>> great to have you here. guy? >> an extraordinary first couple of weeks -- >> sure, extraordinary. >> as is northrop grumman. >> thank you for watching "fast." ar r cmeey" with jimrar sttsight now. my mission is simple, to make you money. i'm here to level the playing field for all investors. there is always a bull market somewhere, and i promise to help you find it. "mad money" starts now. hey, i'm cramer. welcome to "mad money." welcome to cramerica. other people make friends. i'm just trying to make you some money. my job is not just to entertain, but to educate and teach you. so call me at 1-800-743-cnbc newsom or tweet me @jimcramer. whenever you're listening to anyone's investing advice, you need to consider the source. and ideally, you want to know where that person is coming

from. that's why tonight i'm going to tell you who i am and how i got here, not the standard introduction, i'm jim cramer, host of "mad money," "squawk on the street," cnbc investing club, what i want to do tonight, an extremely special show is trace the arc that brought me to "mad money." not for some autobiographical ego trip, but to give you money making lessons and explain of course how you can pop the phone. in the end, this is cramerica, and everything we do here is about trying to help you make money. in short, i'm giving you the investor cramer guide book. call that the skinny on how i learned to be a good investor and how i continue to learn every day. i want you to be better than i ever am going to be. that's our mission in investing club too. my love of stacks didn't begin after high school. my love started in fourth grade. my dad would bring home the old philadelphia bulletin.

boy, what a long time ago that was. at that time one of the largest newspapers in the country. he'd have it when he came back from work every night and give to it me. i wanted the comics and sports. i was a ridiculous phillies fan back then. i still ham. it's a life-long association, although have i pivoted hard towards the eagles. i was a curious kid. curiosity has been a blessing and a curse. not unlike the proverbial cat always looking, jumping on hot stoves there was always this solid chunk of the paper that seemed impenetrable to me. the business session. it was impenetrable because it had this giant list of names that seemed to go on for ever. there were the other tables different from the batting scores. when i read them from left to right, they made no sense to me whatsoever. open range, close? what is open? what closed? what are these strange things? why do they matter? i asked my dad who dabbled in the stock market because occasionally i heard him get mad when he heard prices mentioned

on the radio. he always seemed to get angry when i heard something called national video and it went out. i don't know what video did other than go out and why it went out. i don't know if pop did either, but i know it made him furious. i wanted to know why. he sat me down and explained each of the lines represented the performance of a stock at a company in the different way. the opening in the morning, the range how low and high it traded during the day and the trade is what it was worth at the end of the day. that fascinated me. how could there be so many companies? and why did they trade in ranges? he told me each day people tried to figure out very hard which stocks would go up in value and they wanted to buy them so they could make money from the moves. it struck me at downright silly, when i looked at baseball tables, i was always trying to figure out who was hot. he said it was the same thing with stocks. you studied the companies like you studied the players. some players were doing just okay. some were hot as a pistol. and others were just plain duds.

i told him i wanted to figure out the stock market too. i wanted to figure out which stocks would go higher, like everybody else. i wanted to know if i could learn something from just following the ranges and reading the tables. he said why don't you try it? seemed in my house the radio was always on until pop put the tv on for dinner. we always watched the news during din. >> even as much as i hated that, because most of the news was about the war, and that was the vietnam war and didn't seem to be going well at all. they always mentioned the dow jones industrial averages, and they talked about or shows the most actors, the ones that had done best or worse. national video, pop's stock was often the worst list, and i guess that's why my dad was so angry. what i did is write down the names i heard and tracked them. kept them in a ledger, what a terrific game it was trying to figure out the next move of a stock, not a player. even though i only knew the name. the defense stocks went up in tandem with the war.

