things up. that's what it is to be a yankee fan, tim clf. >> how it goes >> cleveland cliffs. >> sorry, buddy. >> thank you for watching "fast money. on this tuesday. we'll see you back here tomorrow at 5:00. "mad money" 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. hello, i am cramer, welcome to "mad money", and welcome to cramerica. my job is not just to entertain but to teach you, that is what

we are doing tonight, so call me at 1-800-743-cnbc or, tweet me @jimcramer. the method to our madness. i think everything i do is worth the time and effort, simply investing individual stocks or running your own portfolio been doubling your money into some pie and forget index fund is something i'm confident all of you can do buy yourselves . i always have to do the homework and i hope you do the homework. if you join the cnbc investing club, you need one hour per week per stock , the researchers are readily available i would think it is less than an hour, say a few hours if you own 10 stocks unless you go into the club yourself and you have a much easier time to cut that down. because we do it with you, investing is more than just 10 stocks and then i get worried because that can be difficult unless you are managing money full-time. of course if you don't have the

time nor the inclination to pick the stocks that you are better off barking your money in a low cost fund, and i like those, those are good but if you're willing to put in the work regular people can trounce the average if you are disciplined and you can follow the rules, and rules that we constantly highlight as part of the cnbc investing club, how do you start why? that is what we are talking about tonight, the show was all about the methods to break the bar to the madness. how to wipe take the stocks? what gets on the show? how i tell you what stocks are worth buying and some aren't? those of the questions people ask me and tonight you will get a piece of the answer. the truth is i have far too many methods, far too many ways of taking out great stocks. but i want to give you some tools of my trade, i know that you can start to pick stocks like ami on your own. i want you to be a manager. a great manager of your own money. because you can focus on a

small number of names while i have to follow everything. the end of the day is about educating you, giving you the insider's perspective on how the market works and how you can make money. i am not here, just to dole out stock picks like a proverbial fish and if you can keep -- um but i would really like to do, is empower you, and that starts with me teaching all of the many tricks i used to think out great stocks and invest in them like a pro, methods that have served me well for more than four decades. and a 20% annual return after fees for 14 years, at my old hedge fund, not bad. these are what refresh the show and guide me as i manage my own charitable trust now, a learning exercise you can follow buy joining the club . one of the easiest ways to identify names, the stocks that can possibly, i should possibly own, but not necessarily end up on the show, is buy watching a list that comes out every day, the new high list, stocks in

the highest of the high, obviously, something going for them, and that is especially true when the market is in bad shape. only the best of the best in hit highs when the average are falling apart. so what is it tell you when a stock is on the new high list, it is a part of a probable market or the company itself has some serious earnings or sales momentum. no matter how they get there, many stocks often keep going higher because it is a list of students that are worth betting on, they tend to keep getting straight a's, just like the real smart kids in school, and a great bull market, we can see this over and over again, the same stocks will hit high after high after high and, it is a terrific way to make money even as the bears claim endlessly, that the bull market was false and couldn't be trusted. listening to the bears is missing out on some of the greatest rallies in history, i'm not saying that you can chase any stock because they will keep going higher, that would be the ultimate foolishness. i am saying, that if you want to identify potential winners,

unless there has been a stunning change in the market caused buy interest rates and political environment, then it is a good place to start. and the new high list, emphasis of the start. and that is the thing about the market, it is not always that hard to play once you understand that there is continuity to the change, things pretty much going the way that they were going until something major shifts in the you have to lower your course, those courses they can be pretty radical though, and that is why you always have to be re- evaluating your ideas and you should never dig in your heels when the facts change, something i emphasize over and over again. now, i really recommend line stocks off the high list unless there is a special circumstances. but what i would like to do when i'm unting for stocks and what you should do, is wait for something to pull back from the new high list because that is the best place to start. when you are buying. a new high list is not a shopping list but an

