stocks hoping to hit a home run, and then, the truth is, there's no one size fits all approach to investing, and anybody who tells you different is dangerously misinformed or flat out lying to you, probably in order to sell you something, but far too often, people will invest in the stock market with the simple goal of making money. we all want to make money. i want it, you want it, but how quickly do you want that return? what are you willing to risk in order to get there? how much can you afford to risk in the first place? these are the crucial questions you need to ask before you start picking individual stocks. why, because without a clearly defined goal, you have no way to determine which stocks you should be buying. your 401(k) or brokerage account do not exist in a vacuum.

if kryou're trying to save for retirement, a stock like tesla may not be the most appropriate place to put capital. . if you have a decent sized nest egg and you want capital appreciation, then higher risk growth stocks start to look a lot more attractive. in short, before you can start making judgments about individual stocks, you need to figure out what your own internal yardstick is going to look like. that's the foundation of good investing, judgment, knowing what you need so you can find stocks that suit those needs, it's called suitability, and it's important. maybe one of the most important parts of investing. let's put it otherwise, let's say you want to fly across the pacific ocean, you do it in an airplane, you don't try to fly across the pacific in a ford fiesta. if you want to pick up your kids from school, taxing down main street in a 747 would be impactful, wouldn't it? in that situation, you're better off in the fiesta. how about renovating the home, do you need to go to home depot, power tools to get the job done.

the ford fiesta is too small. a pickup truck, maybe a ford lightning, well, we hope because with travel trust likes ford, maybe that can do it. now, this may sound simple, even down right obvious, but it's the same way with stockings. when you're saving for retirement, you want low risk holdings that will give you a slow and steady return. for those of you who don't have time to research individual stocks, you can't go wrong with the basic low cost s&p 500 index fund that mimics the performance of the border market. look, i've recommended index funds endlessly, and i'll keep doing it. they are phenomenal. at their best, they help de democratize the engine of wealth creation that is the u.s. stock market. america remains a growth company that's business friendly compared to the rest of the developing world. when you buy an s&p 500 index fund, you're betting on the long-term performance of the

u.s. economy. h historically that's been a good bet. don't bother trying to pick individual stocks until you have at least that much money and an index fund and preferably more. it's the most important bedrock of your portfolio. now, if you're looking to make slow and steady money over a period of a decade, that's retirement investing in a nutshell. you might consider certain kinds of individual stocks, especially consistent, steady eddy with big dividends. a 4% may not sound spectacular. that 4% return will double your money in 18 years, thanks to the magic of compounding. you've got to reinvest that money, that is vital. you can get the same thing from treasury bonds. stocks tend to offer the possibility of more capital appreciation than you'll ever get from a bond. of course, not every investor finds the retirement. even if you are, that may not be the only thing to do with your savings. this is another important point,

i like to break things up into your retirement portfolio, where you're pretty cautious and your discretionary, "mad money" portfolio, the extra money you're not going to need to support yourself after what the kids call late stage capitalism has ground you down, and you're no longer able to work. the discretionary portfolio is where you can take risks to generate higher profits. but, and this is a mighty big but, for the vast majority, the discretionary is more important that retirement. it's not just retirement. if you want to pay for a house to send your kids to college, you should take a more conservative approach to managing that money. whatever kind of account you put it in, your strategy for college tuition savings or future house savings should look more like your retirement portfolio than your "mad money" portfolio. get to know yourself before you jump down the rabbit hole of getting to know individual companies, something we always try to emphasize in the cnbc investing club, as you know. the bottom line, trust me, i get it, when you get excited about a

particular stock, you want to dive right in. first, though, you need to consider what you're trying to get out of the market. the answer to that question is not going to be the same for everyone. but everything else stems from it. you can't make judgments about stocks until you know what characteristics you actually are seeking. and you value. tony in washington, tony. >> hey, cramer, thanks for taking my call. >> of course, tony, what's up. >> you know, when i was working and contributing to my 401(k), the only choices i had were mutual funds. you know, i never made any real money until i started buying individual stocks. i really don't understand why mutual funds are so popular. >> let's give mutual funds their due. there have been some that have outperformed the market, and the 401(k) plans tend to have an array of mutual funds that you can pick so you kind of craft your own portfolio. i happen to like individual