i decided it was such a cool game that i wanted to introduce it to my fifth grade class. so i did. going in with the ledger and inviting to see who could find stocks that went up the most during the week. not everybody was into it. my dad's company at the time, national gift wrap and box company represented 3m, known as the minnesota mining company in the philadelphia area. he sold tape and a fancy ribbon. remember there was a time when you had to make your own bows? mmm was always innovating, coming with new product line but these days it's plagued by major litigation issues. pop came home with a new line of 3m. games. they got in bookshelf games. he said perhaps i might want to learn more about the stock market, and he had two games that he was selling well about business. one was acquire about takeovers, and the others was stocks and

bonds. i almost cried when a good friend brought me this. i asked the ceo bring the old games back. but the point of mentioning all this from my own stock game to stocks and bonds is stocks are fascinating enough to get your kids started on them right now. and i'm urging you to do just that. it's easier than ever. pick some stocks, maybe stocks from companies that your kids are familiar with. then have them track those and guess what will do best over time. here is the bottom line. the bottom line at least of my childhood stock market obsession. get them started early and they may play for life, because alas, the stock market, it's a long-term contest. the earlier you get in, the mother you can potentially win over the long haul. let's go dave in california, please. dave? >> caller: hey, jim, thanks for taking my call. >> of course. what's up, dave? >> caller: jim, i'm an older retired investor who is moving most of my stock portfolio gains into t-bonds and cds.

what are the advantages of bond ladders, and how do those work? >> well, i think that -- with what i like about a bond ladder is it would normally matter a great deal. the yield curve is so flat, it really doesn't -- people want bonds, i want doesn't make sense. i want you to stay short. no reason to go out in the long end and keep reinvesting like that. i'm not sure of your age, but i want people to remember you don't want to bet against yourself and put too much money in bonds because stocks still represent the greatest opportunity. and don't forget utility stocks. they can play a role too. they could have multiple years of goodness. let's go to phillip in michigan. phillip? >> caller: ba-ba-boo-yah, jim! >> what's up? >> caller: hey, i wanted to thank you. i've been listening to your show since 2006 when one of my coworkers turned me on to the show. you've made me all sorts of mad money. >> oh, fantastic. thank you for that. thank you. >> caller: i'm also a member of

the cnbc investing club. i enjoy listening with you there as well. >> okay. >> caller: my question, my question is so i know that refer to dividend reinvestment, as i'm totally the tli with you. my specific question should i involve myself in a brokerage dip program or should i take the cash and then put it back to work in a stock -- >> no, i am a huge dividend reinvestment person. as a matter of fact, i wish there were an alternative. for my charitable trust, i have to send the dividends out. it has really hurt my long-term performance. you've got to reinvest. that's where some big money can be made. one of the biggest things i learned from getting interested in the stock market early is that it is a long-term contest. the earlier you get in, the more you can potentially win over the long haul. on "mad money" tonight, i'll give you an inside look on how i got to where i am today, from growing up to goldman sachs.

along the way learn the best practices i learned about the market and how you can incorporate these life lessons yourself. so stay with cramer. don't miss a second of "mad money." follow @jimcramer on x. have a question? tweet cramer, #madmentions. send jim an email to madmoney@cnbc.com, or give us a call at 1-800-743-cnbc. miss something? head to madmoney.cnbc.com. when it comes to amgen's life-changing medical breakthroughs, every second counts. but without investment, those breakthroughs are often paused. citi's seamlessly connected banking, markets and services businesses, deliver global financial solutions. so our client can keep investing in innovations

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craig here pays too much for verizon wireless. or reverse orders so you won't miss an opportunity. so he sublet half his real estate office to a pet shop. there's a smarter way to save. comcast business mobile. you could save up to an incredible 70% on your wireless bill. so you don't have to compromise. powering smarter savings. powering possibilities. switch to comcast busines internet and mobie and find out how to get te latest 5g phone on s with a qualifying trade-i. don't wait! call, click or visit an xfinity store today. welcome back to a bizarrely special "mad money" where i'm teaching you life lessons in investing from my life. well, i'm not a dollar sign represented by a man or a stock symbol for that matter, timmer j j-i-m, i have stuck around the stock market long enough to learn a thing or two.