inspiration list, you can keep an eye on those names and then wait for them to come down. so that you can pull the trigger. the pullback ideally 5 to 8 percent, gives you a good lawyer price entry point in a stock that likely has a lot of positives that maybe was pulled down buy an overall move in the stock market that has been the optimal level i found less than 5%, more than 8% more than likely something is going wrong, and, poring over the new list is a fabulous way to identify potential, and ice trust on potential stocks to buy you only buy stocks that have pulled back from the new high list if you are confident they will make a comeback for reasons unrelated to the broader market. unrelated to the broader market but related to your stock. you need to do all of your same homework and you must have conviction, even if it is a cynical conviction. then it deserves to go higher. and the biggest caveat as stocks have pulled back from their highs, make sure they haven't pulled back for a good reason, the selloff needs to be extraneous to the business, don't go because it interest

rates flew up, that could hurt the numbers, but a big form of stock is hurt buy high rates, it has nothing to do with earnings but maybe buying, maybe make sure you are dealing with a momentarily damaged stop in on a company that is going down, how can you tell the difference between a damaged company and stock? the fundamentals haven't changed, it is pullback for mechanical reasons, taking the panic in the market as a general. stocks are traded like commodities, like hedge funds, causing huge sellouts that make no sense whatsoever, so you will see high-quality stocks pullback off their highs for unrelated reasons to the core business but the fundamental picture changes and whatever made the stock attractive has inclined its way up to the new high list goes away than that stock is no longer a candidate for your portfolio, the story has to be entitled this method won't work, here is the bottom line, that is the first method to cramer's madness, watching the stocks that have pulled back from a preselected list,

the new high list especially because of a broad market selloff is sometimes a great opportunity. some of my best picks from the club have come out of the process and some of yours can too. let's take some calls, let's go to andrew in georgia. andrew? >> hello mr. cramer, how is your day today? >> good, how are you andrew? >> good, thank you. as an investor, i have been investor i appreciate everything you have been doing for the new guys, who don't know what they are doing. >> thank you, andrew, how can i help you? >> my question is about earnings, and i want to know, after the arning announcements, how long should we typically wait when you say the smoke clears and, with percentages, what do you look for in terms of up and down and when the price is flat why?

>> okay, you know i find that after an ipo, you have to be careful because what you have got are a lot of analysts that want to say positive things, and they tend to lose their critical faculties. my advice is very clear that when you get a stock that is down substantially from where it opened, that is how you look at it because a lot of times it is controlled buy people who are way too enthusiastic and a company with actual earnings and a good balance sheet that trades at a premium to the stock market but has a premium growth rate, that might be okay but otherwise, no thank you. and how about west virginia? >> good evening. thank you, first of all for everything you do i think you are a national treasure. i love you so much from your show. >> you are very kind, thank you. >> when you want to generate cash, how do you decide, what stocks to sell? >> we talked about this a lot in the club and i tend to write my stocks 1 to 4, following the fundamentals, always willing to

sell a four or 83 on any but i try to look at it like paintings, like a painting collection, i do want to buy a new painting without selling an old painting, and what i look for our companies that reported a bad quarter, okay that was disappointing to me, that had a little bit of lift that i can start lighting up from because i don't want to sell a company that just brought a good quarter, i'm looking for companies that disappoint that are always there, and you have to have the discipline to sell as hard as it might be. timothy in new york? >> hello, mr. cramer, thank you for taking my question. i want your opinion on -- my understanding is that they screen dozens of parameters, on dozens of stocks, and use algorithms to rank them in terms of growth and momentum and profitability and so on.

