>> and if you're in new york new york city, come to the plaza for an ambush make over. >> bye. >> my mission is simple. to make you money. i'm here to level the playing field for all investors. there's always a bull market somewhere, and i promise to help you find it. "mad money" starts now. hey, i'm cramer. welcome to "mad money." welcome to cramerica. you a little money. my job is not just to rtain but to teach and coach you. so call me at 1-800-743-cnbc or tweet me @jimcramer. nobody, i repeat nobody, likes to be disciplined. they don't like to be admonished. and they don't like to follow the rules. i don't blame them. i was a rambunctious kid myself when i started managing my own money, and at first, i didn't know the rules.

didn't believe they could help, or because they cut off my upside. even if they cushioned the inevitable downside. in other words, the rules kept me from making a huge amount of money when things were going gangbusters in order to keep me from losing big money when things went badly. >> the house of pain. >> the rules i am discussing tonight keep you in the game, even when you -- even when things are tough and you make those mistakes. your own bad judgment about what's going on in the companies you own or whatever's happening in the market overall. but if you were going to make money using stocks because you just can't get much of a return anywhere else these days -- that's pretty much the case. you are going to have to work harder with your money to do so. and that requires discipline. discipline. because once you start buying and selling stocks, you can make more mistakes than if you just

money you'll have a whole lot of nothing to show for it. that's why we are doing a show tonight on how to trade and invest responsibly to make your money work for you. how to tend it, how to make it grow. we're kind of gardeners of money tonight. how to keep it growing from what we call active money management. it's not a sin. and a lot of you practice it. i want you to do it right. before we dig into the ways to make your money grow by being hands on about it, i want to delve into a little psychology of stown one question i am asked repeatedly when people stop me on the street -- you know i go back and forth from this street to squawk on the street and wall street -- or they ask me @jimcramer on twitter is, don't you worry about your stocks? now, it is true that i don't own any individual stocks. i invest just for charity with all profits and dividends given away to charitable causes. more than $2 million in the time since i set up my charitable trust. but believe me, i still worry,

plus, since i disclose everything i own and tell you and explain what i'm going to do before i do it as part of the bulletins for actionalertsplus.com, you bet i am concerned. it can be downright embarrassing when i get it wrong. yep, i'm always worried about the trust stocks, especially when they go down. i'm doubly worried when they go down when the market as a whole is going up. that's a sign to me that something's wrong. someone knows something that i don't know. won't be able to take advantage of the weakness to buy more. i'll have to sell instead. that's the chief reason why i'm always bugging you about reading the news releases, going over the conference calls, particular that part right before the q & a, the guidance, and going to the websites for more information. you can't be informed if you don't try to inform yourself. i know that those who don't know what they own and can't articulate what they own and don't know what a company makes or sells don't know why it would

buy or sell until a big sell-off. however, we are talking about psychology here. they psychology of the mind when all that homework doesn't pan out. believe me, it is frustrating. when we select a stock on this show to highlight, we do a massive amount of work on it, every single time, the same amount i would do at my old hedge fund if not more so. it is really difficult to see it go down. but there are plenty of times when there is, say, something you can't detect. chicanery. chicanery in the numbers. there's plenty of times when there is puffing by management, i've talked many times on this show about press releases that make things sound much better than they are. the ones that start by saying, "we are pleased to report that sales increased by 12%." and it sure sounds good. except the consensus was looking for 20%. which means with that 12%, you've got a hideous shortfall. >> boo! >> or worse than that kind of puffery is when you own a stock and someone out there knows the

maybe someone found out about the truth playing golf with an executive. you know that stuff goes on. maybe some hedge funds paid under the table to get the truth, as we've seen time and again for years and years. there's many of these hedge fund titans that ended up in jail for doing it. in other words, the insiders had the call. you didn't. there are also tons of times where you simply own too much stock in the market versus what the market's going to do. we call this being too long. you are too long, as the professionals say, and you can't down because you're so out of capital, so you're gonna lose money, or at least on paper. or worse, you were borrowing money to finance your portfolio -- [ buzzer ] -- which i think is just a terrible idea. stocks aren't houses. you can't fall back and live in them if you have a mortgage on them. they just get taken away by the margin clerks. >> sell, sell, sell! so what do you do?