tonight you're getting wisdom from the school of hard knocks. doefnt you love it at the beginning of a pro football game where they have the player say his name and school, and some say school of hard knocks. that's what i attended when it comes to stocks. you're getting the made for tv version right here right now. for law school, i went to harvard, though. we covered how i first got involved in the market, my fourth grade obsession with keeping a ledger and ultimately learn how they trade the greatest game on earth. no, not monopoly, but stocks and bonds, with its cards about news that would send a stock higher or lower. i loved that game. i left the stock market games behind by the time i got to middle school, which we called junior high back then where my obsession became sports. i was the second fastest guy in the school forever. so i ran track. and of course girls, who my teenaged self found far more mystifying that the market. maybe still do. but that's a subject of a different show entirely. however, my father did ingrain in me the desire to save money. early on i learned that even in high school, i save.

i bussed tables at the block and cleaver which we called the block and cleavish because we were really funny and height of adolescent humor. i started working as a vendor at the stadium ice-cold, i got ice-cold soda here. and graduating to selling ice cream, hey, i got ice cream, vanilla and chocolate. i learned the value of cornering the market and the specific right to sell ice cream, hey, ice cream here on the 600 and the 700 level which i owned by keeping everybody else out of it. you imagine how much known moan you can make if you had the franchise on the upper deck? at least it's the upper upper deck, even for a team as horrible as the phillies. i made fortunes except for the one time they gave me strawberry ice cream. talking about having to run from a customer or when steve carlton left. i had all this strawberry. you can't take it home. you had to buy it from the company before selling it. so i would take a beating

whenever carlton son the mound. that's a business lesson. talk about learning how business really works. the shelf life of ice cream is about as short can be. during the "lightning round," i might jest with you about your name, chief, i skipper, i learned these names at the ballpark. it's what people called me to get my attention. hey, chief, i loved its bizarre intimacy and i never forgot the monikers bud, partner, and that's why i use the terms on "mad money." at the advice of my father, i opened an account at fidelity with the magellan fund. i contributed a little every week run by the great peter lynch, who wrote great books, still available on amazon. they are fabulous. get them. i didn't save enough money when i got to college. the money went to tuition and room and board. after college, after monument approximately attempts to get in the newspaper business, i was rejected by 57 papers, i still have them.

i hate everybody who rejected me, i landed a position as a general assignment reporter. making 150 bucks a week. not a lot to really kind of -- well, any way. ive have thetalitiered pay stub to remind me of how hard it was when i got tired. nonetheless, i still saved. i put a few, maybe $4. not long after that, i applied and got a job at the los angeles examiner. that was a horrible job paying $179 a week. but as you can imagine, los angeles is more expensive than tallahassee. soon after my sojourn began in los angeles, i found this terrific bungalow apartment in the fairfax, pretty sketchy, around the corner for pioneer chicken which was way too expensive for me to go to. a few weeks later my i was stahled. my place was broken into. i was assigned a story in san diego, a horrible shooting. and when i returned, everything was gone. everything. everything i had, including my checkbook, which of course was cleaned out. so it began my terrible but

thrilling six months of living in my car, basically trying to get by. while my old was enough to get an apartment, i was living hand to mouth. people would take me in now and then to get a shower. really important to get the shower or maybe a good night's sleep. but you know what? i never quit saving. i remember cashing my paycheck and writing a check to magellan fund for what i could. gas, car insurance and food expenses if you're living in your car. saving on homeowners insurance, it was very expensive back then. it was unsustainable. when i ultimately came down with mononucleosis and a yellow spot about the size of green land on my stomach, i had no health care. the hmo my paper began to had no branch at last station when the company mercifully put me on the road so i could submit expenses for my day to day. so i had to go to a clinic to get fixed up. and i still put money away, even then. even as i was making weekly trips to the doctor.