stocks, and i like the s&p 500 because i like a low cost index fund that can continue to give me good returns and i'm a believer in that, so i understand but i'm not going to knock mutual fund industry, there's very good companies that do a great job. let's go to rambo in california. >> this is rambo from san jose. >> how are you doing? >> awesome. >> i have a question for you, one of the first metrics i look at when allocating an investment is the debt and enterprise value. in many cases a sound doubt, although a company looks attractive on a price-to-earnings perspective, it becomes far less attractive on an enterprise value-to-earnings perspective, especially in this high interest rate environment. can you give us a sense of how you factor in a company's debt and enterprise value when forming your investment pieces? >> i think it's a great question, and i'm going to be very cut and dried and very simple. i look at how much money the company has to pay in interest, how much money they make and if they don't make enough money to cover the interest, then it's a sell sell sell, and every time i

violate that principle, i go wrong. look, before you start investing, you have to find out what you're trying to get out of the market, and then you set your goals at quarterly for you, and once you know what you need, then you can pick stocks, but not before that. from being flexible to the right attitude, i'm sharing more investing rules that might help you become a master of the market. and you can't miss this show. i want you to stay with cramer. don't miss a second of "mad money." have a question, tweet cramer #madtweets, send an e-mail to madmoney@cnbc.com or give us a call. miss something, head to ma

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regular viewers know that i've got a lot of rules. the result of more than four decades of money matching business. first there's a broker, then a huj fund manager, then as a journalist and a commentator. i've got rules for investing, for trading, what to do in a rally or selloff. avoiding losers, all which should be stressed constantly when we show you the trust portfolio for the cnbc investing club. it can be a lot to take in. as i mentioned before, the point of all of these rules is to help you learn from my mistakes and develop your own judgment. i explained why you need to have a clear understanding of your own objectives before you buy stocks, more focus than trying to make money. let's pretend you have done self-reflection, and you know what you're trying to accomplish. you buy individual stocks, enough to fill out a diversified

portfolio, five to ten names. that's what i want. before you buy anything, i need you to do one more thing. first you have to do the homework. now, i've covered this before, so i'll give you the quick version. if you're going to invest enough money in a company for it to matter to your portfolio, you need to know what that company does. you need to know how it makes its money. you need to know how much money it makes. the internet has made this whole process much easier. you can go online and read the s.e.c. filings, which contain a wealth of information. you can read the transcripts of the conference calls, which is the best way to get familiar with the business and the key metrics that will drive the stock. feel free to read journalism on top of that. google it. listen to opinions, anything to familiarize yourself with the company itself, the way stocks trade, that can be daunting, the kind of homework we do for you on our favorite names, the cnbc investing club. it's a must to join people. after tonight's show. just sign up so we can show you

the hard work we do. by the way, lately i have been starting with the web site. i have to admit, i like the company's web site because they have gotten so much better. the actual research is part of doing the homework. after you learn what you can and develop a thesis, a theory about why you think the stock is headed higher, you need to be able to explain that story to another human being. ideally an adult to ensure it makes some level of sense. walking down wall street, you see me, you're buying a stock, i'm going to say what does it do, you better know the answer? for those of you tuning me out because you can't stand to hear another word about homework, the califor craft as i'll call t i'm done. that's all about the process of preparing a stock. tonight i'm focusing on the big picture. let's fast forward a little. once you have done homework, build a diversified portfolio, five to ten individual stocks, pick your favorites from the club. you know they've been thoroughly

researched. the idea here is that you should be able to do this in your spare time. not that you'll turn money management into a second or even third job. let's assume you own shares in a bunch of companies that you genuinely believe in. you have a thesis for each one, right, you got to have one. there's no sector overlap, meaning you have five to ten companies in distinct vindustris that don't tend to trade together. you can find out if it's too much like another company, and sure, what you have in theory is an ideal portfolio. what's the most important thing to keep in mind? above and beyond everything else, you need to know your perfect portfolio won't stay perfect for long. the five to ten stocks you thought were winners, not all of them will stay winners. some will stay losers, some will do nothing, and some of the companies will inevitably disappoint you. what can i say. the game is full of heartbreak. which brings me to my next meta rule, always try to stay flexible.