under conditions where things go wrong with the stocks you own all the time and things go wrong in the market all the time, wholly a part of what's going on at the individual companies in which you own shares? there are no magic bullets. but i believe that when in doubt, this one principle is key. discipline trumps conviction. memorize that term. discipline trumps conviction. i stared at a yellow post-it with those words for many years i professionally to remind myself that things go wrong, and you need to have a scheme to help you deal with those situations when things go wrong, as they inevitably do. yep, i put a discipline trumps conviction sign right on my personal computer to remind me of what to do in the stock market when things go awry. one of my best forms of protection is to recognize that if you're not tough on your own decision-making, and you like all of your stocks equally or at least pretend to like them all

you can't change up when things go wrong. that's bad, people. that's why i've come up with a system of ranking my stocks when things are good and times are placid. as hedge funds against yourself -- these are hedges against yourself for when things get tough. you know, when it's really calm out there, you can really do some good decision-making. remember, not all stocks are created equal. you have to be willing to circle the wagon, just like a wagon train going out west in the 1800s, around a few good stocks. buy them down to get a better holdings. why does this matter so much? because we must expect corrections, and we must expect declines as a matter of course. more than that later in the show. we must anticipate the days where we wake up and hear the good people on squawk box saying the futures are down. they're down a great deal, and the market looks to open down a half a percent or down a percent. come on, you've heard that so many times. we have learned so much over the years about what triggers corrections. more on that later too. but the most important thing is

all the homework and have the tremendous conviction, discipline dictates that you must assume there is something you don't know going on with your individual stocks or that there is something happening in the world that is beyond the control of your acumen, and you're just being victimized by the events of the moment. my ranking system will indeed get you through the chaotic times, allow you to stay cool and methodical about your money when all others are around you are fumbling and fretting and deciding they just can't take it anymore and just have to get out time. so here's the bottom line. in order to be able to deal with the decline in your stocks or in the stock market as a whole, you have to accept that something is wrong at the companies you own shares in that you might not know about, or maybe there's something happening in the stock market that you didn't foresee. therefore, you must be ready with a game plan that can bail you out short-term and keep you in the market longer term so that your money works for you and not against you in a time

frank in new york, frank. >> caller: jim, i understand why a company goes public, to raise capital for various different reasons. but why would a company want to go private? >> all right. this is a great question. typically i want a company to go private because they think it's worth a lot more than what the stock market is currently paying for it. when you see a company go private, that is typically because the owners of the -- the managers of the company recognize there's so much value and the stockholders and buyers don't. they make it look better, and then they tend to bring it public again. how about ann in california, please. ann. >> caller: hi. i haven't seen any prospectus on stock books lately, and i'm curious if there's any way to tell when a company is going to split their stock. >> no, there isn't. companies tend to be very close to the vest about it. remember, when you split a stock, you only get two pieces of the same company, so it doesn't necessarily create any wealth at all. it happens to be exciting, and i can tell you when stocks do split, some of the smaller

buy. all right. that they didn't have otherwise. so i am pro split, but it does not create any wealth, and they tend not to signal when it will happen. discipline isn't fun, but it is necessary if you want to make big money in the stock market. when there's a decline, you have to accept the facts and always have a game plan ready. i'll help you out. on "mad money" tonight, there are trades, and there are investments. i'll explain why understanding the difference will save you then headlines may be black and white, but investing on their every word could have you drowning in a sea of red. i'll help you spot the true story. plus a correction is always lurking around the corner. i'll help you protect yourself when it strikes. so stick with cramer. >> announcer: don't miss a second of "mad money." follow @jimcramer on twitter. have a question? tweet cramer, #madtweets.

