tomorrow the macy's day thanksgiving parade at 9:00 a.m. eastern on nbc. my mission is simple, to make you money. i'm here to level the playing field for all investors. there's always a bull market somewhere, and i promise to help you find it. "mad money" starts now. hey, i'm cramer. welcome to "mad money." we other people want to make friends. i'm just trying to make you some money. my job is not just to entertain you but to educate and teach you. so call me at 1-800-743-cnbc or tweet me @jimcramer. when is a loss a good loss? when is it a bad loss? what makes for a strong investment versus a weak one? and what happens when the facts change? tonight i'm going to show you in real terms what can go right and

to teach you how to learn from both my wins and my mistakes so you can replicate the wins at home but avoid the losses. these are all taken from real life investments made with my charitable trust, where we document every trade in realtime so we know what went through the minds of both jack moore, our research director, and myself contemporaneously as we tell you what we would do before we pull any trigger. so often we're restricted because if i mention one of the portfolio stocks on air on season, the trust is frozen, and the trust can't take action. but we can tell you what the trust would have done. sadly, because of the restrictions the trust really can't do as well as you might be able to do the bulletins from actionalertsplus.com. but these lessons we'll learn tonight, they encompass all the moves we could have made and did make. i'll spare you the gritty details of the actual bulletins

but i wanted to fill you in on the misjudgments that lead to losses and the correct thinking that leads to gains. first let me describe the process by which my charitable trust works. i set it up a decade and a half ago as a way to be able to keep my hand in the stock market even as my contract wouldn't let me own or trade stocks, so i can do the show free of any conflicts. it's designed that so that any profits whether from capital gapes or dividends, go to charity, enabling me to give away over $2.5 million since we started. it had many co-portfolio managers and research directors during this time and we've always worked hard together. it's a true collaboration, where decisions are made when both the research director, in this case, jack moore, and previously co-portfolio manager stephanie link, now a portfolio manager at tia craft and still a regular on both halftime report with scott wapner and closing bell. at all times we try to run a diversified portfolio, seeking out the best ideas for value,

we divide the portfolio into these segments and rank the stocks within them. so members who subscribe to the newsletter can pick among the stocks that suit their needs. i always liked the idea even as it often exposed me to an intense level of public scrutiny. i didn't give up the lucrative world of hedge funds, where i had been for 14 years before that, where i managed to gain 24% per year versus 8% for the s&p for a less remunerative world for the sake of pain and i wanted to show you how real portfolio managers think with an open hand when they make decisions. unlike the way these money managers present themselves on television. i put it like that because when i see portfolio managers on tv, they never seem to make any mistake. they never seem to do anything wrong, and i've seen thousands and thousands of interviews. that's just plain unrealistic, people. in fact, to go a step further, i their mock perfection is very

at home could ever do things right. so you might as well give your money to a robo adviser or an index fund. of the many misconceptions about me, the most wrongheaded is that i don't favor index funds. for most of the time i've been doing this show, i've said that all of your investing should begin with index funds because i'm so in favor of diversification as a way of playing defense, and that's what an index fund gives you. but i am also a firm believer and always will be that if people want to own individual stocks -- and they still do, decreasing numbers each year -- they should have the tools they need to help them. and they need to understand what makes for a good stock pick versus a bad one. why would you ever want to own an individual stock? because if you use a fund that mirrors an index, you're accepting the mediocre portion of the index along with the good portion. plus you know you often have insights that are useful in investing, and they can be

this didn't used to be such a radical idea. the notion that individuals shouldn't own individual stocks has really only come into prominence in the last decade and a half as the index proponents have become more ascendent. they come armed with all sorts of statistics about how few portfolio managers ever beat the benchmarks. but they never seem to be able to put a nail in the coffin the individual investor's right to research and pick stocks of their own liking. they can't refute that it's a terrific thing to do and think they'd be able to choose when you want to pay your taxes by selling or not. they don't extol the virtues of not having to report to other investors, something that hurts longer term decision making in virtually every hedge fund and mutual fund out there. that's why i said that the industry of money management does you such a disservice on television because the combination of their seeming perfection coupled with the debasing of your own abilities is a toxic brew for do-it-yourselfers, even as so many brokerage houses correctly