outcomes that create buy or sell recommendations. it seems to me that at the bare minimum, these are valuable tools. on the other end, why would a good investor to use them exclusively? >> that is a great question. i think that a lot of times they go up and down, they trade too much of a recommend stocks and the charter says no and the numbers and say no, i like to buy great companies with great management that have good secular tailwinds behind them and the quants do not catch those but i do think that everything whether it be quants or charts or whether it to be it is everything from research i like to include it all. and if the quants has greater records and they share the data that they are using, i am a buyer, too. okay, so now you know the first method to cramer's madness,

stocks that have pulled back from the preselected list called the new high list because of the growth markets a lot but because of something happened at the company tself. some of my best picks up come out of this process over the years, too. tonight i will give you an in- depth look at many more methods to the madness, from watching shorts to key positions, if you want well-rounded sense on how to curate your own stock portfolio, you don't want to miss the rest of your show, so stick with cramer! >> ♪ ♪ >> don't miss a second of "mad money", follow @jimcramer on "x". have a question, tweet cramer, #madmentions, send an email to madmoney@cnbc.com or give us a call at 1-800-743-cnbc . miss something, had to madmoney.cnbc.com!

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methods to madness special where i am revealing some of my best tricks for buying and selling stocks, trying to give you the real sure wants. you can call it investing wisdom for the ages but i am too humble to say. i will tell you to think of me as the penn and teller of the stock market with a physique that is a whole lot more like teller than penn. i want to pull back the curtain and show you how professional stocks know how to buy and those to sell. there's no magic or hidden talent, just a bunch of disciplines that can help you trying to make money if you master them. you don't even have to be all that smart to be completely honest, you just need to know what the heck you are doing and put in some homework that is where cramer the side and the wise comes in, maybe less of a sad clown and maybe the fool. something to think about. and of shakespeare, let's move on to more important things like how to find stocks that are great guys, the earlier i was talking about picking up stocks that have pulled back from the new high list because you can get a cheaper entry

point, something that has been a proven winner, i say you really want to buy names off the new high list because you will pay too much for them. you will have a better chance ordeal if you are patient and weak given how volatile the market can be even when things are going well, there are on very few occasions when buying stock off of the new high list can be justified have some patience but sometimes a stock is so high that you have to buy it whenever you can. as soon as you can because it is not having lower anytime soon. you will find is often but when you find them you have to remember not to buy all at once, if you want to buy 100 shares of the stock you have to think it has so much motor that it won't pull back how about buying 25 shares, the worst that happens it goes higher and you don't get to buy more so you grab a quick profit and find the next one, believe me there's always another one coming down the pipe. i have one exception, where it's okay to buy stock that is hitting a new high if you see

insiders buying the stock when it's already up a great deal, that is a total great light, don't layoff it does happen and it's rare but it does happen in my experience it is rare still, that this method of picking stocks doesn't work out i love an insider buy after a decent run , and the rally may be just beginning, or that there is a big runway i had, i think it will be long-lasting, and insiders can flip a stock that they buy immediately, they have to wait six months otherwise the government takes away the games so these people are seeing positive things, that likely aren't going to disappear in six months time, boy do i like that normally insider buying ranges from medium to small but on its own it is a sufficient reason to buy stock sometimes you will catch insiders buying the stock because they want the impression of confidence, to create an illusion of their doing better than they really are insidersstupid, they know that they are seen buying their own stock, then the market will smile upon them so occasionally, they will game the system that means we ignore most insider buying that is not substantial because it can be

pure flimflam. and that is that when you get a truly colossal insider buying, even if it is not the high, then you might want to take another look at the stock in question when these buy a whole lot of shares, what a powerful endorsement, and if the value of the insider buying that really does declare the sincerity but we are only focusing on one right now, the kind you can see in the stocks that have been running and being historically cheap or low dollar amount plays, those sometimes can be down there for a reason, you see there is nothing more arrogant and telling, and when insider backs up the truck for their own stock when it has been rolling along at a good clip, what they are saying is, we know that we rock our stock has been on fire and we are confident that it will keep going higher and we will buy shares hand over fist. and, arrogant, sure but it is rare, but it is banking on ubs, with some notable exceptions akamai plus if the stocks already on a tear, there is a good chance that the executives