it's one of the best i've ever had. the upshot of investing is this is a challenge. the whole story is a challenge. if i was living in my car and i invested, i never want to hear that you didn't save, never. that's why i went through this. amazing with the magellan fund back then, i was giving money to the best stock picker of all time. past forward 35 years later, enough to take advantage of one of the greatest bull markets in history. magellan money ultimately mountained to a fund well into the six figures, not because of my additional contributions, which remember were only a few dollars a month, but from the power of compounding. i never touched it. still haven't. i just let it build. i think the takeaway here is that i want you to save, no matter what the excuse. obviously the earlier the better. through thick and thin. when cnbc has the all star managers on, you don't have money or a handle the time to own a stock portfolio, send the money in, as little money as you can to an index fund to one of

these big mutual funds. if you need help managing your own portfolio, join the investing club. i think that's the best way to go. and here is the real bottom line. if i could still send the checks to fidelity magellan from when i was living in my car, jack daniels and a hatchet and yes, a pichel, sick as a dog, what's your excuse for not getting start? you can put some money away too. "mad money" back after the break. coming up, take a trip down memory lane. the hair is gone, but the wisdom tolls on. stick with cramer. boo-yah for the emperor of cramerica. >> the honorable cramer. >> you have me jumping around my office right now. >> thank you so much for all you do for us. >> i enjoy your show and find it very entertaining an informative. >> i watched your first ever episode of money in 2005, and i've been watching every single episode ever since. >> don't miss "mad money" every night at 6:00 p.m. eastern,

plus, join the cnbc investing club and stick with cramer, around the clock.

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are two and a half times faster to first hire. visit indeed.com/hire ♪ we're on a magical money mystery tour tonight. i'm giving you the life lessons i've learned the hard way. right now i want to tell you how i got started in individual

stock picking, something you know i love and still believe in, even through multiple periods of pain, chaos and chicanery. you believe too or you wouldn't still be watching. you need to open an account. when i got started in 1979, there was no such thing as an online account. i had my money with magellan courtesy. soy put my individual stock account there too. when i first began, i didn't know where to look future ideas. so i turned to a magazine i like, forbes. forks, i read a nifty article about an orange grower in florida. i bought 10 shares for 9 bucks. a week later a frost hit and wiped out the crop. my investment was cut in half. like "trading place," well, what can i say? pretty similar. i was devastated but not defeated. i sold it out, took the capital and bought seven shares of bobby brooks, a clothing outsaid that forbes said could be a terrific buy. almost immediately the company reported a bad quarter.

fortunately i had a decent job, i was making 20 gs and living in a less than swank studio near the united nations. the cheap $40 a month allowed me to replenish my stock coffers quickly. after a particularly hard night on the town researching a story in kentucky, i fell in love with the breakfast at bob evans. finding out it was publicly traded when i went back, i visited that huge fabulous midtown manhattan library and devoured everything i could find about bob evan abouts, mike feature financials, investment publications, write-ups that allowed me to compare bob evans with other companies in the industry which is what you had to do. i knew i had a good one. i bought 20 shares. the stock went up immediately and the stock split. i figured out the first component in investing. know what you own. what did i know about growing oranges? do i know women's fashion? certainly not. but a good plate of scrambled egged and sausage, good service,

nice enough growth, a big plan to expand in the midwest, that was for me. next up, sps technologies, the standard pressed steel from my hometown that made fastener, screws for airplanes. a buddy of mine from high school catching up with me told me they were hiring like gang busters, paying good money. i already had a good job. back to the library for research. nothing about the hiring push. i caught the bug for good. 23 years later acquired by the preeminent supplier to aircraft around the globe before they went on the berkshire hathaway in 2016. the big investment ideas come from what you know melded with information gleaned from public source, even if they're as late and hard to access as taking a surreptitious trip to the library when i was supposed to be working. a friend's lucky call, a hearty

breakfast at bob evans farms, that would be a more rigorous approach. then it hit me. look around at work, stupid. at the time i was covering mergers and acquisitions. looking at the lawyers who do the deal, profiling some, following the deals they were on. it seemed like every other deal was in the oil patch, one@another, small to midsized companies were being acquired and all i was doing was standing around writing about them. i took out editions of value line and checked out the pages devoted to oil companies and cross referenced them with research to find which could be acquired without problems either because they were publicly traded without a family owning of them or fit the size. an oil company with a gusher in indonesia. oh, i didn't have long to wait. i almost doubled my money. another lesson learned. buy companies that would do well on their own. natomis was, but it was under management, which is the consensus i found about reading the articles that meant another oil company with bigger still