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to the rules make it so losses can be palatable. rules that keep you in the game when others are freaking out. i used to talk about these rules all the time when i was managing money until they became second nature to me. but that was years ago now, and when i think about it, it's usually in response to a tweet @jimcramer that asks a question that the rules answer, and they answer kind of axiomatically. that's why i got to dust them off here, make sure that people realize i'm not ducking their questions. i'm just looking for a better

140 characters where i can't be thoughtful. i want to be thoughtful on twitter, but it's really hard. this is the format. so here's a typical question. someone will mention a stock, an oil driller say, that has had a hideous decline. they'll ask, what do i do now? i often turn the table on the person asking, why did you buy it in the first place? the followers tend to regard that answer as either arrogant or flip, but what i'm really trying to do is figure out if which means it might be fine for them on a longer time horizon and they should buy more, or did they do it for a trade, and perhaps they should cut their losses. why does this matter? because one of my cardinal rules is to never turn a trade into an investment. if there's one concept you must take away from this show, it's that you must never, ever turn a trade into something that it wasn't meant to be, a long-term investment. so first let's talk about the process of buying a stock, the

when i decide i'm going to buy an oil driller, okay, i have to declare right up front to myself whether i am buying it for a trade or for an investment. what's the difference? a trade means that i am buying it because of a specific catalyst, a reason that will drive it higher. that catalyst might be a data point, a recommendation, a belief that things are better than expected when the earnings come out, or some news about a restructuring like we always talk about, a breakup into sel material event that could occur. in other words, there's a moment to pull the trigger. a moment to buy. >> buy, buy, buy. >> perhaps because you think that oil is about to spike because of a shutdown of the spigot in russia or maybe some problems in the middle east. and then there's a moment to -- >> sell, sell, sell. >> -- when the event occurs and you're done. but you must declare first before you buy and here's why. the vast majority of you will buy a stock for a reason.

so then you'll decide, darn, i'll just call it an investment. i won't worry about it. i'll buy more if it goes down. or perhaps the reason never occurs that you bought it for, and you decide to hold on to it because, well, what's the worst thing that can happen? the answer, of course, is plenty and almost all of it bad. the answer is that you would never have bought it in the first place if you didn't think the reason was going to occur. so now there is no reason for you to own it in the first place. i have seen a myriad of investors turn trades into investments, developing a rationale or an alibi to fool the right thing. that's because they don't make the distinction between a trade and an investment. if the reason i bought the oil company, higher oil prices doesn't materialize, then i really can't say, i'll hold on to it because it has a swell dividend. for all we know, the only thing that would have saved that dividend from being cut is higher oil prices. and without them, the idea for the trade is gone, and the dividend -- [ cutting sound ] now, when i want to invest in a

it to start and then hope the market will knock down the stock so i can buy more at a better price. that's right. i actually, when i invest, want the correction, which is always the way you want to be thinking if you're trying to start a new investing position. ideally the stock is down already from its highs because you don't want to invest in stock at the 52-week high. but there is nothing like a nationwide, market-wide sale to get you better prices on your buys. i put the maximum on at the beginning because i believe the data point or the event is about to occur. i never buy anything for a trade without that defined catalyst. that's the word we use, catalyst. i never buy anything for trade just hoping it will go higher as there could be no hope in the equation of buying a stock. i buy down, lower prices, when i'm investing. i cut my losses immediately when i am trading if the reason i am trading the stock doesn't pan out.

