broadening of the market. i like the stories that tim is talking about growth versus value. look at the rst, equal weight s&p. >> all right. carter. >> slv and gld. >> i'll my mission is simple, to make you money. i am here to level the playing field for all investors. there is always a bull market summer. i promise to help you find it. mad money starts now. hey, i am kramer. welcome to mad money. welcome to kramer america. if you have friends trying to make a little oney, my job is not just to entertain, but put it all in context. call me or tweet me. i'm constantly on the show telling you discipline always trumps condition.

i tell it to you over and over and over again. no matter how much you love a stock, no matter how informed you are, if the rules say sell, you sell it. one thing i have learned, no matter how much i believe something, you violate the rules that your own peril. that's why we have a channel of trust. they become our core guide for the cnbc investing club which i want you to be in. where the heck do these rules come from? it's not like they are from on high and carved into stone tablets, that's from the history of the world part one. you're not lost physics. you can't deduce from the works

you can do -- say gravity? no, the rules come from my experience. that's right, from my experience. i spent over 40 years in this business. at that time, you better believe i learned powerful assets. in many cases, i did have to learn the hard way. and because i don't want you to repeat my mistakes, i want you to have the benefit of my whole career, tonight, i'm going to lay out some of the important rules for investing. they are timeless. some of this might seem basic, but you forget the rules of your own peril. i convinced myself it was okay to make an exception, to have a cheat day, normal discipline just this once for this reason. it seemed compelling at the time. i broke my own rules. i almost always got burned. it's like that old joke about the doctor, the guy who goes to the doctor and says dock, listen to me, it hurts when i stretch out and shake my hand around. the doctor replies, don't do that anymore. so, what exactly should you be doing or not doing as the case may be? let's take down my important roles. let's start with this one, bulls make money. bears make money. pigs -- well, they get slaughtered.

look, i say this all the time. i say this in business. stocks went up and up. people were intoxicated. however, it's a point of intoxication that you need to remind yourself that you don't want to act like a pig. i showed this face in the old trading, an amazing hedge fund. i had a stock. michael would tell me i made a lot of money, perhaps too much money. i was being a pig. i didn't know what he was talking about. how do you make too much money? i thought i caught a major gain. not that long ago, not that long after, we got a vicious cell wall. i gave back everything i made and then some. and that's what i learned bulls make money, bears make money, pigs get slaughtered, it's one of the pieces i use at my own. i got a sound effect button to

tell the whole story. the bull, the bear, the pig, and of course, -- the same applies to people who press their bets to shortly on the short side. we had major clients over the years. after the.com bust in 2000, and 2009, most stocks bounce back pretty quickly, even if it induces a meltdown at the start of 2021, you had positive by the fall of 2022. if you push your luck by staying short to long, you got sent to the slaughterhouse. so, the question is, how do you know when you, yourself are being a pig? look, there's no such thing as stupid questions, only stupid answers. honestly, you don't need me to tell you when you are being a pig. the nested more than doubled from march of 2022 november of 2021. if you didn't feel greedy, you didn't need investment funds. you needed a psychiatrist. if you let your winners ride, you give a lot if not all the

money back. financial crisis received even more stark -- if you were walking around owning a huge amount of stock in 2008 as the bank stock flies, you were beyond pig dish. why is this so important? simple .1 of my chief goals is to help you stay in the game. that's the hardest part of investing, holding onto the difficult periods, taking pace so you can have long-term gains. that happened in the stock market for a century. the thing that got wiped out in the 2022 when the.com collapsed, they pretended to be the ones who took nothing off the table. they never felt greedy. and the pig-ish this got slaughtered. this is so impossible. that's why i find people every day, if you've taken any problems, have you booked anything, or are you being a pig? you never know if the stocks are going to crash.