you have to be flexible because business by its nature is dynamic, not static. things change, markets change, new competitors will enter the entry and under cut companies. previously well run companies start executing poorly. customers cancel orders, unforeseen events happen, and simply make a category of stocks seem less attractive to the big institutional money managers who dominate the market. you don't, they do. when something like this occurs, when the story of a company that you own shares in changes. you need to be willing to acknowledge that things are changing, that they're difficult. if your thesis is no longer in tact, if the reason you gave for buying a stock in the first place is no longer valid, then you know what you have to do is sell, sell, sell. you have to, this is why you need to explain your picks to another person so you can recognize when your original ideas stop being workable. we get so many calls where people say they like the stock,

bought it for x, and x is no longer the case. i don't like that, you need to be better than that. you can't afford to say i like it because of x, and x ain't there anymore. this may sound straightforward, but experts peddle the idea you should be willing to hold on until the heath death of universe. how many times have you heard people say buy and hold. nonsense. don't get me wrong. i would love to hold a stock from here to eternity, but if the story doesn't pan out, you got to be willing to sell. the facts change. that's why i always tell you it's buy and homework, not buy and hold. there are two stocks i have given my highest plus, apple and nvidia, revolutionary companies with outstanding management. even then, though, you still need to do the homework or watching the cnbc investing club, in case something drastically changes. i bring this up because people hate hate hate admitting when

they have made a mistake. once we make up our minds that things are great for say, coca-cola, we don't want facts to get in the way of story. we like coca-cola, but shut up, you can't afford to fall in love with any stock. it's a piece of paper. when you buy shares of a publicly traded company, you're not joining that stock in holy matrimony, for sickness and health, richer or poorer. you don't need to go to a judge to get a divorce. it's just a piece of paper. acknowledge when something has changed. if you're buying a stock because you believe the company is going to take a ton of market share and fails to do, so don't move the goal post, don't search for reasons to hang on. just get out of dodge. you must be willing to recognize companies can take a turn for the worst. management can make mistake. look, here's one that you probably know. bed bath & beyond, they spent $11.8 billion

buying back their own stock from 2004 to 2022, in an attempt to boost the stock price. it didn't really work. the company kept losing market share to online competitors like amazon, and the buyback couldn't prevent them from going br bankrupt. the darn thing still went to zero. put the money in a mac, the company might still exist. you know what was their mistake, the guys running bed bath & beyond weren't flexible. they kept buying their own stock, putting money into technology that would help them manage inventory, please customers, customer retention, and by the time they brought in new management to turn the situation around, i think it was far too late. don't make the same error. when something goes wrong with the company you own, be ready to stop hoping and start selling. listen, be humble and recognize a turn for the worst as bad as it might be, always seems to lead to larger lossing than you

have accrued. a wise person says your first loss is your best loss. the bottom line, before you buy a stock, do some homework, come up with a thesis, a reason why you think the stock is headed higher. once you own it, stay flexible. if your thesis doesn't play out the way you expected to, sell the darn stock as we try to do for the club. don't keep bashing your head against the wall. just recognize things don't always go your way, and then move on. "mad money" is back after the break.

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tonight, we're zooming out and talking about the big picture. it's stuff you absolutely have to do if you want to manage your own money in the stock market. before i get back into it, let me just say that if you don't feel like reflecting on what you need from the stock market, if you don't want to do the homework, if you don't want to watch the underlying companies and give up on their stocks when something goes wrong, nobody's forcing you. there's no gun to your head. it's okay if stock picking is not for you. that's why vanguard invented index funds. it's why the dutch invented bonds. you have plenty of investment options. it's why we created the cnbc investment club to help you understand the whole process. if you're going to play the stock market, you should put in the effort to do it right. i think stocks are the greatest engine of wealth creation in history. and you can harness that engine, make it work for you, only if you know what you're doing. a lot of this comes down to

