♪ ♪ i'm jim cramer. and welcome to my world. >> you need to get in the game! >> going out of base and he's nuts! he nuts! they know nothing. "mad money" you can't afford to miss it. hey, i'm cramer. welcome to "mad money" and i'm trying to teach you how to make a little money. my job is not to entertain but coach and talk to you about the stock market. call me. there are some things i've been keeping from you. it's not fair. tonight i'm going to tell you who i am and how i got here. not a am jim cramer, that plus an avatar and 140 characters sums up everyone these days. i want you to know more than that.

what i want to do tonight, is trace the arc that brought me to "mad money." but to give you some lessons from the faces of my various careers and how you can profit from them. remember, in the end, this is cramerica. i want to tell you how i became a good investor and how i continue to learn every day. and that is the goal of "mad money". my love of stocks started back in 4th grade. you see my dad would bring home the old "philadelphia bulletin" when he returned home from work every single night. back then, the only thing i would change, i would have made it that i would have been a

yankee fan. i was a curious kid. it has been a blessing and a curse of mine there was a solid chunk of the paper that seemed inpenetrable to me. they were the other tables. different than the tables and box scores. they made no sense to me. open, range, closed. what were these strange things and what did they matter? i asked my dad because i would hear him get mad. buy buy buy when he would hear prices mentioned on the radio. he would get angry when i heard the name, national video on the radio. i did know of -- i don't know if

pop did know what it did. but i wanted to find out more of what these things are that made him react with such fury. where the stock opened on the new york stock exchange on the open and the close was how it was worth when it finished for the day. and what did it mean to close? he described to me that people wanted to buy them to make money from their increases. this struck me as downright silly. i was trying to figure out who was hot and what it means for the teams that i like. he said it was pretty much the same thing with stocks. you study the companies like you study the players. i said i wanted to try to figure

out which were going to go higher. i wanted to know if i could try to learn something. it seems in my house that the radio was always on. we watched the news while eating and it was the war in vietnam. even when i was nine years old my mom was worried that i was going to have to go to the war in vietnam. but after the world news they mentioned the dow jones industrial average and they talked and showed the more active stocks. national video was all for the worst. what i did was write the names down that i heard and i tracked them. i kept them in this leather. you can see it.

how did klm go out? there is mgm. magnavox that was a real winner. i would put them down and look at that, there is a winner. anyway, it was a game. i was trying to figure out the next move of a stock even though all i really new was the name continental and the name rca. so i followed a lot of those and a bunch of others. and this was a cool game. and i wanted to introduce it to my fifth grade class. so i did. showing them my ledger and i have to admit that not everyone was as into it as a was. represented at 3m corp. and the manufacturing company

selling tape and fancy ribbon that bowed easily. triple m was always coming up with great product lines. right about fifth grade pop came home with a new line of 3m products that they were selling. book shelf games. he said we might want to learn how the stock market worked. and stocks and bonds of which i'm fortunate enough to have gotten a real copyright here. courtesy of the producer of the show courtesy of the holidays. i loved the games so much. shady brooks development. try city. well, maybe he has a 13 deal right now. i asked the ceo to bring these games back.

the point is that the stocks and bonds is that stocks are fascinating enough. to get your kid started on them right now. when you have your kids started on stocks and bonds pick some stocks. they are performing in a good way, but if companies maybe your kids are familiar with. guess what they will do over a period of time. so here is the bottom line of my childhood stock market obsession. get them started early and maybe they will play for life. the stock market is a long-term contest and one i think the earlier you get in, okay, the more you can win. let's go to loretta in arizona. >> hi captain cramer a big booyah to you. >> love phoenix.

>> okay what steps should an investor take when a company they thought was solid with a strong monthly dividend suffers a steep drop hold them or fold them? >> a lot of the monthly ones are oil related. free port a few years back cut the dividend. that of course is copper and gold. it can mark the bottom and i think that is what you have to be thinking about. john? >> windy city booyah to you cramer. >> nice what's up? >> thank you for what you do for us and thank you help get my son through colorado state university. >> congratulations to you. i want to thank my staff because

it is a team effort here to make things great. >> i got an e-mail from one of my holdings and they said they are going to do a five to one reverse set. i know what a reverse set is the question that it is five to one, is that a red flag or should i get out? >> the damage is probably done. the stock has gone down so low. they put it back and it goes higher. it is going to go back to one. i suggest you hold it. if the company is doing poorly. sell sell sell. >> irving in nevada. >> hello. >> hey, irv. >> hello. >> you got me. it's cramer go ahead. >> look, i'm irving from las vegas and i'm because of you and you have been wonderful things