if you buy a stock for trade, not an investment, and it starts going against you in a meaningful way -- perhaps a decline of 50 cents is meaningful when you're trading -- you may have a real problem on your hands. i'm not kidding. when it comes to trading, i am an extremely disciplined person to the penny. i like to cut my losses quickly and get over them quickly. that's why i say that my first loss is my best loss. all other losses tend to be from lower levels and at bigger cost to me if i don't operate on this principle. again, people, anyone watching st but because of ego, pigheadedness, they don't want to heed the thunder, and they stay in only to have to panic out at lower levels when the catalyst doesn't occur and the whole reason to own the darn stock evaporated. so please don't fool yourself. cut your losses quickly when you put a trade on and it starts to go awry. sure, there's an occasion or two when it's about to pan out and the market doesn't know it.

it's just a fact of life. it's a compendium of all the studies i've made. the bottom line, never turn a trade into an investment. better just to take the loss because, believe me, the percentages say that you will most likely lose money. and if you do so, do it earlier rather than later and save some bucks. stop fearing the big score, and start fearing the losses because it is the latter that can wipe out all those good juicy gains you have and then some. hey, there's much more "mad money" ahe seductive, but chasing doesn't always have a happy ending. i'll help you know when it's ever right to run after a hot stock. then corrections are as certain as death and taxes. don't miss my take on how to prepare yourself for the inevitable. plus it's easy to get attached to your holdings. but holding on for too long can burn you in the end. i'll let you know when to cut the cord.

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do. tv character: taking selfies in the kitchen does not make you a model. we are going over the rules that have gotten me to this point in my career, where i can play for charity at actionalertsplus.com instead of trading at my own hedge fund, which i retired from. but the lessons of the hedge fund are very much with me, and i'm going over them tonight in

with your portfolio. let me give you one that's the height of silliness. if it weren't for that darn buy of, and then you fill it in -- why don't we use himax -- i would have been up big. or i would be making a huge amount of money in the market if only i hadn't let blank -- let's use fireeye -- run against me when there was all that insider selling. darn it all. it takes only one or two losers to wreck a portfolio. i try to devote far more of my time analyzing my loser stocks some sort of masochistic streak. rather, i recognize that stocks often telegraph declines ahead of time. lost control is the paramount concern for all of those in the market because the winners, the good stocks, i got to tell you something. they take care of themselves. take the loss before it gets hideous. don't buy into the notion that you can't sell until it comes back, and then you promise not to do it again. how many times have i heard that

think. you need to think like a winner, not a loser. so you want one of those people whom i answer with, focus, will you, on twitter because you are obviously unfocused and undone by the market. of course the flip side is true too. you don't have a profit. listen to me, you do not have a profit until you sell the stock and nail it down. >> sell, sell, sell. >> it's not a profit. it's something ephemeral. people confuse book gains, real gains you can take to the bank or, of course, to get yourself a cashmere sweater at a nice department store, with phony paper gains that are meaningless. most people are also reluctant to ever book a profit because they don't want to pay taxes. i always tell people if i could just rewind the tape to january of 2000 or july of 2007, when people were sitting on literally trillions of dollars in unrealized gains because they didn't want to pay the tax man, we would be able to drill this

gains not taken can be losses that will be taken. gains taken never become losses. it's that simple. i stress this point because we have all been brainwashed not to sell. somehow we think it's sinful. it's trading. it's commonsensical to sell. it's logical to sell, and it may be the only way to really get rich in a choppy business. but it's just counter to human nature. when it comes to stocks, human to counter it. i can't tell you how many times i have had my heart in my throat, pounding, pounding, because i didn't own enough stock in a rising market. i didn't have enough exposure. i can't tell you how often i felt that i had to play. i had to be big in stocks because the market was going higher, and it was going higher without me. do you know that almost every time i had that feeling, that

action" drama playing around in my head, do you know what happened? that's right. i lost money. discipline is the most important rule at winning investing. we're doing winning investing here. that's what we're teaching. sometimes that discipline means admitting that you missed the opportunity and it is already too late. i almost always feel like i've missed something right near the top of the market, the top of the move. when i was a hedge fund manager, i actually -- are you sitting down for this one? into a profit center by actually betting against myself and the market when i thought i was missing the upside. that heart stuck in the throat feeling correlated with the tops of moves, not the bottom ones. i actually made money saying, oh, there's that pan again. sell. i always remember that the best time to buy is when it feels most awful, not when it would relieve the incessant pain of fearing that you're going to miss the next big rally, especially given that the rally has invariably already occurred. you must also protect yourself