know what they are doing. of course not everyone deserves the benefit of the doubt and if so many investors got burned buy the 2021 vern boom, that i knew a lot of people knew most ceos are really crooks, but look at that is the wrong lesson to draw, and healthy skepticism is one thing and a total unwillingness to believe that anything positive is something else entirely if you're going to invest in need to do more than extend some measure of trust of the people who run the companies that you own shares in otherwise why bother, just go buy the index fund, what else could be going on , even when the justice department and the trust division are hostile to mergers, you will still get some takeovers, sometimes they will buy their own stock because they will hear footsteps of a potential in choir, they have told companies there's a lot of companies interested, they have been content and return the companies down, happen all the time and if executives expect, that they may be next, it is a healthy and honest reason to

buy. or, maybe they realize that the business is worth more than they thought and they can be broken up buy bringing out all different generations of even dupont, we have seen ton of these breakups over the years and they generally because wall street likes smaller more straightforward companies, that are easier to get your head around, think about it, think about carrie or about otis or the other technologies, maybe the ability to create value them and they wanted it on themselves or maybe the stocks run just a bit but they don't think the run is over because they recognize how much better the business will be once it is broken up. for me, buying after a big rally can certainly feel a little bit reckless and even lazy most investors are smart enough to wait for a pullback before they pull the trigger. but insider buying after a decent run tells me that one of the people who knows the business best doesn't believe there will be a pullback and there is nothing more bullish than that. so you want to wait until the stock sells off after the insiders have bought but that

is the best of both worlds it doesn't happen all that often i have seen it happen to some red- hot stocks that cool off momentarily and that is a terrific eye, the bottom line, one more method of cramer's madness, you can see insider buying that has already had a solid run admittedly a rarity, you might want to do some buying, too. "mad money" is back after the break. >> coming up, need another tool in your belt to help identify the right time to buy a stock? cramer is revealing how interest in a name can be your telltale sign, to buy it. up next. when it comes to amgen's life-changing medical breakthroughs, every second counts.

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you are in luck because you can't cramer on a good night. i'm not going home to sip the cheap scotch . and buy the way i apologize to the doers which i once suggested was linoleum score it is actually pretty good stuff, have you guys ever try to the 18-year-old jamison? it is sweet. don't waste that long on the floor either. i'm in a great mood, a manic mood even which is me at my best, which is to say that i'm pretty darn productive in high gear, i'm so revved p that i'm revealing many secrets and the methods to my madness, i am giving you some of the best ways that i know to pick the stocks. and trained like cramer, if not to be like me because i have some emotional issues that

frankly, you would prefer not to emulate . someone off-track, so far, i have given away two of my precious secrets, two of the tools that i use at my hedge fund and my travel trust, which you can follow buy joining the cnbc investing club, where unlike lady gaga i play with an open hand, not a poker face, to see all of my traits, before they happen. and what i'm teaching you tonight or really what i call tells, singles and a stock that might be worth owning that it is worth your time and effort to go through the boring process of reading through the conference transcripts and quarterly filings to do the necessary homework and are thousands of stocks out there any method we can use to narrow down the ones that have been attracted to us as a method worth having. i have talked about insider buying and why i don't use insider buying is the only way to determine whether or not a stock has got it going there is one other scenario where insider buying makes for an

incredible bullish tell, that is when the stock has a heavy short position. meeting a lot of people out there have borrowed shares and sold shares and are now waiting for shares to go lower before they buy back the stock return them to the bank they borrowed them from and collect the difference between the price of a sold, first and the price that they bought the stock at later, and you can think of sorting as regular investing but only in reverse, we try to bellow buy low and sell high but you can turn it around, they try to sell high and and buy low. when a stock has the position, they have a lot of serious conviction that the stock is heading lower, in fact it takes more conviction to short a stock and it doesn't go long because when you short the potential downside it is infinite, when you are long, the stock will stop losing money when it hits zero. shorts will lose money when the stocks go higher, and there is no limit on that, the only thing about shorts it is there a lot of them, then a stock will get some great news, we