discipline. the stuff i have been talking about all night. there's another ultra important component here, call it the emotional side of the equation, you needed right attitude toward the market. without the right attitude, stocks will break you. i mean it, they'll break you. this is a brutal game, and you need to make sure you're in the right head space if you're going to play it. i cannot stress this enough. for many of you, managing your emotions will be the hardest part of investing, harder than picking winners, knowing when to cut your losses. stocks being in an abusive relationship, but we keep coming back because long term, it is a great way to try to make money. the thing s unless you can perfectly predict the future, you're going to make lots and lots of mistakes. and when you make mistakes, well, and you lose money, it can be very hard to handle. it really is. you need the patient of the dalai lama to not get upset when

you buy a stock and it falls off a cliff. imagine what it was like before i mellowed out. i was the opposite of the dalai lama. when i got something wrong, i would flip out. i was not gyjimmy chill. i can tell you from experience this is not a productive attitude. i know better than anyone you need to try to remain calm because constantly getting mad at yourself just isn't sustainable. you'll end up running out of patience and giving up on the whole asset class. i'm not telling you you got to be the dalai lama, you don't need to go a buddhist monk to be a bad investor. you can't afford to punish yourself. the market is brutal nenough. you need to have it on right every day if you're going to find opportunities. yet so many of us approach the market with let's say an inferior attitude, an inferior state of mind. our heads are clouded with negativ

negative thoughts that throw us off target. let me be your stock market therapist for the moment at 300 cl dollars an hour. the worst of the worst, when you think to yourself, if only i, as if only i would have pulled the trigger ahead of nvidia, or i could have made a fortune. don't get hung up on the woulda, coulda, this is a wasted damaging emotion, destructive to the psychology you need when you're making investment decisions. for a long time, i took it to the extreme. a couple of big losses, things i got wrong. i would be obsessed, going over the big miss. this was the wrong thing to do. not anymore. it took me a long time, but eventually i was able to see just how destructive playing the game could be. this is a key rule we stress to members of the cnbc investing club where we highlight exactly what the messy parts of money management is. we do it not just in the

e-mails. we also do it of course in the morning meetings and in the home stretch. if you're an emotional guy like me, you may need to trick yourself into a more productive pattern of thought. i have had to build in all sorts of methods of tricking my mind into not playing the game. just clear touout. use the ticker on social media. go back and buy it for heaven's sake. don't tell me what you could have done or should have done different. you didn't. whether you walked into a big loss or missed out on a big eight, it's irrelevant. stop beating yourself up about it. the bottom line, the stock market can be punishing enough. you don't need to make things harder by punishing yourself. don't play the if only game. if you need help curving this kind of destructive thinking, go to that extreme. take the stocks off your portfolio watch. you'll be surprised how much better your decision making pictures when you stop the

woulda, coulda, shoulda, and the obsession. let's go to joe in new jersey. joe. >> mr. cramer, thank you for taking my call. >> you're welcome, joe. >> i want to say that i have learned from you, and i have earned from listening to you over the years, thank you so much for that. >> i like that. learned and earned. it's going to be adopted and used in tomorrow owes show. what's going on? >> my portfolio has grown significantly, thanks to you. >> thank you. >> and there's a lot of qualified dividend paying stocks in there. dividends that are being paid are being reinvested, and it's almost equivalent to my earned income salary. i'm 58 years old. and i plan on retiring next year at 59 with a modest pension. do you think this would be a good move? >> absolutely.

absolutely i think it would be a good move. you've got the wherewithal to do it, and that's what matters. never bet against yourself, long life, and you're going to have to stay invested more than people realize. i'm one of the few people in the world, a person 75, 80, should be 50% in equities, i need that because i don't want people to bet against their long-term existence. the stock market can be punishing enough. you don't need to make things harder by punishing yourself. you'd be surprised how much better your decision making comes when you stop the woulda, coulda, should a. more "mad money" ahead, tips i wish i would have had when i started invests. and jeff marks and i are going to be answering your questions about the stock market, so stay with cramer.