leads to positive conclusions. recently we've taken a much more of a club approach to action alerts plus, a kind of membership where we conduct forums to help each other with ideas. do we have any empirical evidence that individual investing works beyond my own record as a professional? is it all arrogance to think that you can do it yourself and you shouldn't check some boxes and send your money into someone who is either knowledgeable but in knowledge but has a handbook of answers or for that matter is just a machine? all i know is that when i worked at goldman sachs advising wealthy people with their stock portfolios, i was astonished at how often they crushed the market simply by looking at companies and making decisions based on how those companies and their managements might do. these were my clients. and that was at a time when there was far, far less information than we have now about companies, especially now the web allows us to find out

these days. everyone seems to have equal access. but the simple fact is i watched people clobber the market regularly, and i've always therefore resented those who tell you you can't do it yourself. i saw it with my own eyes. doesn't it bother you to be told that you're basically a fool and an idiot if you try to manage your own money? it bothers me. it's kind of like going to home depot, aska the orange-aproned salespeople, and being told, that's only for the pros, not for the do it yourselves. i would find that to be astoundingly stupid and an arrogant judgment. you should feel the same way about those who tell you that you can't do it yourself. the only real difference is the home depot people aren't trying to get your money from you whereas all the people who constantly hype their own prowess or denigrate those who would love to try to do it themselves are driven by the desire to get you to surrender your assets to them. it's kind of their business model.

which to be fair would be quite rude. so they look like they're always acting in your best interests, and they very well might be most of the time, particularly if you don't have the time, the inclination, the temperament or the ability to make sound judgment about stocks and bonds. but here's the bottom line. let's say you actually do. let's say you have the time. let's say you have the inclination. let's say you have the desire to do it yourself. let's say you want to save money, not pay a percentage of your assets to someone who may not be better than you are when at big numbers over time. then you know what? this show, tonight's show, it's for you. beth in connecticut, beth. >> caller: jim, for my i.r.a., i have a 15-year time horizon. it is okay to be all in a diversified stock portfolio like the s&p 500 index? >> yes, absolutely. that's exactly, beth, what i would recommend. i think that's a great way to

exactly what you should do. nick in arizona, nick. >> caller: jim, booyah. >> booyah. >> caller: i had a question about with all the recent mergers and acquisitions that have been going on, how does one maybe try to look for the next possible acquisition, or how do you position yourself to maybe make money on that? >> you tend to look at the sector and see when there's sector activity like in the food ps you look at the ones that don't have enough bandwidth to be bigger and someone else could gobble them up and therefore raise their numbers. that's really the pattern that i've used over multiple years. ben in florida, ben. >> caller: hey, jim. thank you very much for everything you do. i listen to your podcast every morning on my way to work. >> thank you. >> caller: i just have a quick question. i've called before, and you've blessed my diversified portfolio, and now i need a little help on how to adjust my

>> sure. well, i mean, look, i usually don't like it. unless a stock has gone up 25%, i don't want to take any off. stock goes down say 20%, i buy back the stock that i took off. it's in a bunch of my books. you know what, these days for action alerts, i'm actually discouraging a lot of trading. i don't want to have too much trading because the trust doesn't want to incur the fees. but it certainly makes sense if the market has a big spurt up and your stock went up with it to take a little bit off the table. all right. re future into your own hands? then tonight's show is for you. i've got the lessons you need to know to get ready to do it. plenty more "mad money" ahead. you've often heard me say the biotechs can be a great place for speculation, but there's four rules you need to know before you ever buy one. make sure you've got them. then it's one of the worst possible actions you can take when it comes to your money. i've made it myself, and now i want to help you avoid it. find out if you're at risk. and my cautionary comments when it comes to investing in

so stay with cramer. >> announcer: don't miss a second of "mad money." follow @jimcramer on twitter. have a question? tweet cramer, #madtweets. send jim an e-mail to madmoney@cnbc.com or give us a call at 1-800-743-cnbc. miss something?