get what is called a short squeeze, and it sounds exactly what it is, in order to close out the positions, the shortstop to buy, this is called coverage, short coverage when a lot of shorts cover the same time in a panic the stock will search because what you really have is a lot of people desperate to buy the stock to cut down their losses a lot of demand, they have to buy unless they want to perform to be wiped out. the process is so predictable that sometimes concerted buyers will foment a short squeeze, and hey listen, that is what came stop was all about, that is what amc was all about, that is what that was all about. so where does insider buying fit? let's say that you have a stock with a high shortage and some of the people that run the company start to buy shares for themselves or maybe an outsider takes more than a 10% stake in the business and indicates they want more, it is almost like drawing a line and saying that our stock goes a bit slow, and no lower, this is an explosive domination of people and one that often leads to a short squeeze that since stocks much higher, the shorts are smart and they often are but they

usually don't know more about the business than the insiders who will run it. if a lot of people are shorting a stock and management starts to bite it in sizable amounts, you can start to do your homework right then. so it makes to decide with management, then you can write it higher andrew, jackie wilson style, higher and higher, lifting me up, as the shorts panic and push shares higher, and in their desperation to cover the positions and cut their losses and move on, similar to a company with a heavily shorted stock and announcing that you have the buyback but bigger than any previous one, that is another line in the situation where managements contradict the shorts, they often repurchase shares and a lot of buybacks are bowls but some ways of money. but in the face of the shorts, it is often a good reason to take a closer look, now a note of caution, you need to be very careful when dealing with a

company in the crosshairs of the short-sellers especially when people are nervous in the markets in bad shape know the landscape. the shorts have the ability to wreck a stock even the fundamentals could be fantastic these days, stock owners no longer have the benefit of the rules that used to slow down shortselling, and make it harder to create that, i got started in this business, it was much harder but the s.e.c. gutted those rules, under both democratic and republican administrations, all in the name of creating more efficient markets, without these protections where you can't smash the stock down and the shorts could easily assassinate stocks and smash them down anytime something goes wrong, we have seen it back in 2008, that was such a horrible period and we saw a smaller version of that in the crisis of 2023. for the shorts it was like shooting fish in a barrel, so many banks treated like they're going bankrupt, but other than a few than first republic, they were fine, and recent years, they found themselves targeted buy social media platforms, so they have to be careful, but only when the main stock crowd goes up after them, and you never know when that will

surface, these are highly unusual situations, and you can still find great opportunities when the shorts have overreached and before going into one of the situations, i have to warn you that the balance of power still favors the short-sellers, that means even if the short-sellers are wrong about the prospects, they can still demolish this especially if they have highly visible campaigns in the stock many times the shorts are right, the stock deserved to be slaughtered, just don't underestimate the amount of damage shot shorts due to the stock in the end, the bear rates are stocks that pay good solid dividends. when you short a stock, you have to pay the dividends to whoever you borrowed the stock from. when we see a stock with a big dividend being attacked buy shorts, that is often a terrific place to be, especially when the insiders are snapping up stock, too so let me get to the bottom line insider buying, plus heavy short interest, can equal raging bull buys as long as you avoid situations where the shorts are determined to crush the stock at any cost, let's go

to debbie in colorado. debbie? >> hello, my husband and i are proud members of the club and we absolutely love it, it is so much fun. >> thank you, a shout out to my colleague, that is fantastic. >> my question today is, i have a 31-year-old son and he is finally starting to listen to me so i was wondering if you had some tips and tricks for us to get him involved in the market he has got a good sum of money to spend and he's really excited about getting involved. >> that is fantastic, there is so much he can do, i would first look at biotech which has got some amazing situations, because, that serves the biotech companies, i like bird tax, he should look at for tax, that is a terrific company, and you know let's not forget, we do want to have a diversified portfolio, it is okay to take a

look at some of the stocks that you and i both know, like a honeywell is incredibly cheap that we have. and maybe you have a stock that is a bit of a flyer, like a footlocker, so emphasize the science that i think you will be in good shape, now we will go to vincent in new york, vincent? >> hello, cramer how are you? >> good, how are you? >> what advice would you give a 26 that has been daytrading for two years and is looking to do better and go as far with us as he can? >> if you are daytrading it is a full-time occupation so what you want to do is put some money into the vanguard return fun and put some in the s&p 500 fund and of putting money away every single month, and if you have some good daytrading you made a lot of money, take off some of that capital and put it into those vanguard accounts, that is the way that i would suggest to do it because i want you to have exposure to the