could do more with natomis which was cheaper than it should beif it got rid of management. i was distraught i had given up the ghost in the first few trades. i learned how to handica learning to read the books of the andy beyer, the legendary horse racing better. among the best books ever written. it teaches discipline, how to identify the best thoroughbreds, how to identify the best long shots going to the track, not betting willy-nilly on every horse in each race. find the ones where the payoff was more sure and bet big. cut your losses if you're having a big run. every one of the lessons could be applied to the stock market, right? a huge swing when you know what you're doing, particularly when others don't on a less known track. alloway track. most important, be disciplined. don't let your losses pile up. after five years of professional

journalism, i decided to go back to law school. the good news, i saved enough money to pay for the first year. all in the stock market. i never would have in a savings account. you want to get started, go small. invest in what you know. research, research, research. back then, i got old data from public library. now it's a simple key stroke and the information is free including brokerage research, the conference calls that are a must if you want to actually know what you're doing. simple? no. lucrative? you bet it is. let's go to michael in california. michael? >> yes, jim, first of all, thanks for taking my call. >> of course. >> i'll take and make this as quick as possible. i no eyou got a lot of people to help here. this concerns my two children. i inherited recently a quite deal of money, not a million dollars, but it's a substantial amount. and i'm looking at a 20 to 30-year time frame here. i've been investing for them since the day they were born. they're doing all right.

but i want to leave them some good, good money. i'm thinking on the lines of berkshire b. now this is putting all this money, berkshire b. and vanguard etf along those lines. what is your opinion? what do you think? >> i think s&p 500 fund and the total return funds are both really god for that kind of situation. vanguard's total return. one thing i would caution, as much as i like warren buffett, i just think you have to have a kind of basket if you do one stock. but if you do the ones i just mentioned, you don't need a basket and you don't have to keep track every minute. if they're young enough, give them something they want to spend time learning about. and that could be good too, to keep them invested and interested in their money. thank you for those kind questions. and let's go to loyal in arkansas, loyal? >> yes, sir, how you doing, mr. cramer? >> i'm doing well. how about you? >> caller: i'm doing all right. i wanted to know getting back to

the market with 11 k, what is the best way to have a long-term -- a long-term goal but get a short-term return within a year or two on your investment? >> well, that's -- it's too risky, frankly. at one time or another, i think in my earlier years, i would have suggested coal options and then also some longer term stocks and mutual funds. but these day, i'm just against the short-term stuff. i can't deliver, and i don't want to encourage trading. but thank you so much. i wish i could do better for you, but it's just not my thing. trading things, not my thing. any way, if you want the get started in stocks, go mall, invest in what you know and research intensely. the process may not be simple, but boy, it can be lucrative. much more "mad money" ahead, including an inside look of what i learned for from my time at goldman sachs. and my colleague jeff marks. so stay with cramer.

coming up, how has investing changed since cramer's hedge fund days? we count the ways, and the answer may surprise you. next. good evening, mr. cramer. thank you. thank you for everything you do. >> you've been such a wonderful source of information with your teachings. i have to say thanks. >> thank you for all your advice and saving us from ourselves. >> your advice let me quit a job that i hated. i love you to death. >> thank you for everything you do. thanks for making us money. and more importantly, thanks for keeping us from losing money. were you worried the wedding would be too much? nahhhh... (inner monologue) another destination wedding?? why can't they use my backyard!!

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tonight's show is all about you learning from my attendance at the university of financial hard knocks with a major in investing. i have taken you through the importance of starting early, saving no matter what. i showed you how to spot winners. i avoid losers through discipline. all through looking at actual examples in my life. now i want to give you a sense of how you can become a trader, uh-oh, here we go, a good trader, and i don't necessarily recommend. this it's not the direction i like to take the show. "mad money" has changed time and time again. after the first few years, i scooted away from trading and trading ideas and much more long-term investing. that's because there is so many more obstacles to invest than trading. you have to watch like a hawk during the day to the point it's hard to do your job and follow the market. the there is great tools. there is so many different products that allow hedge funds to move stocks around like toys. it's very hard to compete against them.