you never know when the market could be wiped out. you can't have certainty. stock markets do not have certainty. if you assume stocks will go up forever in a straight line, you are in for the house of pain. everyone would own stocks if that were the case. we know they don't because it's risky. there are times when stocks go up and up and up, they just keep going. i coined the term fang for facebook, netflix, amazon and google, i love them all, but amazon had an incredible run. it did continue to move up another 50%. i felt like a pig as the stocks went up, but i felt -- i felt like a fool after it kept galloping. you had the feeling. you know what it's like. that's just the price you have to pay for following the rules. i have been a pig, but the pig kept running, he didn't get slaughtered. fortunately, we got back in the amazon when then president trump kept dashing them for ripping up the post office.

remember that? you probably even don't. it was tricky to get back in. you didn't recognize though for every year [ inaudible ] like amazon, gigantic pauses, the kind of which you would have had if you left a reading on the table in 2000, 2021. experience a generation of investors with stocks, hopefully, i'm trying to preserve the last one. never again, bulls make money, bears make money, but pigs, no. pigs, yeah, you get it. i will keep repeating that forever. i'm going to keep using sound effects. it is that important. how about rule number two? people, i see them on the street. almost everyone says [ inaudible ] made some sales. one of the two of them, it's okay to pay the taxes. look, no one ever likes paying taxes. i don't, you don't, but like death, taxes are unavoidable. the eversion of pain taxes

often borders on the pathological. so many times people have gigantic gains but they refused to take any profits because they don't want to incur taxes that cut into the winnings. nevermind capital gains rates are low versus ordinary income. wall street is littered with the broken heart of investors who made that mistake. several years ago i went to a presentation for prominent hedge fund manager who recommended buying macy's because of the real estate. it was a great deal for the presentation. it was rife for profiting regardless. i know people who voted for years with hefty profits. they had to write a check to uncle sam. of course, they were thinking about how much the real estate was worth. mixing you know, macy's saw its stock and cut in half. and it wasn't a 2 for 1 split. the space hit a tipping point thanks to competition from amazon. in the darn thing got obliterated. those who wants to share the

profits with the irs ended up with no profits at all instead of stock going 200 because it might have a lot of real estate. so, i want you to make your peace with the taxman. some gains are simply unsustainable. the profit is not the same as a prophet in your bank account. gains can be ephemeral. you have not made any money until you ring the register. the last thing you need is to worry about capital gains tax in taxes. when it is time to sell, sell. in short, stop fearing attachment, start fearing loss. you won't regret it. the bottom line, bulls make money, bears make money, don't be greedy, be desperate. don't be afraid to pay the taxman on profits you have earned. let's go to tyler in california. tyler? >> hey, big willie from california, how are you? i'm doing good, thank you, sir. i don't know how many times i have sold the position and next day or two watched it rivers. so, i would like to know, when is a good time to just reevaluate and cut my losses? >> okay, i think this is a terrific question. don't feel bad. i obsess on losses for the trust. i know, i bothered jeff marx

endlessly. [ inaudible ] no. what you do, try to look -- just once. i want you to get down. you will miss other opportunities. what you're looking for is a change at the margin. it is something on the quarterly call, you don't just want to get up in the morning and say, you know what? i don't like the way that ask. i'm taking the loss. wait for something definitive. and if there is a bump up, don't be afraid to trim the position. how about robert in minnesota? robert? >> hey, jim. things for taking the call. >> my pleasure. >> yeah. when i retired, my company let me keep my 401 which is a time dated fund at the corporate rate which is very cheap. it had limited choices. my question is, should i switch it over to a managed fund with another company like fidelity or et cetera at a high standard rate? it has more options. >> look, i'm big in favor of the s&p 500 index fund.

i think it will be terrific. that's what my retirement is in. that's what your retirement should be in. that will be fine. i'll of diversification. remember my first two rules, bulls make money, bears make money, but pigs, they get slaughtered. don't be greedy. be disciplined. and don't be afraid to pay the taxman the profits you have earned. coming up, learning how to do your homework, i will give my investing rules that i think are the key to mastering this market. you don't want to miss them. so, stay with cramer. ♪ >> don't miss a second of mad money. follow @jimcramer on x. have a question? tweet jim cramer. send email to mad money at cnbc.com or give us a call at 1- 800-743-cnbc. miss something? head to mad money.cnbc.com.