there aren't that many great ideas out there to act on. the real great guys don't have that many great ideas. you always have to think about when you're prone to this. for instance, when i go on twitter, i'm always amazed at how people want me to opine on a stock that just reported and they want me to do it in just one headline alone. i find the business wires that report these numbers are almost always wrong in their quick takeaways simply because business is a lot more harder and complicated than the press release which often obfuscates what's really happening. reality because the reality is, in reality, a jumble. headlines that present stories about such and such a number being better than expected are the types of headlines that always punch the quick draw mcgraw traders. the reality is there is something else, some other metric that might be more important, or that the quarter is manufactured with one-time gains. that happens all the time. i think you have to read the whole story and listen to the conference call.

its guidance for the future. that moment and not what the headline writer is responding to is what you will see will make the stock move. that's where you get the accurate move from. everything else, guesswork. we can't do much with just guesswork except get in trouble. so many of you want to get in trouble because periodically one of you wants to be right. this point is very important. because of electronic trading, you can move too fast, and often many do. for you. if this is really a great opportunity, you will not miss it by taking time to inform yourself, believe me. before you do so, be sure you know what to look for and what matters. you might want to have a grid of what all the analysts have been saying about what is about to occur. that way you won't be fooled by the first move, which could be taken by people who are less informed than you are, and they are less informed, believe me. most important, understand that the headline for many companies' earnings doesn't even tell you

looking for? production growth, not earnings per share. with hotels, what are you looking for? revenue per room, not earnings per share. airlines, revenue per seat mile, not earnings per share. many times in my career, i've seen up headline numbers only to learn that the company is guiding down expectations later in the conference call or that the key metric estimate wasn't beaten even though the headline says it was. the bottom line, don't let gains turn into losses and certainly never trade because you fear the market going up without you or a stock rallying off a headline wrong, as they so often are. ed in california, ed. >> caller: booyah, jim. jim, i'd like your opinion on a strategy that i've been using in deep in the money calls going out of anywhere from 6 to 12 months on stocks that you recommend. this is to avoid any possible volatility in the market swings. what do you think of that? >> this is exactly what i want. ed is doing exactly what i want. i talked about this in "getting back to even," a 100-page

he is doing what is called stock replacement. he is literally taking the risk out of common stock by stopping the decline at a certain point and getting the upside. you are the man, ed. you know what i like to say. you have horse sense. jacob in california, please. jacob. >> caller: hey, jim, how are you? booyah. >> booyah. >> caller: hey, jim. i love the show. >> thank you. >> caller: the advice is phenomenal. >> thank you. >> caller: jim, as an initial fi your recommendation on how many positions one should have without going, you know, over their head? >> okay. we can only handle 30. as soon as we do more than 30 -- and we are pros who are devoted to this -- we get hurt, which means i think more than a dozen on an individual who may not be as sophisticated as we are is going to end up making mistakes. so try to limit it. when we play in my diversified, it's five with "mad money." larry in massachusetts, larry. >> caller: jim, it was often

surrounded himself with extraordinarily bright people. well, i wouldn't be in the game at all but for your teaching through the many books, action alerts, and the show. you know i'm a cramaniac. when does a holding start looking long in the tooth or something to be ditched? in other words, what characteristics made it a core holding such that the bad news threshold for dumping it are higher? >> what a great question. first of all, thank you for all those nice things about action alerts, stom everybody. here's what you're looking for. when everybody knows what you know, when there isn't a single analyst that doesn't love your stock, when you constantly hear that that company is great and the ceo is great, you know what? it's long in the tooth. got fomo, that's f-o-m-o? don't trade because you fear the market going up without you or if you fear a stock rallying off a headline that may be wrong. there is such a thing as overtrading by the way. i'm here to help you out, coming

when they strike. i'm going to show you how to prepare for those painful days. then we all want our stocks to succeed, but getting too attached can be a portfolio killer. i'll explain why emotions and money don't mix. they're oil and water. plus i'm taking on your tweets.