this show tonight is all about learning from my mistakes and from what i got right from my charitable trust. we're starting from the proposition that you do want to do it yourself, meaning manage your own money. with this show is help yourself to try to figure out if you could actually do it on your own, or maybe it's just too difficult and you got to send it to someone else. that's okay. no sin. i want to start with the classic mistake, the choice of stock in the company itself. lesson one has to do with investing in drug stocks, and it's a sobering one for anyone trying to profit from pharmaceutical innovation. we started from a simple proposition. find companies that are doing breakthrough medicine that have

that's really what drug stock investing is about. the idea behind this kind of investing came about from something that happened to me in the late 1980s, before i started my old hedge fund. merck, at the time the greatest pharmaceutical company in the world because of its magnificent reputation for new drugs while constantly improving on old ones, had pioneered work with the harvard medical school that showed a link between heart attacks and cholesterol. the company discovered a cholesterol-lowering agent called mevacor that it thought could save many lives. but wall street was skeptical of both the linkage and the category. therefore, it was considered to be an unimportant new drug. little did they know that statins would become the greatest-selling class of drugs in history, led by pfizer's lipitor through its acquisition of warner lambert. i can recall merck doubling, the stock just doubling when the sales came through. ever since, i've been looking for the next mevacor from a pharmaceutical company that has an established stable of drugs. that's very important because

maybe two drugs in the pipeline that one day might or might not be approved for use by the fda. anything like that could be too risky for you. from the detritus of the biotechs, we know this. the ones that never got approval and ended up just limping along forever until they were put out of their mystery. i've had tremendous success isolating these kinds of companies, the good ones, whether it be bristol-myers from its breakthrough cancer therapy or celgene with its exploitation of the blood cancer drug revlimid or regeneron with its terrific eylea franchise to help keep macular degeneration at bay. it's one of the most important kinds of stories you could own, and you should always be on the lookout for the breakout. in the last few years, my research director, jack moore, and i have found two situations that fit the rubric. both companies trying to solve the biggest crisis of the baby boomer generation, alzheimer's. now, there are a couple things you need to know about alzheimer's. first is millions upon millions of people suffer and will suffer

treatment that can hold the disease off or maintain it at an acceptable level. third is that many have tried and failed to find a cure. but fourth and most important, if you have a medicine that can reverse brain plaque, which is thought to be the cause of the illness, it would be the biggest drug in the history of all time. billions of dollars at stake. the company that's had the best success so far at early trials is eli lilly, the indianapolis giant. we've gone to hear them several times over the years as they've drug. we selected it for the charitable trust knowing that lilly has many other irons in the fire, a good balance sheet, and nice-sized dividend. in other words, when we purchased the stock in the high 70s, we had excellent hopes that it would reveal data points that showed some definitive success in its battle against alzheimer's. but in the past few times the firm has spoken about the drug, we detected a more prolonged set of obstacles to a potentially positive outcome. finally, when lilly spoke not that long ago, we sensed less optimism on the drug's

we weren't alone. the stock dropped to the low 70s after its presentation of some of the findings of the drug. out of frustration, the trust sold eli lilly, not happy with how long it would take for this alzheimer's story to play out. we ended up taking a small loss on the stock. now, there are four lessons here. first we were dead right to be sure that we had the upside of the other drugs, the reputation of the firm, and the good dividend. it allowed lilly's stock to bottom, that dividend in particular, and contained our loss. so lesson one, if you're going to speculate, make sure there's something to fall back on. lesson two is trickier. the stock ultimately bounced back as others decided that lilly's prospects were better than we thought and they didn't discontinue their work on the alzheimer's drug. that meant the stock bounced and bounced hard after we sold it. so your takeaway, if you did enough homework to know eli lilly has enough in the pipe away from the drug to keep the earnings up basically, you

when this one drug didn't pan out. at the very least, you could have waited for more of a bounce and sold it at a higher level. really surprised that we did this. big mistake by me. third lesson, the time to buy a stock with a potentially amazing drug is after people have given up on it but before the trials are discontinued, which often happens. that's when expectations are at the lowest. we took a swing at lilly when many people were already excited about the prospects for the anti-alzheimer's therapy rather than waiting for a down series of days that rained havoc on the of any talk about the medicine, which is kind of like maybe it works, maybe it doesn't. the investor event where it was talked about first, the one that really intrigued us, was very well attended. we were far from alone when we bought the stock. so, therefore, we paid too much for it. the trust overpaid. it was far better to wait until it wasn't top of mind for any investors. that would have been just a few weeks after the meeting. the fourth and final lesson, when you're investing in a drug