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[ put a little love in your heart donby david ruffinlth obegins to play ]

my bad, my bad. good race. - you too. you were tough out there. thank you. i'm getting you next time though. oh i got you, i got you. down goes jewett. jewett and amos are down. what a lovely sign of sportsmanship. you okay? yeah. ♪ ♪

♪ >> at the end of the day, you are only you. if you remember one thing about being an investor, that is a. nobody is perfect. everybody is fallible. it is inevitable we will make mistakes. if you want to own individual stocks, you need to follow a set of rules. rules that are designed to protect you from yourself. that brings me to my next commandment. never buy all at once. i can't stress that enough. under any circumstances, do not buy your whole position at once. this is something you can see us put into practice. that's one more reason i think you should join the cnbc investment club, shameless promotion. you do not fall around with partial orders. no financial advisors has the ability to buy stocks over time .1 level in a big way, make

this statement, boy do i hate statement buys. get in now, i don't like that idea. where i stand, it is all wrong .100% wrong. you should never buy all it runs. you should never sell all at once. instead, you should stay your buys, try to get the best of her time. okay, when i first started as a professional, i wanted to prove to everyone just how clever and smart i was. and how right i would be. i said by god, i will buy it now, big, all at once, make a statement. i was sure how right i was. put me up on 50,000, i would scream, as if i were the smartest guy in the universe. i think back about the young cramer, full head of hair, by the way, i was one arrogant son of a gun. it arrogant and wrong. what was my mistake? was my 50,000 shares, you don't pick them all at once. that is full eucharist.

what if it goes down? that's my rule. never buy all at once. instead, i should have bought in increments of 5000 shares, gradually overtime throughout the day, get the best price i could. put a small position, cross your fingers, hope it goes down so you can buy more on a lower- level. did you hear what i said? i don't mind when a stock goes down if i can buy more. i no longer say trade in size as we used to call it. but we still do. but i still invest for my account with trust. when we have a new name, we buy it in small increments .500 shares at a time to get a 2000 chair position over the days, preferably, lower price. that's why we like when our stocks go down so we can get a best cost basis. we have this whole process [ inaudible ]. when you buy all at once, you guarantee it won't go any lower. that's crazy. nobody is that over time. find gradually in stages is about recognizing our judgment is fallible.

so, why don't more people do it my way? why don't investors, if they want 500 shares of capital exxonmobil, why won't they? i think it's because they want to be big, too. they don't want to waste the brokers time. the broker wants to trade time. i get why they wouldplace incremental orders. it is plane eucharist to put a chunk of your net worth into any stock all at once. knows? maybe it will go 54. it doesn't apply to having a broker. it applies to electronic trading, too. at the same time, many others want to pull a trigger on the whole position and want to get it over with, they want to agonize over each moment. that's why you need to resist feel like you re making a statement by when you purchase a stock. i once [ inaudible ] do you know how often i got the absolute bottom? how often the last price i paid was the lowest wax it was off to the races. 81 trade in 100, and i'm pretty

good at this game. so, resist the arrogance. by slowly, even after an automatic it beats eucharist every time. next, i need you to buy damaged stocks, not damaged companies. let's say the mall is having a sale. you want a piece of merchandise, you only find out it is broken when you get home. maybe it didn't work. maybe it has a hole in it. in the real world you can return the merchandise and get your money back. there are guarantees on main street. wall street is different. if you buy a stock from a defective company, eat the losses. there is no moneyback guarantee. that's why you need to be careful to distinguish pre- broken stocks, names that are down that are down for no particularly good reason and broken companies who deserve to see their stocks trade lower. companies can be easy to start. when nearly everybody got their covid vaccinations and we put the pandemic in the rearview mirror, all sorts of covid winners fell by the wayside. them of them had empires, but many of them [ inaudible ] disappeared as we knew what happened. take some video, a couple by storm drain, well, say the very name became the vote.