you can't do the one-on-one, especially when you're doing it part time. but there are some advantages that you have now that didn't when i started trading at any dorm room in 1991, and i was trading, not investing. you can get in and out without much friction. tekd, information needed is on your personal computer. i had toe call brokers from washington. and third, trading is lightning-fast. back then i didn't know what price i paid for stock or when i bought it. market order, whatever. when i was in class i had the cell phones and cell. you had to wait while some kid chatted aimlessly to his girlfriend, maybe someone called mom. at the time i had to go with what i knew. i knew individual stocks including the movie "paper chase," which can tell you there was tons of downtime at law school and a terrific library that had a lot of research, along with up to date

microfiche. those who were too young to remember mike feature, they'd miniaturize everything in a little piece of film, and then you would have to read it through a machine that looked like a glorified microscope. the first thing i decided to do, though, given the circumstances was to work on finding one trading idea per week. my requidea was simple. i figured i couldn't take a lot of chances until i really knew what i was doing. a very valuable lesson if you want to start trading. looking for stocks that had catalyst, with upcoming mergers and stocks that could rally based on the other part of the newspaper. an article in the front page might talk about a breakthrough in medicine. i got on a role. i start mid first writing about the market. it was newsletter called mr. bullish that i only mailed to my parents once a week. i did not trade if i couldn't explain exactly what the company did and why i liked it and what

would happen to the stock, what was the catalyst to buy. no buy of anything didn't have a clear exit strategy. again, important lesson. make discipline by the insistence of written pieces before i pulled the trigger. when you trade, you've got to trade with confidence. otherwise you can easily be shaken out by the border market. you want a trader krompbs? would you be willing to put a stock recommendation on your voice mail. we used to have those. and updated every week. it was something like this for me. hi, this is jim cramer. i'm not here right now, but i like memories at $32 ahead of the next quarter. yeah, i actually did that that's the level of conviction i had of my picks the week. i managed to augment the winnings from work. lois and freelance worked for "new york times" and a legal work for a processor who doing these criminal defense cases, it

wasn't before long by marty perts, a professor, teacher at harvard, tried to get me to write apiece. he inadvertently got three weeks of trace from my answering machine, all successful. and he told me to meet him at a coffee house nearby. when i did, he said he made more money with my about machine. he said he had confidence in me. and shortly having a cup of coffee, pulled out a check for half a million dollars. that was real money back then. i ran down to fidelity with the money and set up an account and went right to work trading. almost immediately, i could see how i might need to watch dishes or mow his lawn like the cheese i just blown to smithereens. as clint eastward told us in magnum. force, a man has to know his limitations. you can't trade a huge chunk of money ought al once. you can't put it to work at finish. you have to do -- you can only

do that after you have done a huge amount of work. you had to have a chance to pan out an entry point. you had to come up with a reasonable exit. and i tad no discipline. i i'll v8ed my own rules, and i confessed my sins to matter. i said please take the money back. instead, he wanted me to have more money, betting that i'd learn my lesson. he is right. i reverted to my old skill, trying to be right about things, doing a huge amount of homework, going best when i had the convicts. i slowly by truly made it back while paper invested to get a better few of things that would be the beginning of my investoring career, and we've made a huge amount of money together. don't mind saying that. make sure you have a catalyst and exit point where something is supposed to happen, and then get out of the stock, even if

the idea doesn't pan out, because you're trading, not investing. you need convicts. you have to ask yourself, would you be willing for the world to hear -- hi, it's me. i'm not here right now. start small, give it a tried. "mad money" is back. boo-yah, jim. i love you, man. i've been watching from you day one. >> thank you for all the wonderful vibes you provide us. >> i'm learning so much watching your show. >> what's your program every day, i want all of the sudden wanted to say boo-yah on your show. >> we consider you the money market major, and we thank you for automatic you do. >> i love you show. >> aloha, loves your show. we think it's the most entertaining program on tv.