broader market, not just the stocks you have traded. in most cases, the stock with insider buying and heavy short interest equals buy as long as you can avoid situations where the shorts are determined to crush the stock that you owe, much more on "mad money", i still have some tools in my belt that i want to share with you, including my method of trading around a poor position, so stick around. they need a retirement plan. work with principal so we can help you with a plan that's right for your team. let our expertise round out yours. at aes, our energy solutions have powered the world forward for more than 40 years. and as demand continues to scale, so do our solutions. introducing maximo - our new ai-enabled solar robot. max makes construction faster, safer and more cost effective than ever before. and with max doing the heavy lifting, even more people can join the team. solar energy is changing the world, aes is changing

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nothing numbs pain more. regular viewers know that the show was all about investing. owning stocks for the long haul, not really short-term trading because it's much easier to be a good investor than a trader, especially when you do it part-time. however, knowing how to trade makes you better and investing, and trading around the poor position is one of the most basic and useful disciplines especially in markets that get hit buy wild swings.

that is most markets in recent years. so what does it mean to trade around a core position why? what's go through it step-by step, pick one that you like, one that you have an opinion one where you have a stock that you believe is heading higher over the long term. when you are searching for is a great company with shares that might get tossed around even as you believe it all may go higher if you are patient, now if you are just investing and you have a position in the stock, because we all know that buying it all at once is peer arrogance, and that would be it, buy the way, this whole process of buying in increments is something that we have constantly shown you how to do, if you belong to the cnbc investing club, but let's talk about trading around positions, nvidia, a great story that doesn't make the most powerful semiconductors on earth that we need for cutting edge applications like artificial intelligence, i love nvidia for the long haul but it has a volatile stock, let's you want to own 100 shares of nvidia and the latest position what you

buy 25 shares, four times over a period of weeks or months. that is your core position as an investor. let's say that you want to trade, something that is hard to do but cheaper than a separate bid because they can now fit in, and fill out, with those and i would recommend your trading something like nvidia, my stance is don't trade it, but trading around a core position is a different story. let's assume that nvidia is sitting at $500 for the purpose of it, every time the stock jumped another 5%, you could sell 25 shares. a core of your position, you shave a little off to bring in profits, so once nvidia is at $525, you can sell 75 shares, but don't ever sell the final 25 because that is your core position, then you wait until something happens to knock the stock back down and as long as nothing has changed, you can use that witness to stock up on more nvidia, we have done this

it is going to happen pretty often because since we are in a world where stocks can get crushed buy all kinds of factors, that is what happens. now as the stock comes down to the original cost basis, you buy it back in increments, since we started with 100 shares, let's keep using increments as 25, as it declines you can go beyond 100 shares, if it comes down low enough, too, now this might be small potatoes, up to 5%, down where you started and repeat the process all the way back up but over time your profits will add up and that is what trading around a core position is all about. now a lot of people think trading is incredibly exciting and it can be but if you are good at trading around a core position you should be pretty bored all you're really doing is watching a stock to move and trimming or adding your position to it, contrary to the image of trading it is something that is reckless and irresponsible, really the height of prudent adjustment.

who is buy the way good in this business, exciting, save it for the stadium, obviously you can scale the numbers depending on how big your position is but the basic idea is a putting yourself in a spot where you have too much on the table in case the stock gets down, and you can take advantage of any that comes your way, trading around a core position is an important basic strategy, that everyone can use, even those of you who found most trading, because less trading and more of just a supplement to investing, so here is the bottom line, now you know the basics of how to trade around a core position, and another method to my madness, one that allows you to generate lots of small games, that i am telling you will add up over time, and, "mad money" is back after the break. coming up, cramer is revealing his tools to the trade of buying a stock, but what about selling them, cramer is breaking down how to get out of the stock at the right time,