today you can do everything

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tonight we are going over the rules and disciplines that i have learned in, holy cow, four decades of investing. rules that i want you to just kind of learn by heart like i have. you know, not just like the usual twitter 140-character stuff. this is real stuff here. a lot of people, for instance, don't think a correction is ever going to occur. they get lulled into the market during good times. a lot of people get involved when there's just been months and months of good times. and when bad times hit, they are eager to pin blame or to be shocked in disbelief instead of

not being fearful of them. yep, when a correction occurs, many investors decided they now want nothing to do with the market. the correction signifies that something is wrong with the market as a whole as if these aren't stocks of companies and therefore the market can't be touched. that is a really big mistake that is made constantly. corrections happen all the time. they particularly happen after big runs. they're to be anticipated. i learned this from the great peter lynch years ago when he used to run the ge he said anticipate these, but you can't write off the market when they happen. i always like to tell the stories -- i like to put things in sports analogies. they become clearer. so i tell the story of joe dimaggio after his own personal bull market, his 56-game hitting streak. still the most amazing baseball feat of all time. when he failed to hit in game 57, should you have traded dimaggio? should you have cut him because of a -- well, whatever. was he finished? is that smart thinking? same with the market.

and accepted as a matter of course. particularly after 56 great days of the market, you're going to get something like that. hey, when they happen, they're not a reason to panic. they can be great opportunities even as people insist that they're wrecked, that the market's done because the charts are bad, taking out the 200-day moving average created a bearish cross, a death cross, a hindenburg cross, whatever the heck that is, or the market's unpalatable, some clap trap that i hear every time the market snaps a winning streak with a bears who come out of hibernation. they like to be right that day. now, given that so many don't expect corrections, here's something that seems pretty commonsensical but is studiously avoided by many people i have met, especially @jimcramer on twitter. lots of people wrongly believe in being fully invested at all times. lots of managers think they're supposed to be fully invested every day. i have to tell you this is nonsense. lots of time, the market just stinks so you want to have some

the market. i'm saying having some cash. pretty good. a lot of times there's nothing to do except have some cash. in fact, one of the chief reasons i outperformed pretty much every manager in the business during my 14-year run as a professional money manager is there were substantial blocks of time where i had a lot of cash. hey, i was largely in cash, including the 1987 crash, when the market dropped 508 points in one day but from a much lower level than this one, so it was actually a 22.6% hit to be precise. cash is such a great investment at times, even when it earns little to nothing as it has for ages. you know what, i regard it as a better hedge, a perfect hedge, as opposed to shorting the market because the market keeps going higher as it did in 1999 or the year before the great recession in 2008. you could face devastating losses as an overvalued market can continue to stay overvalued and climb and climb and climb. i think cash may be the single most underrated of investments

i know that from my charitable trust. always great to have a big cash position when the market gets hammered. it's one of the reasons why if you follow my method of how to trade around a stock, you will know as the market spikes, i take stock off, sell a little, trim here and there. yes, to get ready and reposition myself for the next correction. close viewers of the show know i sell strength and i buy weakness. when the time is right, i almost always have that cash to put to woau strongly in cash as an option. if you don't raise that cash, here's what could happen. you might end up selling your winners to subsidize your losers. that is another common mistake people make. so many bad portfolio managers and befuddled individual investors always sell their best stocks so they can hold on to their worst stocks. you can always tell when you see this pattern. you'll be reviewing someone's portfolio, as i used to all the time before my rules prohibited giving individual investment advice, and the portfolio will