that you have been doing for people and for me i got into the stock market at the age of 90. >> fantastic, sir. >> isn't it the greatest don't you love it? >> because i have been listening to you for many years, at the age of 90, i'm 92 now. >> you are just getting started you got a couple of bull markets and bear market ahead of you. >> which way is it better to buy stock preferred or common? >> preferred i happen to like the bank. you have to figure out what is out of step. they are still the best in show. common has more upside. i like to follow the common stocks. they give you better award but more risk. but i think you are doing terrifically. tonight i'm giving you the lessons i have learned. why not get them started really

early. teach the kids about investing it is a life-long skill. >> don't miss a second of "mad money" follow on twitter. have a question, tweet cramer. send jim and e-mail to madmoney@cnbc.comor call us at 1-800-743-cnbc. or head to madmoney.cnbc.com.

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welcome back to a bizarrely special "mad money." i'm not a dollar sign represented by a man or a stock symbol for that matter, i have stumbled around the market enough to know a thing or two. don't you love at the beginning of a football game, jim cramer when it comes to stocks?

that is what you are getting right here and right now. and then the greatest games stocks and bonds. and all of the little cool doo dads. what would send the stocks higher? i left the stock market games behind me by the time i got to middle school. i was the second fastest guy in the school so i ran track and then girls certainly ran them so i couldn't win for losing. but that is a subject of a different show. my father engrained the ability to save. i saved as i bussed tables as the old block and cleaver and a

vendor at veteran's stadium and then selling iced cream. i learned the market power and hey, iced cream on the 600 and 700 level. can you imagine how much money could be made if you had the only franchise on the upper deck. except the one time when they only gave me strawberry iced cream. or when mitch carlton pitched? talk about learning how business worked. the shelf life of ice cream after the 9th inning is as short as short can be.

i will call you hey captain or skip or chief i learned those names at the park. that is what people called me to get my attention. hey, bud, i mean partner. i made a ton of money. and i opened up an account at fidelity. i didn't save enough when i went to college, but when i got out of college islanded eye landed a position. i kept the paystubs to remind me how hard it was to get started.

not long after i got a job, a horrible job making $179 a week, in los angeles i found a bungalow apartment, soon after i was stalked, i was broken into repeatedly, at the time i was assigned a story in san diego and when i returned everything was gone. it was like a big moving van came. it began in my car trying to get by. i met a woman who was easy to figure out the end of a night query. i know this isn't your normal behavior. my goal was to save and people would take me in now and then and i never quit saving.

that is why i'm giving this autobiographical stuff. i wrote a check to fidelity magellan fund. how poor was i? yet still putting money away. and then i got sick a yellow spot about the size of greenland on my stomach? i had no health care. and the company put me on the road so i could submit some expenses so i had to go to a migrant farm workers clinic to get fixed up there. which by the way i had a doctor who was one of the best i ever had. the upshot of investing while you were living in your car, i manage if you add it up i managed to put enough money away

to teach, money amounted to a fund well into the six figures. i stopped putting money into that years ago. i never touched it. i think the take away here is that i want you to save no matter what. no matter what. the earlier the better through thick and thin. when cnbc has the all-star managers on. send the money in as little or as much as you can. if i could still send those checks to the fidelity fund living in the back of my car, and saved by a pistol by my side, you can put away some money too, stay with cramer. >> taking control of your financial destiny is smart. but why would you go it alone?

let cramer be your guide. your sounding board. >> i'm having a hard time with my favorite stock. and your coach on the road to financial independence. "mad money" week nights on cnbc. p in the middle of the night it can be frustrating. it's hard to turn off and go back to sleep. intermezzo is the first and only prescription sleep aid approved for use as needed in the middle of the night when you can't get back to sleep. it's an effective sleep medicine you don't take before bedtime. take it in bed only when you need it and have at least four hours left for sleep. do not take intermezzo if you have had an allergic reaction to drugs containing zolpidem, such as ambien. allergic reactions such as shortness of breath or swelling of your tongue or throat may occur and may be fatal. intermezzo should not be taken if you have taken another sleep medicine at bedtime or in the middle of the night

or drank alcohol that day. do not drive or operate machinery until at least 4 hours after taking intermezzo and you're fully awake. driving, eating, or engaging in other activities while not fully awake without remembering the event the next day have been reported. abnormal behaviors may include aggressiveness, agitation, hallucinations, or confusion. alcohol or taking other medicines that make you sleepy may increase these risks. in depressed patients, worsening of depression, including risk of suicide, may occur. intermezzo, like most sleep medicines, has some risk of dependency. common side effects are headache, nausea, and fatigue. so if you suffer from middle-of-the-night insomnia, ask your doctor about intermezzo and return to sleep again. ♪