like alzheimer's, be more skeptical than you'd be with a disease that's easier to treat. this happened with biogen too. so many drug companies have failed trying to fight alzheimer's that it's way too arrogant to bet that you're on the right path with any one company's research department. so here's the bottom line. when you're going to invest in a company with a potential cure for an intractable illness, make sure the drug company you're away from it in the pipeline and a good balance sheet as well as a dividend to protect the down side. second, if the drug doesn't initially work but it hasn't been written off, expect a bounce. a better time to sell. third, don't buy the stock when there's still a ton of hoopla out there about its new drug. wait until the fuss dies down and get a better price for the stock. finally, when you have a drug company against a difficult disease that many others have failed to cure, please be more skeptical.

it's an incredibly difficult problem to solve. the company you like might fail too. investing in biotech can be a challenge, but now you've got the rules to help you invest. still more "mad money" ahead. i'll help you avoid a rookie mistake that plagues many investors, even me. then the truth about investing in commodities that if you're not careful, could cost you dearly in your portfolio. and it's time for me to take on my biggest challenge of all. your tweets. i'm answering the questions you've been sending

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tonight i'm teaching you the difference between right and wrong. sounds like a tall order, but leader, when i say right versus wrong, i mean what's smart versus what's dumb in the context of investing. and in the admittedly limited world of the stock market, right is whatever makes you money without breaking the law while wrong is whatever loses you money. as an investor, it's the easiest thing in the world to tell the difference after the fact. hindsight is 20/20. but it's much harder to get things right in the moment when you're emotional and you're

in the future. that's why i want to educate you by looking at some of the moves made by my charitable trust, which you can follow along by subscribing to actionalertsplus.com. the idea behind the newsletter is that we can help you become a better investor by playing with an open hand, issuing bulletins before we make our own moves, not to mention telling you what we'd like to do in an ideal world if the trust's trades weren't subject to all kinds of restrictions because of the show, restrictions you don't have as a regular investor. fortunately these bulletins give us aer contemporaneously. we, meaning my research director, jack moore, and i, which allows us to learn from our moves and make judgments about what we were doing at that moment that was so darn wrong. one of the great virtues of do-it-yourself investing is you can be patient with a well researched idea that you personally like. you don't have to punt or dump the stock if it doesn't work out immediately. you don't have clients breathing down your neck who get angry if you're not making the money

cases, even day after day. unlike a hedge fund manager, you can take your time waiting for a terrific story to play out itself. you don't have to be so hard on yourself. but it's a big mistake to forget that fact, something we did when the charitable trust bought tyson foods back in the $40 range in 2015. jack had come from the research department of barclays. he had done a considerable amount of homework on tyson, which was in the process of transforming itself, become loss of a commodity purveyor of chicken and more of a proprietary food company after brands back in 2014, which you might recognize as the maker of ballpark franks, jimmy dean sausage. that deal allowed tyson to branch out from just the commodity chicken aisle. we wanted to be early, to get in before everyone else realized the transformation that would cause a re-rating, meaning shareholders would pay more for the stock simply because it would have a stronger, less erratic earning stream. tyson had been trading as a function of the price of chickens. now it traded as a full-line food company with lots of product line extensions and proprietary branding that would

price of the raw foodstuff. that's what happens when commodity becomes proprietary. plus we believed the synergies between the two companies would become more evident as they often do early on in the merger, and numbers would most likely go higher than the street's consensus, meaning that what the analysts who follow the company were expecting the company would earn when it reported. there was just one problem. the hillshire merger came together more slowly than we had anticipated. the result, when tyson reported, the street was disappointed. you know what happened? instead of raising the numbers as we're so used to after these deals, the numbers were cut. i didn't see us as being early. i saw us as being wrong, and we told subscribers that we had screwed up. so we had the charitable trust cut its losses in tyson. they were small because we bought the stock right. however, we did give up too soon. sure enough, literally the next quarter, we saw the very gains and synergies we predicted, and tyson never looked back on the