your blue chips, the kind of stocks that can best weather the tough times, allow you to come out smiling on the other side? invariably they will say, i had to sell those. i had to buy more of these other stocks because they kept going on down. many on twitter seem to have this problem, portfolios riddled with stocks that stopped working a long time ago. i have counseled enough professional investors that were in trouble to know that the first things that get sold are the best stocks because they can be sold. there's always a bid for the good stocks, a ready buyer that's willing to put up capital to go straight down the line and fold under any pressure. but when even some of the more admired professionals have a handful of good and awful stocks, they don't sell the awful ones because they're down so much, a typical alibi for not taking action. nonsense. they're probably going lower. please do not subsidize losing stocks with winners. if you own companies with deteriorating fundamentals as opposed to good companies with deteriorating stock prices, a common occurrence, please sell the bad ones. take the loss. reapply the proceeds to the good ones.

don't feel bad for yourself. lots of times the circumstances have simply changed for the stock market. the company in which you have invested might do a lot of business, say, in russia, which could have been great before sochi, but then with the fight over ukraine, companies' profiles changed, maybe dramatically. you may have to sell that one for a company that's largely domestic, or perhaps a slowdown in the economy has caused shoppers to stay away from expensive branded products and run toward private label goods, which happened in what i call the debenturing of america, one of the largest trends out there that blindsided many of the food stocks traditily be safe. or perhaps a terrific drug company like pfizer had been making fortunes on some very big drugs until they went off patent and the generic competition crushed their margins. these kinds of stocks were so often kept because they had gone down, and investors bought more of these stocks and subsidized these losers with the sacrifice of winning stocks. let me give you the bottom line. get ready for the correction. it's coming. have some cash on hand. and when it happens, don't sell the good ones to subsidize the bad. you'll end up with a terrible portfolio that won't be able to

better. "mad money" is back after the break. ? ? ? ? ? ?

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they're a drag, aren't they? i hate rules, but they will keep you from getting blown out and help you navigate the tougher times that come up when you least expect it. if you aren't prepared mentally, you won't be tough enough to handle these moments, and you will flee instead of thinking about what's really right to do, or you'll be paralyzed with fear and self-doubt instead of mindful and opportunistic. emotions have to be checked at the door in this business. i often hear people say, i hope that a stock goes up, or they ask @jimcramer on twitter, doesn't it have to go up, implying a question like, doesn't a team have to win a game sometime? people, this is not a sporting event. we have no room for hoping or rooting. we're buying stocks that we believe should go higher because of the fundamentals and we're avoiding stocks where the underlying business is bad and getting worse. where should hope fit in? nowhere.

ideology. they believe that if they pray things will work out, maybe if chair chanting, maybe they will, or they fall in love with these miserable pieces of paper with the idea that love will somehow be requited. be realistic. hope, pray, love, rooting, these are all enemies of good stock picking. i can still recall the ringing in my ears when i would get off the trading desk with karen cramer, who was our head trader, and she would say, what's the deal with this memorex, a now long defunct company that got crushed back in the '90s. i would say i am hoping it gets a big contract. she would scream, hope? hope? we need hope to make this work? sell it and give me something where we have more in our favor than just hope. man, what a beatdown. many times she didn't even ask. she just sold it after i used the word "hope" to see if i would buy it back. invariably i didn't buy it back. i was hoping somebody would happen, and once it was sold, i felt, well, relief.