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♪ welcome back to this special edition of "mad money," where i've been teaching you life lessons investing from my life. now we're up to the professional grade when i started at goldman sachs. i've been courted by goldman before i got a job in what was then the security sales helping individuals and small institutions manage their money. i've got a ton of history from those years. and if you want the know more about it, i suggest you lead "confessions of a street addict." but tonight's show is about learning how to trade and invest. so i'll dispense with the anecdotes and try to teach you how to make money from the events that transpired at goldman. the ability to build a portfolio from the ground up.

and i had the best teachers in the world. one of the great hedge fund managers of our time, lee cooperman, he put on investing clinics almost daily. but you know who i learned the most from? my customers. keeping wealthy individuals from all walks of life. at goldman i learned something to this day that can't be understood by so many individuals in this business. individuals can and do beat the market quite regularly. have i nondiscretionary accounts being i wasn't allowed to invest anyone else's money with my own ideas unless i could win them over to make the purchase. remember, i was on commission and made money only with the buys or sales i could convince people to act on. that's where i learned how important it was to talk over a story with an individual and have it articulated in a theyway that makes sense to them. if you do that to someone when you're picking a stock, you had to know your stock. i asked my questions whether they knew enough about the stocks that they wanted to buy. i wanted them to be as educated

as possible too. if it went up, it would be their idea, but if it went down, it would be mine. that's human nature. what else did i learn? how about humility. it was at goldman sachs that i figured out how humbling this position could be. the great '80s market started before i was hired. when one of your entities went against you you, had to get on the horn and explain why they should buy more or cut their losses. i also learned to let your gaze run while you cut the losses. i learned the hard way. many of my clients were terrific business people who didn't know much about stocks. they'd just been fabulous at running their own enterprises. i had a real estate tycoon who i worked hard to get trying to win him over for ages. i told him i would be judicious, work hard and get it right. he said he didn't want trades. he wanted long-term investments. at the time i happened to like the stock of kimberly-clark. i told him i thought this would

be a terrific addition and i bought him 100,000 shares. almost immediately the stock went up 8 points. i had a winner. i called him, i bob, i want to sell the $1,000 shares to kimberly-clark. i thought he would thank me. but he was furious. he told me i said kimberly would be a good long-term position, that it would have great gains over time and he wasn't the least interested in making only $8,000. and then he questioned my integrity and wanted to know if i was churning him, a horrible charge, meaning i was just trying to generate commissions off his account. you know what? i was scorched. i was burned. it taught me a terrific lesson. just as you don't want to turn a trade into a investment because that's a sign you're embracing a loss, you also don't want to turn an investment into a trade when you have a good one, let it run for heaven's sake. bob was right. kimberly-clark nearly doubled and i was vindicated despite myself. finally, understanding how to

create long-term wealth. a lot of my business involved contacting people who just came into a great deal of cash either through inheritance or a sale of business. i regarded my first job listening to their needs, trying to figure out what they wanted. were they conservative? did they want capital preservation or capital appreciation? i try to get to know them and urge them to get to know themselves, just as you should know yourself. can you handle the pain of a market decline? would you prefer your money to appreciate slowly meaning from bonds or dividends. do you want to participate in new issues? do you want to try to hit it out of the park with some of your new capitals? many of you are familiar with these lessons. i know that. you've heard me say them time and again on air, preaching them constantly to the cnbc investing club. i teach you to try to know yourself, to know what you can handle and what you can't. finally, this is when i learned the value of diversification. when i first got to goldman sachs, the oils were hot as a pistol. you had to understand, those

were different days. you could have oil companies double and double again in a short time as if they struck oil. everyone got caught up in the oils. the families i work for wanted oils. i wanted oils for my personal day. every day seemed like another great day in toil patch. servicer, driller, you name it. then one day oil plummeted. some global tensions had jacked up the prices were settled. the next thing the bull morphed into a bear. those who owned nothing but oil stocks, including yours truly were crushed. i learned firsthand the concept of diversification. while occasionally violated some of my rules, i never intentionally avoided diversification. from my early days at goldman sachs, i learned the principles of investing building solid ideas to build long-term wealth in a way that suits the customer. consider yourselves the customer of this show. stick with cramer. coming up, wall street's

most reliable tag team squares off to answer your questions. keep in touch. "mad money" will be right back. boo-yah, jim. your integrity makes you the boo-yah saint of wall street. >> boo-yah, jimmy chill! >> boo-yah, jimmy chill. >> ba-ba-ba-boo-yah, jim. >> quadruple, that's a lot of boo-yahs.