sold it. >> the house of pain. >> our mistake, we had done all the homework. we had faith that the situation would totally work out in the end, but we didn't have faith in ourselves and our own homework. we didn't have patience. we were too skeptical, and the charitable trust missed out on a huge win. in reality, the right move was to buy more, not cut and run because the situation was beckoning. and if we didn't already have a position in tyson, we probably would have taken one. there was no reason to take the action other than our own disgust that we did. that's never enough to justify terrific homework-derived payoff. yeah, we were just angry and bummed and took action, and it was wrong. how about this one? this was a doozy, starwood hotels, symbol hot. we had come to love the work of the former ceo fritz van paasschen and thought he had tremendous operating skills that allowed him to turn this domestic chain into a worldwide powerhouse. what we didn't know is fritz had a restive shareholder base that was unhappy with his progress even if we thought the world of him.

the stock fell, and we were totally mystified why anyone would find fault with his long-term track record. not long after, starwood stock took off on a takeover rumor involving a chinese hotel chain. it vaulted from the 60s to the 80s where we managed to sell some, which is always a smart move given how often we get phony takeover bids, particularly out of china. but then starwood dropped back to the mid-60s where we got a very hard-to-value takeover bid from marriott that failed to generate much support, and the stock actually fell on the news and stayed low. in fact, it kept going lower as it reacted to the faltering the decline in the acquirer's stock. starwood was one of the most painful positions the trust had in a very long time, and we weren't sure what the heck to do. so we decided to hold on to it, hold on to it until the pain got to be too great and then fell to the 50s, well below what it was worth when we got the takeover bid. we were of two minds. first, whenever we get a bid, i like to be able to ring the register. i tell you that all the time. but this combination seemed so great, i thought the stock had to go higher, not lower. that in itself was a bad judgment. second, we totally ruled out the possibility that another buyer

70s would still like it now that it had fallen to the 50s. so when the stock had a little bit of move back up to the 60s, wow, boom, we booted it. big loss. mistake number two, not long after, a chinese hotelier came in and offered a premium bid for starwood. we watched helplessly as marriott and the chinese firm got into a bidding war, sending the stock soaring. we left 15 bucks on the table after that loss. should we have seen the bidding war coming? that's a hard one. but we certainly should have been patient enough to wait for something good to happen. we simply had to stop caring that we had missed out on higher prices and were now stuck with what seemed like a failed combination where marriott had stolen starwood from the shareholders. we had several options. first, we could have bought more as starwood fell, which if we truly believed in it as we said we did at the time, would have been a terrific idea. we failed to do so. or we could have bailed when we first got the takeover news, after the three-day holding period that we have to endure because of our restrictions had passed. that would have made sense, but we didn't do it.

starwood and stayed patient. we would have been rewarded. we didn't do any of those things. we got disgusted. we took our bat and our ball, and we went home. worst possible choice. so here's the bottom line. don't act on emotion. don't go against your homework. if you think that a stock deserves to go higher whether because of a re-rating or a takeover or anything else that would produce a great gain, then why don't you wait? no one's looking. you can afford to be patient. don't give up on your best ideas before they have time to pan out. and don't give up on yourself. eric in texas, eric. >> caller: hey, mr. cramer, a big san antonio booyah to you, sir. >> nice. what's happening? >> caller: i have 50 stocks in my portfolio, and they're all dividend payers. they yield about less than 2.25%. other than the payout ratio and retained earnings on the balance sheet, can you tell me what other metric i could use to ensure my dividends are safe? >> we have a cash flow analysis in "stay mad for life" that is the one i've always referred people to. the book is a very in-depth analysis of how to calculate the

important than the earnings per share in terms of trying to figure out whether the company's dividend is safe. tom in new jersey, tom. >> caller: hey, jim. thanks for taking my call. >> sure. >> caller: a week or so ago, you had mentioned that if you got a portfolio of about $10,000, you have a basket of stocks, about five stocks. >> right. >> caller: if that portfolio grows with the help of "mad money" to like $100,000 or even $1 million, what woue number of stocks that you would suggest to be comfortable with? >> well, i'll tell you, what the problem is that to really follow a lot of stocks -- we follow a lot of stocks for action alerts because there's two of us, and we do a huge amount of homework. most people have a very hard time following more than ten stocks if they have a regular job. that's the max that i would tell you you can handle. that's after many, many years of looking into this. right and wrong in the investment world can be a lot tougher than black and white. but when you avoid making emotional decisions and rely