frustrated and you do want to sell them. good stocks at times can do nothing for ages. i remember when berkshire hathaway did nothing for ages. if you're a professional investor at a hedge fund, this waiting can be unnerving. you have partners in your fund calling you regularly asking what you're doing with their money. they don't want to hear you own a whole bunch of stocks that aren't moving up at once. but individuals have no such pain. individuals can sit on stocks as long as they want. unfortunately when i counsel patients, many individuals get antsy. they want the gains. i say some of the best stocks require some incubation. do you know how patient i was owning intel, one of the greatest stocks of our generation? for 18 months, i watched it do nothing at all in the late 1980s. but i believed. i held on to it because at that time i had only a few partners and none of them needed to know every minute how much they were worth. later in my career when partners

lots of stories take a long time to incubate, to develop. lots of turnarounds take 18 months to two years. when you buy a stock and recognize it could take a long time to turn, mark it as such in your mind so you don't get tired of it and just sell it and give up. here's something really important to remember. stocks that are stuck in the mud a long time tend to romp like thoroughbreds when they are freed from the great. they're mudders. do you have the patience? if you don't, let someone else invest your money. shoulda, couldas. one of the despicable traits is second guessing. you make a call. you buy some celgene, and then it suddenly has a patent issue, or you sell du pont the day before a noted activist takes a stake and sends it soaring. next you're filled with self-doubt. that's nonsense. get it together. the market requires you to have the right head on at all times. you have to be ready to see the

there's no time to get down on yourself. do that for fantasy if you cut like brady or something. if you want to be introspective and constructive, bracket some time at the end of each month or maybe at the end of a quarter to assess your strategy and your stock-picking abilities. but to second guess your strategy is to put yourself in a loser mind set. i want the pain felt. when i thought one of the younger people in my office made a mistake that was costly to me, i made them wear the symbol of the stock that they screwed up on as a post it on their forehead for the day. i even sent them outside. but i insist that anytime saying if only i is time that takes you from getting the next big stock. karen cramer believed that women are much better traders than men because they lack the second guessing instinct. they did teach me to steel myself and come in the next day without the mental baggage of a screw up so i could be ready to swing at the next big pitch. here's the bottom line. this is business is not about hope.

higher. just pick shares in good companies, and they will unless circumstances change dramatically that cause you to sell. they'll go higher. but be patient on the good ones and try to keep the self-doubt to a minimum. clear your head. get out there immediately and find out if the next big winning idea. there's just no room for shoulda, woulda, coulda.

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@markrichard. auto dividend reinvestment or take cash and buy selectively? your take? really easy call. a huge percentage of the gains people have in the stock market over the years come exactly from dividend reinvestment. this is a no-brainer, and there are very few no-brainers, and there are very few free lunches in this business. compounding is the secret behind great wealth. revest. here we have @jamierdevries, who wants to know who with the way you say bristol-myou knowers? that happened to be an old broker at kidder peabody. can you imagine? when karen cramer and i traded together, we had a broker who often recommended bristol-myou knowers. he always said it that way and you know what? i decided, hey, that must be the way it's really pronounced. let's take our next tweet from @kraigbu, who asks, which is smarter, add to a holding that has been recently hurt or initiate a new position? #madtweets. if you do not want to buy more

you liked it higher, you should love it lower. so the answer is buy more of the lower one or get rid of it. up next, @no2l -- whatever -- at what percent for profit should we sell shares? @no2. okay. this is really important. there's no firm rule, but what i like to do is when a stock goes up about 50%, i like to sell some of it, and then a little bit more, and i sell more. but the ultimate goal for all great investing, you play with that's the way to do it. always try to fight to get to the point where you're playing for the house's money. and, yes, stay with cramer. why are you checking your credit score? i wanna see if it changed. credit scores don't change that much, do they? really? i'll take it. sir, your credit...

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i like to say there's always a bull market somewhere. i promise to try and find it just for you right here on "mad money." i'm jim cramer, and i will see

. it was a real shock when all of a sudden his hands were all over me. he started encroaching on my space. >> talk about your october surprise, bombshell reports from dona trump touched them inappropriately t. trump campaign comes out firing denying all allegations. we have late breaking details on the u.s. military strike in yemen. developing overnight, two boston cops shot, both in critical condition. we have new information from the police chief. a powerful hurricane 4 churning, "early today" starts