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through this entire show tonight, you've heard me pound the table on how investing in the stock market is a long-term, emphasis long-term. you're never too young to start investing like you're never too old to learn things about the market. i love to teach my viewers and learn from them. which is why i always say my favorite part of the show is answering questions directly from you. so tonight i have jeff marks

here, my portfolio analyst, partner in crime at the cnbc investing club. we're going answer some of your most burning questions which are always amazing, frankly. i learn so much. plus an inside look at what we do in the club. by the way, if you're not a member of the club, you can scan the code behind me or go to cnbc.com/investingclub to sign up. i sure hope you will. let's take our first question. first up we have a question from sandy who asks my husband andri at retirement age. he likes dividend stocks, but i don't like holding them when they lose value. my original investment is in the negative. i prefer solid growth stocks to continue to build our portfolio. keep or sell these losers. i'm going start by telling you right here, retirement age. that's the eye of the beholder. ha i have been a big believer contrary to the entire industra stocks.ent age whe i think people should always be investing for grr bonds. so my answer to this one is that

i -- you have to kind of at times take the risk, but you just use smaller amounts of your cash. >> yeah. i think there is always a balance to everything, right. one thing i would point out is without knowing the stock, if the dividend investment is in the red, well, maybe they're not growing their cash flow, their earnings. maybe they're not growing their dividends. and that could be a red flag that something's wrong about the company. >> for instance, you know that we got involved with footlocker. and their cash flow declined. and what looked like a good dividend stock became a nondividend stock. so sandy, i think that unfortunately, you have to do a level of homework. of course, join the club and we will point them out the things we missed in footlocker. you're going miss things. but what matters is i want you to have more exposure to stocks than people expect because retirement age may turn out to be something that's 20 years before you -- when you need to grow capital for that 20 years. next up is bruce in michigan.

and he says, "how do you set price targets?" i'm going refer to my colleague who does a lot of the price target setting. >> it's an art and a science, right. there is no one standard rule of thumb to apply, but what i will say, though, when looking for price targets, what you can do is look at some historical multiples of where stocks trade at and try and figure out how much you think the stock will earn out in the future and apply that. but another key considerations too is if the company is improving its margins, maybe taking share, then it would deserve to trade at a premium versus historic levels, or maybe at least catch up to so to speak the multiple closer to some peers in this case. >> listen, during the great runs that were lily and nvidia, how did you go about setting price targets? >> look, those are some of the great momentum stocks of the last couple of years too. that i would say is a little bit of an art. but again, stock likes that you have to look out years out. >> yes. >> in advance.

especially in the case of leli lilly where the decade is glp-1 sales. >> so people know, we take them very seriously. now let's go to lindsey in oregon, where my daughter had her formative years who asked how do you trim a position? do you sell shares with the lowest cost basis or the highest? >> this is an accounting issue. >> yeah. there are rules on what you can and can't do. we are just so people know, we send everything out, all our capital gains out and all our dividends out, and we often want to try to get rid of the ones that has the worst basis. that's been our stock in trade. >> look, this is always a question of tax considerations, right, because if you're taking a profit and you're selling a lower tax basis, you'll trigger higher realized gain. and on the other hand, if it's for a loss and you sell that lower basis, it's a smaller loss. so it's tax considerations.

>> so just you know, my accountant says jim, take it as they come. last in, first out. why is that? don't ever get in trouble. there is my lesson with the irs and you. i like to say there is always a bull market somewhere. i promise to try to find it just for you right here on "mad money." i'm jim cramer. see you next time. investment will face these sharks. if they hear a great idea, they'll invest their own money or fight each other for a deal. this is "shark tank." ♪♪ with a money-saving idea to help parents entertain their kids. ♪♪♪ i'm nikki pope. i live in los angeles, california, and my company is toygaroo. (singsongy) look what i have. yay! i have 13 nieces and nephews, and they absolutely love playing with toys.