homework that you've done, i bet you'll have positive results. there's still much more "mad money" ahead, including what you must know before investing in any energy stocks. this is required material, folks. don't miss it. then you know i always tell you to lock in profits, but there are some times when selling can be just plain wrong. plus this is the most interactive show on the planet for a reason. your mad tweets are coming up,

welcome back. tonight we're learning lessons from my charitable trust, actionalertsplus.com, both the good and the bad so you can be a better do-it-yourself investor. let's delve into a series of costly mistakes i made when oil peaked in 2014 right through the oil market bottom in february of 2016. frankly there's so many mistakes

explain them. first when you're investing in commodity stocks, you must immediately recognize that it doesn't matter which one you hide in. better, worse, higher growth, better balance sheet. when the underlying commodity gets hit, they're all going lower. i've tried to buck this principle by adopting a high-growth, deep-value strategy where the charitable trust bought the highest quality company, which in this case was eog, and the one that i thought had the most takeover hopes, marathon oil. >> the house of pain. >> first, even as eog had the best properties, including amazing ones in the fertile eagle ford shale and the permian basin, ones that actually made money when the oil was in the 30s, nobody cared. oil stocks traded like they were all parts of an etf, and no one cared at all that eog might have been better or worse than the others in the etf. every one of these oil stocks with the exception of exxon mobil had spent too much money,

with the declining price of crude. marathon was worse, though. here's a company that decided to split off its refining and marketing divisions from its exploration and production business at what amounted to the top of the cycle in crude. without that refining cushion, marathon was about as vulnerable as any of the cash-strapped independents. we saw the stock plummet from the 20s to the high teens before we booted it. fortunately we dodged the trip shares just to stay afloat. unfortunately, the trust took a major loss, which did not endear us to subscribers. it wasn't all that bad in the oil patch, though, because we had had some foresight when it came to the combination of kinder morgan that the entity's ceo rich kinder put together, deciding we had been greedy and not ringing the register on that one after a big run. even though i had written up rich kinder in "get rich carefully" as a brilliant chief executive, and even though he had repeatedly insisted his company was more of a toll road

ceo to slash his distribution, which effectively revealed how kinder morgan had much more than just toll road exposure. that should have been the sign that the master limited partnership group had become unstable and that their yields were unsafe even though he had changed his company to a (c) corp. yet after the examining the group to see which company could maintain its yield, what did we do? we went right back in. we bought energy transfer partners, etp, because it was rapidly expanding its footprint with the acquisition by its parent of williams. spiked, and i was able to offload a considerable part of the trust's position, but not all of it. then as oil plunged, energy transfer partners plunged with it even though it had this big yield, which i thought would save it. and while we ultimately ended up buying some low and then selling all of it higher, it was not one of the trust's finer moments. the moral? don't think that you can outrun a commodity grim reaper, even with a derivative situation like a master limited partnership that's supposed to be so safe.

worry about even though i thought there were regardless of the price of oil. if oil goes down, something does happen. companies don't pump enough, and if they don't pump, they can't pay the pipeline companies, or they don't need them. and those very high yields could be illusory. all right. something good. how about this? one of the hallmarks of the charitable trust since i've been working with my current research director is that we let the best ones ride. we don't take short-term gains on our winners when we think they're worth a great deal more than they're selling for. but there are times when one of our stocks rally so far in excess of the fundamentals that that was the case with the 50% gain that we had in starbucks stock. near the end of 2015, starbucks stock shot up to the 60s, where it was selling for more than 30 times earnings. at the same time, its earnings growth was about 17%. now, you can pay up to twice the growth rate before you get severely overvalued, but we felt this run had happened too far, too fast, and it would begin to attract sellers on the first sign of any flagging growth. so we decided to ring the register in this longtime core