we would zoom just like we would google. when we got quality vaccines, the growth opportunity evaporated. the company struggled to use the money from the pandemic to pivot to something else. then gradually, competitors caught up. it is tough to go up against microsoft, google and cisco. zoom punched from 588 its all- time high of october 2020, down to the 70s last year. there were points on the way down people assumed it had to be a bargain. every time they did, they got burned. because you can't call a bomb in a stock, it's a freefall if the business is getting slower. there are financial tech stocks that had a draining. of ultralow interest rates. that was with the pandemic, by now pay later alphas, a firm which is one of the better ones, but [ inaudible ] it would start rapidly raising interest rates. the business model is called into question. the worst thing was a company called upstart. which is supposed to facilitate loans. but they started doing these loans [ inaudible ] causing to

skyrocket. from just over 400 in late 2021 peak down to the low teens less than two years later. [ inaudible ] from the lowe's. on the other hand, sometimes a stock will sell regions that have nothing to do with the underlying company. it could be caused by atf, problems overseas. just because a stock is down does not mean there's anything wrong with underlying business. damage stocked, not damage company. how do you go from broken company to broken stock? complicated, good question. what i like to do is make a list of stocks i like very much. i call this the bullpen on my trust portfolio. we give you the bullpen all the time. when wall street grows a sale of the whole market down, use that as an opportunity to pick up stocks our list made in the calm of no trading versus the battlefield of the market. so, we know the stocks ahead of time. we know there's nothing wrong

with the underlying companies. we have done the research ahead. but the bottom line is, you never really know. that is why this rule works in tandem with the last one. never buy position all at once. what you think is a damaged stock might turn out to be a damaged company. if you take your time, you are much less likely to end up with a large quantity of broken merchandise. remember, there is no moneyback guarantee. the word on the street is caveat enter. mad money is back after this.

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if you want to build portfolio with initial stocks, and that's a big if. you've got to be pretty diverse about it, which brings me to my next rule. do the homework. listen, my kids hated doing the homework. they thought it was punishment. sometimes, when i look at what they were studying, i could see where they were coming from. must've this they teach in high school, how will it help you later in life? don't even bother. of course, that's a terrible attitude. i always encourage my kids to study. you never know what they will be interested in later in life. i bring this up because many of you have the same attitude toward the homework for stocks. you suspect it might be irrelevant to your portfolio as schoolwork seemed to my kids. when i tell people they need to

listen to the starbucks conference call or netflix, they don't want to hear it. they think i am being a schooled. but that's not true. you need to do the work if you on those kinds of stocks. i remind people doing the homework means [ inaudible ] they want no part of it. they look at me like an old- fashioned teacher asking for too much in this busy 24th century world. that's just plain wrong. stocks without homework is lunacy. people do it for a couple different reasons. on the one hand, there is the buy-and-hold school of thought, the idea you don't need to do any work, you don't have to keep track of what is happening to the company because you're in it for the long haul, so so what? then you have people who don't have the time to be diligent. for those of you who don't have the time, get someone else to manage her money, for heavens sake. or invest in the low index s&p 500 index fund. find someone to do the homework for you while teaching you to

be the portfolio manager. that's what we do at the cnbc investing club. i encourage people to do -- do as much work as they can. you shouldn't be messing around with individual stocks. this is what we are meant for. investing may not be a full- time job like trading. what it is definitely a part- time hobby. that's the part time that is more pernicious. buy-and-hold became the be all and all of investing. you know what? i'm just going to hold onto my c mgi. it's got to go back to underwear i bought it. yes. if you hold things for the long- term, everything will work out. but this philosophy took a blow during the financial crisis. people who practiced buy-and- hold got obliterated. >> that was easy. the house of pain. >> it keeps popping up anytime there is a nice, smooth., when it is flooded, they little money and, buy, buy, buy.