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i have got one more trick to teach you tonight, one more method to my madness. i want to talk about selling. how do you know when to sell a stock, i talk about that all the time. how you get up before the party ends so that you are not the only cleaning up the mess. here's a question that needs to be answered because there's a lot of money to be made buy owning hot stocks with lots of momentum but when you play the momentum game, you need to know when it's time to leave the table. there are always naysayers and eventually they always are proven right because sooner or later, all hot stocks, remember it being lowered in 2021 or the

collapse of 2022 but the collapse occurs later rather than sooner, and all of the negative talking cats that have kept you out of the momentum stocks with the recklessness they actually cost you a great opportunity to make money and people shy away from the stocks because they don't know where they will stop they don't know when they will top out, so it is understandable, and i would be afraid to buy them too, if i didn't have the discipline that would let me know when to get out but, i do have one and you are about to learn it, the first one i'm talking about our hot stocks, hot speculative stocks of companies, with fairly low market capitalizations, these stocks with very little research coverage brokerage houses, they often don't even have earnings or sales, i would never buy these but we are not talking about that, these names can go up for a long time and i can catch fire for years, when they have the wind at their back the key to figuring out when interest is peaked and it is time to sell, it is not from

the stock but it is buy watching the analyst coverage, you have to use your own judgment here but a good rule of thumb is once one of these hot stocks has at least a half dozen analyst covering it, the run is going to peter out, the stock in question is becoming too well known, it is the rest speculative winner that can keep winning after it gets big, you can find out how many guys are on a stock buy looking it up online, this isn't hard to find information, this formula has worked for me for as long as i can remember as far as i can do it worse because the number of the stocks is a good gauge of how much awareness and interest there is in the name hot stocks get tapped out when there is nobody left to be attracted to them to go buy more. when all of the people will be interested in buying that have already bought, they come out of nowhere attracting more attention and more backers and eventually everyone who wants a piece of the stock has a piece

of it already, and when that happens, the run is over and it is time to go home. and if they get their hands on it, take advantage of their enthusiasm, to ring the register. that is a great sign that you want out because they can only push a stock up so much, before they run out of firepower. of course, there are other situations where speculative stocks go out of favor all at once, regardless of the attention, in 2020 when we had a huge run in anything related to electrical fields and carmakers and battery plates and charging stations, the same goes for enterprising software stocks, a lot of this was fueled buy an easy money environment and there was a lot of digging around back then and it had to go somewhere, which is why so many money losing companies had red hot stocks, but then, the federal reserve declared war on inflation. and in november of 2021 but you know the near zero interest rates have come to an end, at that point we knew that the speculative was about to be drained out of the entire market because that is what always occurred when they tighten now if i told you that

we are in a new environment where everything speculative was toast and you would own real companies that make things or do stuff out of profit, now i know it wasn't the most elegant way to phrase it but these names held up much better and i got obliterated in 2022, but putting aside the interest rates issue, when the fed is not tightening and it is safe to speculate, you need to watch how many analysts are following these little speculative stocks to know when it will end. the bottom line, once the speculative stock gets too much attention it needs the rally on its last legs because there are only so many people who are willing to buy these things, and eventually, the bulls will run out of firepstick with cram

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i always say that we have the smartest viewers in television and i always listening to your questions and listening to what you want to know about. so joining me today, is jeff martz, we are answering some of your burning questions and some of your mad dimensions, and he does a great job with some doing some great announcements for "mad money" viewers, if you aren't a member already, what are you waiting for? , so let's start with tim in alabama. and, how do you decide, whether to take profit rather than keep a stock longer to receive capital gains tax treatment, these are always hard issues because i think you have to worry about that kind of thing with your accounting professional because what i