an ever so slight deceleration in same-store sales in china and the united states in its next quarter. nothing really all that visible even to the naked eye. but the stock fell, and it fell hard, losing more than ten points almost instantly. at those levels, it was no longer as expensive, and we started to actually rebuild the position. still, selling starbucks near the top was a smart move because it's a rare stock that can equal the height that comes with a 30 priced earnings multiple, and even the great starbucks wasn't one of them. finally there's the stock of walgreens. we had bought it for the charitable tru b 80s because we liked the changes being made after the overseas purchase of alliance boots. but we recognized the company wanted to do more acquisitions. in late october 2015, walgreens announced the acquisition of rite aid, and its stock immediately went flying to 95 bucks. i had very little faith that this deal could possibly go through quickly with the hardened attitude of the u.s. justice department's antitrust division. so we sold as much as we could before the stock started coming down. oh, man, did it come down. it was a huge win, and

to the low 80s and then to the high 70s where we were able to replenish the position. i only wish we had had the same foresight with regard to allergan during pfizer's aborted takeover bid for the big drug company. here you had a fantastic situation where allergan, a pharmaceutical company with an overseas mail drop that was able to pay much lower tax rates than it had been based in the u.s., was being bought by pfizer for a princely sum of roughly $360 a share. while the stock didn't trade that high, it climbed to the low 300s as investors waited for the deal to close. now, theer regulations regarding these tax inversion deals, regulations that allergan and pfizer had followed incredibly closely. the two companies specifically crafted the deal to meet the terms laid out by treasury for approval. but then the government totally changed the rules on the companies, literally making it so this very specific deal was totally spiked and not others. i didn't see it coming. and allergan quickly shed 100 points. what did i do wrong? i trusted the government to keep its word.

didn't see it coming. and allergan shed those 100 points. yeah, you know what? in an era where deals have been killed left and right with the most activist antitrust department in 50 years, i don't think there's necessarily a reason to believe that any deal is going to be a given going through, especially one that is now politically unpopular. yeah, i trusted the government to keep its word. meanwhile, the government claimed there was no word even offered and allergan and pfizer were acting as rogues. the government changed the goal post. but if i knew enough to take profits from walgreens on the spike, why didn't i know it would be too dangerous to hold out for the pfizer/allergan merger? simple answer. i was greedy, and the bottom line is that in this business, greed is just plain bad. don't let anyone on or offscreen tell you otherwise. "mad money" is back after the

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for most of tonight's show i've been talking about what you can learn from the mistakes i've made running my charitable trust, which you can follow along at actionalertsplus.com. it's got a club feel to it. but now let's talk about what you can take away from some very specific wins that did defy the odds of investing. the first is facebook. it's hard to remember when facebook was considered a disappointing company that was failing to live up to its potential. but this stock was viewed as a real loser for the first year or so after it came public. i was aghast at how facebook had missed the entire migration from downright confusing how a bunch of smart people could have been so baffled by this change in the way we consume information. didn't they know better? i watched the stock get pummeled and saw a lot of famous people's names give the stock the boot. but i'm a huge reader of conference call transcripts, and when facebook was trading in the 20s, it reported a really good quarter. even better, they talked about how they were switching rapidly to mobile adoption. as they made a switch, you could tell the advertisers were flocking to it. however, so many people had been blown out of the water by

to the positive story. given we didn't have a position in the stock and therefore we didn't feel scorned or down or upset, we bought facebook for the charitable trust in the mid-20s, and we were fortunate to participate in a huge rally after that. how were we able to hang on? because each quarter showed such an improvement in the numbers that the stock's priced earnings multiple wasn't really expanding. you were simply paying the same amount for even bigger earnings growth. that's the best kind of situation. then there's panera bread. here's a company that had lost its way. "mad money" repeatedly to talk about all the flaws of the chain, a place i love. we even had father's day lunch there once. shaich said the lines were too long and you were basically standing in a mosh pit -- his word, not mine -- as you awaited your order. he said he was going to change all that and do a top-to-bottom reinvention of the place called panera 2.0. when a restaurant chain decides to do a makeover, typically it starts by testing things out in one city. if the rollout is a success in one part of the country, you can bet it will work in other parts too. so we made panera the charitable