the cheap money just vanished. a lot of people thought and hold the customers nothing worth holding. that was just a travesty. that's why i have always been the evangelist for a new concept, which is buy and homework instead. before you buy a stock, you should listen to conference calls. go to the company's website. read the research if you can get a hold of research. read news stories. that's called google. everything is available on the web. everything. you have so much more info available now, so much knowledge. there is no excuse. you are banging on the library for a microfiche statement as i did four decades ago right down the block here. you have everything right at your fingertips. if you fall ack on a buy-and- hold strategy for those who don't pay attention, i can assure you you will be soundly beaten by professional money managers actively searching for high quality stocks all the time. more to that point, i'm sure an

index fund could beat someone who doesn't know. that's why experts tell you give up on individual stocks and [ inaudible ] buy-and-hold is not a strategy. like i said, i am in favor of index funds for those who have the time and predilection. this is something i harp on constantly, diversify, diversify, diversify. always be diversifying. that controls risk. and risk is the holy grail of the business. what is the biggest risk out there? it is sector risk. stocks tend to trade together, especially in industry moments. only 50% of the action [ inaudible ] stock it came down to [ inaudible ]. thanks to sector etf's, the number has gotten much higher, some cases like 80 or 90%. i don't care how great a tech

stock was in 2000. if you have all your eggs in one basket, you got scrambled. i got to prevent that. i've got to prevent that .2 thousand 14 through 2016, and of course, through the discrete. in 2022 that was so horrible, there is only one thing that can keep you from getting nailed by sector risk. that is diversification. i always say diversification is the only [ inaudible ] in the business. it is the only investment concept that works for everyone. if you mix up enough sectors in your portfolio, at least five, i tell you you won't be wiped out when one group gets obliterated, something that happens far more often than you might think. but diversification is such a no-brainer. if everyone under the sun has been telling people do it for years, how can anyone be undiversified? i think it comes back to the homework initiative. a lot of people sent we don't know what stocks they own. they don't understand what the companies do. they end up with stocks that are similar. they don't understand that one is a disk drive company and another is a semi conductor. it drives me crazy. others have zero respect for the history of air and how it attacks in digital sectors. i still feel i field quite few

calls from people who think fang is a diversified strategy. you own variations of the same thing, social, mobile cloud, that is foe diversification. or another example, no matter how much i like stocks at any given moment, i can't count on pioneer national resources, i don't know, i use halberd, too high yielding ones in a drawer. i always say no to j&j, eli lilly, [ inaudible ] even as i like all four companies. really the way to expose to healthcare risk that could overwhelm the whole group all at once. having an undiversified that polio is such an amateur mistake, though. many nationals tell you in on the mac works in this country. if you concentrate all your bets in one sector, the sector takes off, you pretty much beat everybody right then in the diversified fund. that is the nature of the beast even though [ inaudible ] is why kathy would [ inaudible ]

best money manager in 2020, far from the best in 2021, the worst in 2022. her flagship arc innovation went all in on the high risk stocks. that is not diversified. and those stocks tend to trade as a group. but that one huge year in 2020 made her a household name. once you are a household name, you got it made in this business, don't get me wrong. i feel bad for kathy. she is great at picking high risk stocks. i just want you to be aware that when you go all in on the the diversified portfolio is likely to blow up in your face a couple times, i don't know, in a few years time. he was a bottom line, whether you are an amateur or professional, you need to do your homework and keep your portfolio diversified. this is routine maintenance that protects you from monster

losses down the line. remember, if you keep your losses to a minimum and let your gains run, you will almost always come out ahead. don't try to rationalize those losses. stocks don't always come back to even or anywhere near that. let's go to trey in texas. tray? >> jim, the second greatest investor of all time, warren buffett, said individual investors like me should just buy the s&p. my question for you is, what does the greatest investor of all time think we should buy? >> i am no warren buffett. the tv guy who tries to do his best to teach you. but i think you for that. here is what i have to say. i think it depends on your time and predilection. you put away your first 10,000 in an index fund. if you like picking stocks, let's do it together. join the cnbc investing club. if you don't like picking stocks, let's do it for you. if you want to be involved, i will help teach you to be a good investor. i can do it. i have done it for a very long time and i have been very successful.