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let me give you a piece of advice that would have saved me lot of cash, and even more heart ache back when i was running money professionally. this is some genuine sage investing wisdom from the late great maya angelou. quote, when someone shows you who they are, believe them. the first time. i know she wasn't talking about publicly traded companies, but man, if the shoe fits, i say wear it. all night i have been trying to hammer home important bedrock principles of investing, principles we show you how to follow in the cnbc investing club all the time. this is another essential one. when some company shows you who they are, believe them the first time or to put it as bluntly as possible, when a ceo tells you that business is bad, take their word for it. don't try to make excuses for

them. just get the heck out. at least until the smoke clears and you get a better assessment of the damage. let me read you the rest of that maya angelou quote, there's another valuable insight for investors, she continues. people know themselves much better than you do. that's why it's important to stop expecting them to be something other than who they are. the same thing holds true in the corporate world. a company's executives are going to know the business better than you will, unless they're being negligent. that's why it's so important to listen to what ceos and cfos have to say, whether on the quarterly conference show or visiting you on the show or someone else's show. high level executives are your best resource, that's why we put them all the time. don't get me wrong, you can't take everything that comes out of a ceo east mouth as gospel. there are plenty of executives who are promotional, who talk like they had rose colored glasses welded directly to their

face. i try to ask more skeptical questions, an alarm goes off during the interviews. i don't want to get snowed. i don't want to hurt you. that's what i did with the spacs and ipos in 2020, and 2021. felt like the whole market ran on hype and nothing else. occasionally ceos can be misleading, also known for flat out lying. lying about material information is what we call a crime. sometimes you need to take what they say with a grain of salt, if not a full carton of morton's iodized. you might be surprised by how many straight shooters you find at the highest levels of corporate america. some are honest, others don't want to go to prison. good call. either way, they tell the truth. again, when we have someone on the show with a track record of being extremely candid or both, i try to point that out to you. it matters, when honest, smart executives tell you something is going incredible well, i think you should believe themm.

when jensen huang, the visionary ceo came on the show in september 2022, the stock had been eviscerated for the better part of a year. everybody was giving up on tech in the face of the federal reserve's rate hikes. he told an incredible story about nvidia's ability to reinvent itself. nvidia's engine, less than a month later, the stock bottomed, four months later, we witnessed the birth of the artificial intelligence boom. one that nvidia had been planning for ages. they had the best chips by far and built them out aggressively in advance. nvidia is making new all time highs. by the way, we told you to stick with this one for the charitable trust. nvidia was always able to reinvent itself in the past. we told you to hang on when things were at the most ugly in the tech bear market of 2022. something very similar happened with marc benioff, the ceo of

salesforce during the depths of the great recession, another important travel trust name from the get go. he explained his cloud software company would be fine and we should just, well, he just said it's going to be the future of the industry. he said there had been no slow down in his business, even though there was slowing everywhere else. he was right. if you listened to him, you made a killing. whenever a companies annoannounces a shortfall, you need to wait 30 days before you think about buying a stock, especially if they give you a preannouncement. they figure, hey, bad news must be out already. wrong, in practice i found that other than some rare exceptions, the opposite is the case. when business is so ugly that a company comes out early it means more bad news is ahead.

companies likely just to slash their forecast for the next conference call. if they go so far as to preannounce or give bad slash, things are going to be terrible for a while. why? it all comes back again to maya angelou. when someone shows you who they are, believe them the first time. the negative preannouncement is the first time. when management preannounces a bad quarter, they're not just looking at the past. they're looking at their order book for the future. believe me, if there was hope business would get better, the company wouldn't have to cut numbers between the regularly scheduled quarterly reports. if they thought something could get better not worse in the next 30 days, they keep their mouth shut. preannouncements or severe guidance cuts signal ongoing weakness that you can't be tempted bid. that's why i recommend waiting 30 days before you think about buying this kind of stock. that's another rule we try to follow religious for the cnbc investing club. you may miss great opportunities

every now and then when a stock bottoms. that can happen. most of the time, and i have studied this extensively, after 30 days, you will have sidestepped another brutal leg down. 30 days sounds arbitrary. i found enough homework on the question, and it usually takes a month for the bad news to get baked into the stock price, and it's okay to start buying. bottom line, sometimes it can seem like we live in a post truth world where it's impossible to know who to believe on any particular issue. but even the most skeptical among you should believe executives when they preannounce an earnings shortfall or cut their forecast to well below what the analysts are looking for during the regularly scheduled report. these people don't like slashing their numbers. they do it because they don't see much hope of things improving before the company's scheduled report next quarter. in the wake of a shortfall, you have to presume the stock won't be bouncing back anytime soon. for the next 30 days, treat the

darn thing, you should trust her investment advice. "mad money" is back after the break. (sfx: stone wheel crafting) ♪