constantly so you can find out the ones we really like versus the ones we hope will go higher so we can give them the boot ourselves. sure enough, the rollout was a smash hit. panera stock had a great run over $200. that's the power of a restaurant redo, whether it be mcdonald's or wendy's or domino's or, yes, panera. finally there's apple. i know there have been billions of blog entries and newspaper articles and pieces on television about how it's doing and, since the death of steve jobs, whether it's deteriorated. so many people seemed so to believe that the best days are behind it. i see apple as reinventing itself with a service revenue stream that could ultimately be large enough that we could put a price on it. not yet. i see that stream as easily augmented via acquisitions. i see the iphone franchise as being not nearly as global as it could be. and i see ceo tim cook spending a gigantic amount on research and development that i bet will pan out as we wait through these iphone cycles and streams of service revenue. there seems to be an inherent bias against the stock that stems from apple's own past success. the stock has spoiled us because the iphone seems like it can

which currently comes from the fees used to back up your pictures in the cloud and the music stream that comes from the music plan seem like they're back-doored into a service revenue stream, it doesn't mean they should be dismissed. who cares how apple got there? the truth is that the service revenue stream is going to transform apple into something much bigger provided it can make a series of acquisitions to augment that stream in a timely fashion. that's why i've been saying that apple stock should be owned, not traded. whenever apple gets stalled, wall street becomes frustrated. but you can afford to take the long view if they bolster th service stream, which would offset any margin issues caused by shrinking phone upgrade market. the bottom line, solid growth stories are hard to come by. and when you find them, you need to hang on to them for the ride. don't switch out into inferior merchandise simply out of frustration or out of boredom.

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time to take some questions from the smartest viewers in television. if you've got one for me, send it over @jimcramer, #madtweets. here's one from @scottabaumann, who asks, what advice would you give to someone wanting to day trade in this market? my advice is unless you want to quit your job and do nothing but stare at your screen, please do not do it. it's way too dangerous. and even then, i don't think that people have enough edge these days, and the market's too thin to really do well, and the algorithms are really in charge. i'm going to say don't do it. next we have a tweet from @adbruins. jim, what should i read after i finish confessions? "confessions of a street addict." well, i got to tell you, i want you to read "one up on wall street" by peter lynch. it's available on amazon, and it will be a great read and get you involved in trying to figure out how what you see can turn into what money you can make. coming up we have a tweet from

my garden. do you start from plants or seeds? on my way out to get stuff for our garden, and i have never gardened before. okay. i do a mixture. i like to buy some seeds, particularly for radishes and for carrots. also for some tomatoes and definitely for beans. i never do anything other than -- although, yeah, there you go. other than in beans. now, look at that. nice-looking guy. but here's the thing. wh that i get from home depot, i've had fabulous success. so my flats do work better, but i do want to thank some of my camera people like frack, who gave me some good seeds that worked very well. that's frack. he gave me seeds. i'm not kidding. he did, and i thank him. now we have a tweet from @padionne, who writes @jimcramer, thank you for being so nice to my friends visiting the city. you made their day. i always tell people i am so

they bother to even watch it. so, yes, if you come up to me and you want to take your picture with me, i am more than happy to do it, particularly on the floor of the exchange. people are always amazed. wow, what a nice guy. what am i supposed to be, a mean guy? i mean i'm so thrilled look, i'm an older guy with, like, you know -- i mean it's not like you're taking a picture with george clooney in some movie about money. ha! anybody see that one? if they had louis c.k., it would have worked. next up is a tweet from he asks, @jimcramer, thoughts on trend of some restaurants charging more, paying employees more, and banning tips. i don't know. i got to tell you from bar san miguel, my small-plate mexican restaurant, that if you ban the tips, you ban the good people from working there, and that's not the way to maintain an establishment. so why don't you stick with cramer. i laugh, i sneeze...

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a bull market somewhere. i promise to try to find it just for you right here on "mad >> on the way to grandma's house. many on the move, even if protecting the new and very large first family. ahead of the annual macy's thanksgiving day parade and the commander-in-chief parting words for pardoned turkeys, tator and tot. >> we are thankful this is my final presidential turkey pardon. what i haven't told them yet is we are going to do this every year from now on.