care about is where the stocks are going to go up and down and i believe that if the stock is going to go down, you should take it off the table, even if you have a big game, that is what matters to me. >> you want to see qualified advice for something like that but for the trust that you could follow along with at home, we will really play the tax game too much because everything gets donated to the games, what is donated to charity at the end of the year. >> look, i think i have always felt, from real money my first book about investing, that never fear the tax man. fear the losses. next up we are taking a question from russell who asked, i always try to follow your advice to buy stocks and portions rather than all at once often the stocks never pull back enough to buy more, i end up with small positions unlocks a different stocks what would you recommend? >> this is another one, where, this is a discipline, that i came up with, which says, that

it is a way to figure out whether you missed the move or not, and if you come in and the stocks keeps going up there is no doubt about it that you are late and there is nothing you can do. and i have accepted that consequence, if i am late, that all i do is have a small game, that is the way i look at it. >> it is a high quality problem you have and if you are able to continue to do the homework that you can still hold them as the prospects are quite good, it is a challenge because you don't want to spread yourself too thin, with a whole different number of stocks, but like if they are going higher, you know, it is a quality issue that we deal with sometimes. >> it is a discipline what happens if you buy all at once and it goes down? there is a good chance that could happen and we are trying to avoid that that is the real worry, let's take a question from randy in ohio, who asked i know when the right goes up, if the bonds do sell off, why would it impact stocks? there are many different ways you can answer this, one is that if it goes up for something that is risk-free,

then, that has greater appeal, then a dividend, which may be equal because of the dividend, you know what that is only a part of the equation and if the stock goes down bigger, then you can wipe out whatever gain you get. and then of course, long-term considerations as you know about the value of a bond, versus stock further out. >> it is competition for dollars, like you mentioned, but interest rates are still used, in a discounted cash flow model, which investors they will look at the cash flowing out and they estimate them and they discount them back when the interest rate is higher, they can get discounted at a higher rate that lowers the value and that lowers the value of the stocks but there is also things like financing cost and if it is used if the company relies on financing, to sell their products, higher rates might hurt their business as well. >> you just have to think that stocks aren't as competitive in many different ways than bonds,

if rates go up, really that is the way you have to look at it even if you don't finally actually understand the cash flows, you kind of have to take it for granted, that that is what occurs. lynn in virginia wants to know, if i only have five shares and you recommend taking some profits, should i close out the position or let it ride? these are just questions that are so hard because, five shares reminds me of the tail end of having some wind, it is a tail end and what do you do? and in the five shares, so that if the stock goes down you can buy more, so if the stock goes up and we recommended to sell, i would just get rid of it i really would. i would say, let's find something better. because there is always something better. >> it is absolutely unfair debate, and they are growing the dividend profits and the outlooks are bright, maybe you can sell one or two but maybe you don't want to fall into the trap from the earlier question, that we just had about managing too many positions, so there is always cross disciplines. >> that is one of the things that people don't understand

about investing is that there is no right or wrong, there is often two rights that compete against each other. now i have a question from kyle, who asked, do you have a similar approach to investing index funds, where you will wait until the oscillators are oversold or would you just dollar cost average this is very funny because this is where i have gotten to disciplines, but what i like to do if i'm utting money in, every month, and if there is a month where it is down more than 10%, i double and, it is like let's say august is down buy 10%, i take july's contribution and, keep that, august contribution and a september's contribution and i take september and august together. and i just feel like that is good luck, so you might have 112, 112 or 2/12. >> i mean, look, stocks should be more attractive as prices come in. you want to run from a sale at a department store, but on the

other hand what i would say if it is index funds, it is more about time in the market, then necessarily trying to time it oversold or overbought, you just want to be investing in it. >> absolutely. i think that is an important issue, we do not buy my method, try to imply that we are necessarily timing the market but trying to put a little bit more money in it , but certainly do the rest. that is the way that you should do it. well, what can i say. there is always a bull market somewhere. i promised i would find it for you right here on "mad money", i am jim cramer and we will see you next time! oh, my goodness. are you kidding? you think this is worth $10 million? guys, i've doubled the amount of cash you're getting. lori, are you in on this deal with me?ack this. i'm offended. it's stupid. -- captions by vitac -- ♪♪