let's go to and in indiana. >> hi, jim. thanks for taking my call. >> what's up? >> i am a club member. i've been thinking about this lately, and wondered if you could talk more about suspending our judgment and letting the market take its stock up even when a ceo is something they said they are not going to do, or company makes a bunch of mistakes, they have very low competition, or a ceo makes mistakes that take a long time to fix? >> well, this is a tough one. because i have made this mistake. i have stuck with people for too long. i keep thinking i'll give them another try. almost every case, it hasn't been worth it. almost every single case, complete situations own. whether you're an amateur or professional, you always do your homework, keep your portfolio diversified. i'm putting my four decades at work, showing the key rules involved for the cnbc investing club. think of it as it moves behind the curtain if you are not a member. so, stay with cramer. [busy hospital background sounds] this healthcare network uses crowdstrike to defend against cyber attacks and protect patient information. but what if they didn't? [ominous background sounds]

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♪ >>i don't want to go zen and the art of portfolio maintenance on you, but it comes to managing your own money, you are often your own worst enemy. don't take it personally. on my own worst enemy, too. you're constantly fighting off your own worst impulses. we are not robots. we have a motions. those emotions can throw you off your game. that brings me to my next rule for investing. nobody ever made a dime by panicking. panic is not a strategy. people do it constantly. a stock gets hammered. investors sell. the market gets crushed in a huge downbeat. ensure, something gets annihilated. people can't take the pain.

so, what did they do? they bolt. there is something instinctive about panic, the desire to flee. if you are a hunter gatherer who stumbles into a family of grizzly bears, panic is a helpful strategy. but it is not a useful emotion when you are investing in the stock market. the truth is, there will almost always be a better time to sell them whatever moment inspired you to panic in the first place. don't i know it. remember the spring of 2020 when covid hit? everything shutdown. the stock market collapsed. the s&p 500 lost money in a little over a month. and for months after, almost everybody in the business was convinced it was ending. louis williams gave us the all clear. he was looking at other countries and realized we would be out of lockdown by mid-may. he told you to buy near the teeth of the panic, not flee with the panic hers. sure enough, the s&p was making new eyes again by the summer. the market just never looked back. so, the next time there is a big marketwide selloff, and you feel like fleeing and never

touching a stock again, i want you to do something for me. i want you to take the opposite side of your own trade, the most boring trades you can make are those where the decks have been cleared out by terrified folks using market orders who just don't get the exit doors aren't as big as they think they are. mind you, i'm bsolutely not saying every stock that gets hit with a panic sell is worth it in the long-term. often peoplewe got about an individual continuity. it is for a good reason. after a big decline, you get some kind of back that gets you a better moment to sell if that's what you want to do. even when things are really bad, bargain hunters will take it up from the lows, and that's when you get out. so next time you want to dump everything, take a deep breath and wait for the feedback before you sell. speaking of hideous [ inaudible ] i've got nother one that can help you with big declines. ready? when the stock market gets unrelentingly negative, remember everything defends nothing. it is when [ inaudible ] said

that years ago. you know what? it's just as true now. he who defends everything defends nothing. what does that mean? it's about how you evaluate your holdings. when the market is flying and many stocks are in bull mode, you don't need to worry about most of your positions. the exposure to a bull market, well, let's say, the better. but when things get difficult, when you are on the defensive, you need to recognize many of the stocks he bought during better times might not fit this new environment. so, when the economies are slowing, you can hang on to everything you might like. you can try to defend all your positions that are marketed against you. that's a recipe for getting blown out. and when i say defend, i mean you can't treat a declining market like it's a buying opportunity in every single stock in your portfolio. if you do that, you quickly run out of capital leaving you unprepared to buy more if you go lower still. and we usually do. yep. when the market gets negative, you need to be more selective and focus your efforts. that's why i rank all my trust