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safe from cyberthreats? absolutely. can we provide health care virtually anywhere? we can help with that. is it possible to use predictive monitoring to address operations issues? we can help with that, too. with the advanced connectivity and intelligence of global secure networking from comcast business. it's not just possible. it's happening. i've spent a lot of time here tonight talking about the many ways in which you can make mistakes. and the need to guard against them by knowing when to admit that you're wrong. let me be crystal clear, the market can be just as wrong as an individual investor, just as wrong as you. maybe you're smarter than the market. contrary to what so many of the

gray bears claim, the market makes mistakes every single day. this is my next big picture lesson for you. don't just assume that the action makes sense like so many do. a lot of times stocks go up or down for the wrong reason or a stupid reason. it's something we try to walk through with you in the travel trust of the cnbc investing club because so many times the market, people will try to come up with theses that don't exist. when a company reports earnings, the stock goes down, naturally leaves the company, often that will be true, but it's not always true. sometimes there are other forces at work, stocks will go down in the initial earnings release and bounce right back. how many times does that happen or vice versa, which is why i'm telling you not to jump to conclusions until after you have listened to the call. especially in the middle of earnings season, with hundreds of companies reporting every day, the market makes a ton of mistakes, but it's not just about errors in judgment. the truth is the stock prices do

not always reflect the underlying fundamentals, the actual facts and figures. the fundamentals are a big part of it. over the long-term, the most important part, they're not the whole picture. you have to understand a stock market is a market, it's prone to distortions. when adam smith wrote about the invisible hand or free market capitalism he forgot to mention it's the hand of someone with bad reflexes, and possibly some kind of neurological disorder. the poor guys needs to see a doctor. stock prices do not reflect the reality as if by magic, there's much perception on wall street, and the mechanics of the money management business as they are a product of the fundamentals. i tell you all this time about short squeezes, the mechanics of the market, can't handle the short sellers. this is why it's possible to beat the performance of averages by investing in individual stocks. you would never be able to exploit opportunities.

the point of the game is you can spot stocks that are mispriced because there are stocks that are mispriced every day. why do i bring this up. when the action is as irrational as i find it often, it can be frustrating. i want you to be able to take advantage of the moments where stock prices are simply wrong or at the very least, i don't want you throwing up your hands in disgust, nothing seems to make sense to you. let me go over some of the larger distortions i have seen in my time that are in play right now. for instance, i spent a lot of time talking about what i call the etf of stocks, a major issue for me. for most of my investing career, you could bank on the fact that half of a stock's performance came from the sector, how the sector is doing and how wall street felt about it. it was never 100% the company's fortune, unless there's a takeover. your average company was in control of about half of its own destiny. this was a good situation for stock pickers, as long as you

avoid sectors out of favor with the wall street fashion show. you could research companies, trying to predict which ones would do better than their competitors in the sectors in favor. the rise of etfs has changed the equation, sector etfs, and gimmicky ones, the dozen or so that own faang, amazon, etflix, google and alphabet. the stocks with incredibly well run companies can be dragged down by a rip tide. faang is the most ridiculous example. netflix catches a cold, the other three stocks sneeze, even it has nothing to do with the advertising business of meta. strange. a lot of times you'll get situation where is sellers throw the baby out with the bath water. if the worst company in an industry reports bad numbers, the whole group tends to go down. even if everyone else is doing well, these are opportunities. we saw them with the cyber

security stocks in april of 2023. one of the worst offers in the industry, a company called tenable, reported bad numbers. whole groups sold off. it was one of the greatest opportunities ever to buy the stock of palo alto networks, panw. sometimes the market is up too. you'll see companies report good quarter after good quarter to no real effect. suddenly money managers say hold it just a second, things are going well there. the next time they report strong numbers, the stocks soar. in those cases you need to be patient. i keep saying, the market gets it wrong all the time. you're ancient people will come on tv and tell you that's not true. they're not true. the caveat is sometimes when the market makes a mistake, it's not worth trying o fight it. while the markets are often