stocks at times for investing club members. once [ inaudible ] and threes, well, threes are allied cells. it sometimes needs some strength. if you get out, it is good. that way, i know which stocks to defend when things get tough, and which to cut and run with as a source for capital for something better. so, let's say tech is getting hammered but you think it's going to rebound. it's important you don't try to hang onto the whole complex. pick the best tech stocks, the ones you want to buy, and toss out the rest to raise cash. use [ inaudible ] lower prices. that's right, the nonessentials, the ones that have no catalyst, at that you only owned because he wanted exposure to a bull market, they get the heave immediately when things turned bearish. we used to call this circling the wagons with my old teams in

a hedge fund. the first few times you do it, you will curse yourself because you might be putting down stocks you loved for quite some time. eventually, if you experience enough difficult markets, you will see how valuable the process is because it can protect you from a lot of pain. i never try to battle more than a few losing names. it is too painful. remember, you have to take on a lot of stocks that are going against you. in where you are down, is exactly what it's going to do, making it more likely you will crack under pressure and dump everything near the bottom. it is simply human nature. that you have to fight human nature tooth and nail or any of those clichid phrases that went out of style ages ago. by the by, great investors know how to ignore emotions when those get in the way of making money. the next time the market gets slammed, please don't panic. nobody ever made a dime by panicking. also, don't doubled down your whole portfolio. these negative markets can give you buying opportunities. you need to focus your capital on your absolute forites rather than chasing bargains

and merchandise that actually deserve to trade lower. mad money is back after the break. (man 1) can you hear me now? can you hear me now? can you hear me now? (dj) can you hear me now? (runner) stay with me now! (teens) oooo! (woman 1) mírame ahora! (woman 2) get em now! (roger goodell) we're ready now! (woman 3) have fun! (fan) ooo, pinch me now! (woman 4) save me now! (toddler) let's go now! (woman 5) check me now!

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♪ >> welcome back to tonight's check yourself before you wreck yourself addition of mad money. i'm a big believer in the idea that once you give money saved up, you are in control of your financial destiny. that also means you need to be careful because you are the one with the power to achieve your

financial future. this will always be part of the investing game. i want to do my best to ensure you don't make the same mistakes twice, three times her endlessly. that's why have rules for investing to protect you from the judgments i used to make when i was young and inexperienced, the same rules we preach constantly in the cnbc investing club, rules like don't own too many stocks. i used to spend three hours every day analyzing mistakes of the day before, i'm not kidding, one reason i had retire for my own well-being, that was a major task, when i complete every morning before anyone came to the office between 7:00 and 10:00. summer night owls, some are earning early-morning owls. i try to figure out how i could have, let's say, made more money or lost less money, more portly. i was, for lack of better word, maniacal about it. after a couple years i had an epiphany. i realized group performance could be linked directly to having fewer positions, owning fewer stocks.

in short, when we own fewer stocks we tended to make more money. that's why ever sense, i won't buy a stock without first taking a different one off the table, even with my trust which is the only way i can play these days. don't just buy shares in more and more companies. you need to limit your holds. you should adopt it pronto. all mad money managers i know have 100 positions. how are you supposed to keep track of all that? all the good managers i know have a few names. they know inside and out those names. that means they can confidently buy them on the way down. that's why i say don't own too many stocks. i know. you will end up selling stocks that are good for stocks that don't happen. hindsight is 2020. take it from me, as someone who owned stocks for 20 years, it's far more likely you will be selling marginal companies in order to get bigger and better stocks. that's how to make a portfolio really work for you. i the way, the time i lost the most money on hedge fund

manager, my sheets were thick as a brick when i made the most money, my sheets were one sheet of paper, doublespaced. i made hundreds of millions of dollars. whether you are a pro or immature, okay, either one, it's always possible to have too many positions. rule of thumb, if you are just investing for yourself and you own more than 10 stocks, you should probably pare something back. you can have too many stocks. you know what it's hard to have too much of? cash. that brings me to y next rule. cash is for winners. the widespread amount of cash in the business breaks my heart. it's an investment that drives me crazy that so few recommended it. they hate the market. they are 95% long instead of the hundred percent. they think the market stinks and decides a few high flyers to get their loans. no, no, no. as an investor, that is the wrong way to approach things.

you don't like the market? you don't like stocks? then sell stocks. manage one, then raise some cash. put it in cash. don't put options of the stocks you own orget stocks for your current positions. that is the stuff that makes it too hard for you. the odds do not favor you winning on both stocks, short and long. the strategy of the goal is mediocrity. but if you can raise some cash and put it to work at lower levels, that's the best way to protect yourself against a lousy market. let me tell you a story. i was one of the biggest traders on wall street for a time. i could tell you when i put options on my positions, and was always lost money. when i make money? when i bought put options to profit from low income companies or stocks seemed completely overvalued versus the fundamentals. if you like the market, you don't need to bend your self into a pretzel to hedge against risk.

go into cash. that is less than the variety. people start talking about how little cash urns, although it's a lot more lucrative when the fed is tanking. they said it can't be cash. that is for losers. that is just plain wrong. i say cash is for winners especially if you think there's a major disaster ahead. i don't care what interest you earn on the cash. i grew up in a different time. i only shorted stocks when i had an edge. i can't short it all by contract. when i could, i didn't short stocks for the sake of having exposure to balance out my longs. i don't care about having enough exposure. i care about losing money. i was the exception in the money management business. that was my focus. if you don't like the market, if you think there's nothing compelling to buy, then just raise cash. go sit on the sidelines and wait for the situation to improve. believe me, it's never the wrong call when you can't find anything that truly makes sense

for you. the bottom line, always be careful not to own too many stocks. and not to have too little cash. stick with cramer. ♪ so you can rise from pain. icy hot.

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♪ >> i always say my favorite part of the show is answering questions throughout from you. tonight, i'm bringing in my partner in crime. helping answer your most burning questions. for those of you part of the investing club, jeff needs no introduction. those of you who aren't, i hope you will be soon. i say jeff's insight in our back-and-forth help do a great job for mad money viewers as well as members of the club. jeff, you do this sort of thing during our monthly meetings where we get an in-depth look at portfolio decisions. we talk about every single stock. and we answer your burning questions. if you would like this to be something to keep up with, i need you to join the club. thank you, by the way, people who stop me on the street because they love the club. it means the world. let's start from michael, my home state of pennsylvania who asks, what do you think about

dividend reinvestment strategies? jeff, what i taught at goldman sachs was, it's one of the great few things of our business. you keep letting it ride. i have seen in my lifetime the dramatic amount of money you makefrom the reinvestment. >> absolutely. that's how you take advantage of the power of calm calming by reinvesting those dividends quarter after quarter. unless you need the income, of course, depending on where you are in your life, that may be a reason not o. always reinvest. it works for high dividends stocks like a consumer package stock or text stocks that offer a dividend. it's a good thing to have. it's another way to dollar cost average -- >> are a member going over this with my late father. he was adamant you take the money and run. i tried to show him manage it, vincent. take the money, get back in, reinvest. now we take a question from john in california who asks, what are your sources of

information related to stocks in the overall market and the economy? sources that you go to daily. we have a the research in the world. the great thing is, the luck we have, is the research. and i tend to let that control things as by the way when i do when i talk about maybe the most important research calls of the day. so, we are blessed with that. let's go to nico in maryland who asks, are there pe multiple that we won't buy above in each sector? at this is tricky. when you are intact, we have to use [ inaudible ]. nvidia, if i had discipline, i wouldn't pay more than those journeys. i would've kept out for a decade. it is about futures. >> you have to look at a company's growth rate.

money. i'm jim kramer, see you next time. right now on last call, he said what? president biden making a few comments few are paying attention to. where is the beef? a.i. stocks smashing. one top tech says there is little to actually show for it. and stock point blue. no to paris as the olympics loom but golden travel deals may be for you, could suddenly be within reach. we will name them. all of that and more over the hour, belly up or buckle up or put your tray