irrational, they can remain irrational longer than you can stay solvent. your goal here is not necessarily to be right. it's to make money. sometimes that means being a little cynical about other people's expectations. i hear people say, i was right. that guy made money. i was right. you were wrong, that guy was right. here's the bottom line. don't assume stocks go down. don't presume they deserve it. in the immortal words of clint eastwood, clint made a point. you know what he said, reserves got nothing to do with it. the market is going to make mistakes. your job is to recognize doing something wrong and try to take advantage of it. stick with cramer. - have a fun weekend. - ♪ unnecessary action hero! unnecessary. ♪ - was that necessary? - no. neither is a blown weekend. with paycom, employees do their own payroll so you can fix problems before they become problems. - hmm! get paycom and make the unnecessary, unnecessary.

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i always say my favorite part of the show is answering questions directly from you. tonight i'm bringing jeff marks, my portfolio analyst, and partner in crime to help me answer some of your most burning questions and we're going to take a look at some of your mad tweets. for those of you that are a part of the investing club, he'll need no introduction, for those who aren't members, which is a shame if you're not, i hope you will join, and i would say that jeff's insights are back and forth, help me do a great job for all "mad money" viewers. you see a lot of the stuff that jeff and i talk about in the show, now you get to see it in realtime. we do this in the monthly meetings, give you an in-depth

look to the portfolio club, and answer burning questions too. if you like this, join the club, for heaven's sake. we're going to go right to the questions. john in arizona asks, when profit is taken or there is a sizable cash on the sidelines, how would you pick a stock to add to my portfolio. i want to start out by talking about the oscillator here. because if there's a lot of cash on the sidelines, jeff, i'm not that interested in putting money to work if we're over bought. >> if we are looking at ideas, a couple of ways to go, sell stock in one area, look in the same industry but a better run company, you could buy that. we call that high grading the portfolio or if you're looking at something completely new, maybe it's something, you know, industry up on the rise or just a good dislocation of value but at the end of the day, we're looking for high quality companies to buy. >> and you and i take that back. med tech, people may like medtronic, but we have g health care, we go back and forth and

compare. it could be netflix versus tesla. we do everything but the main thing that i want to point out is if the market is really flying, it's okay to have the cash. cash does not hurt. next a question from mike in maryland who asked how can an investor choose which is more likely when the narrative flip-flops back and forth between recession and strength in the economy so often? so here we're not traders. we have a lot of special situations that are not dependent upon a recession, dependent upon strengthening the economy. when we have it, we like to look at our sector, and figure out whether that sector, for instance, let's say we're picking something we don't know. we're buying air conditioner company. air conditioner companies, you should sell them. but if there is a secular case for an air-conditioning company, i'm thinking about carrier because i like it very much, then it really doesn't matter, because there's such a huge amount of money coming from the

infrastructure plan. i'm saying those words, expansion and contraction usually do not play that much of a role in our stock pick. >> i think that's such a great point you made, and that's something you taught me if you're willing to get your hands dirty, study a company, you can create your own narrative of what's happening in the market? >> that's what i really want to emphasize, we in the club do a lot of special situations. we're not hostage to the whims and slings and roarsarrows of t economy. let's look at ivan on twitter who says i'm starting to think that jim cramer is a time traveler from the depression era. no, that's photo shopped. there's tno way. i was in the philadelphia lot. this is the new york ine. immediately i know that this isn't right. and by the way, just so you know, jpmorgan had his pictures, he was the first ever to be photo shopped because he had what was known as a cauliflower nose, and it was hideous. no pictures of him, one sp

spontaneous one. if he was photo shopped, i'm photo shopped. >> is that when they used to call it corner at the stock exchange? >> corner. all right. this is it. i like to say there's always a bull market somewhere, right here on hi. i'm brian sullivan. tonight. hope? or unhealthy hype. testing weight loss drugs, on kids as young as 6. another week, another failure for the speaker. how long will the capitol hill drama drag on? solar meltdowns. paying billions in taxpayer subsidies. good news in detroit. we may finally have a breakthrough in the autoworkers standoff. staggering tesla. the sum elon musk has lost just this week. unload your unwanted stuff. a new app could make se