>> you are why i come out here and do this show. thank you so much. >> the stuff you are doing is so important and i want to say thank you. we count on your help. >> put cramer's experience to work for you. "mad money" week nights on cnbc. >> we are riding the money mystery tour. ♪ hallelujah >> and i'm giving you the life lessons i've learned the hard way. i told you about how to get your kids started early and about living out of the back of high car. >> and it is still totally worth

while and yes, it is the reason i believe you watch. that is unless you like the funny outfits that i don. and the outrageous sound effects. i used to have a radio show called real money. if you were picking stocks you need an account. i had my money with fidelity. so i chose to put my account there. i turned to forbes. the people at "forbes" do not take this personally. i read and article about an orange growen in florida so i bought ten shares for it for $9. a week later frost hit and wiped out the crop. i was devastated but not defeated.

i took the shares of bobby brooks. a clothing outfitter. almost immediately the company reported a bad quarter. >> i had a job making 20 g's living on 41st and 42nd twice the rent for a beautiful one bed room in florida allowed me to replenish my stocks. and a night on the town, i fell in love with a breakfast at bob evans farms. i went to the library and devoured everything i could about bob evans. forms and compared bobe with others.

i knew i had a good one and i bought 20 years and i figured out the good first component of investing, no what you own. like it even. what did i know about oranges or women's fashion. but a company of good service and nice enough growth plans to expand that was for me. next up a company from my old town. jim, if you are in a jam they are hiring at sps. he said that are paying good money. but back to the library for more research. solid debt but nothing about the hiring push.

and it doubled. 23 years later sps would be acquired by precision cast parts. and one i'm liking right now. the best ideas come from what you know. and you combine that information with that of public sources and that is good enough. there was a problem here. i didn't like the random way i was making money. a friend from home about a job and a hearty breakfast, there has to be a better way? look around at work. at the time i was covering some, and small to major oil companies were offering it.

checked out the pages to find out which one could be acquired without problems. i settled on this thing and i doubled my money. if you want to buy take overs get companies that were undermanaged. that meant another oil company with bigger scale was cheaper than it should be. as much as i had hit winners though. i was distraught that i had given up the ghosts. at the time i had given up the

track on weekends though. i had learned how to handicapped by reading the books by andy byer. he wrote two books picking winners. how to find the best long shots. you are sitting there looking for something to do. find the ones where the payoff is more sure and bet big. think about it, everyone of these lessons could be applied to the market. you can take a huge swing and know what you are doing particularly just on the stock. don't let your losses pile up. i decided to hang it up and go back to law school.

all think the stock market as i would never have been able to make enough let's be clear an index fund would have made me nothing at all. go small, invest in what you know and research it intensely. back then i got old data from the library. now the information is free. and of course the conference calls that i tell you are musts if you are going to know what you are doing. simple? is no. lucrative you bet it is. dian in new york. >> question, wouldn't it be considered a quote good rate of return? >> i think what you are always trying to do is measure it against bonds if you can get something against the risk free rate and the tax on it, then you are going to do real well, if

you look the ten year, you can measure against the 30 year, you want to get six, seven, 8. you are doing great. john in north carolina john? >> hey john? >> hey, what is going on. >> not much how are you. >> doing good. so, i'm new to the market and i've been watching the show and reading the "mad money" book which has been helpful so thank you for that. >> my question is when i'm doing valuations and i'm calculating which number should i use. >> were you doing the growth ratios look at the forward next year. i don't like to look at historic. you got to go and get the estimates. get them on yahoo!.

want to get started look for things you know and research it until you can't research it anymore. you are surrounded by information so use it. stick around i've got more lessons from my investing experience coming up. >> keep it with cramer all day long. follow at jim cramer on twitter. . ...with geico... ohhh...sorry! director's voice: here we go. from the top. and action for over 75 years people have saved money with gecko so.... director's voice: cut it! ...what...what did i say? gecko? i said gecko? aw... for over 75 year...(laughs. but still trying to keep it contained) director's voice: keep it together. i'm good. i'm good. for over 75...(uncontrollable lahtuger). what are you doing there? stop making me laugh. vo: geico. saving people money for over seventy-five years. gecko: don't look at me. don't look at me.

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tonight's show is about learning from high attendance at the university of hard knocks. i have shown you how to spot winners and avoid losers through the life examples of when i was younger. now how to become a trader if you want to and when to become a good one. if i spewed it away from trading. you have to watch the positions to the point where it is hard to do your job and follow the market. there are so many products that allow hedge founds to allow stocks to move with toys.

you have to move one-on-one with the big boys. but there are advantages that you have now. commissions are so much lower. you can do it on your computer and your smartphone. and trading is lightening fast. when i was at class you had to use a payphone or a cell. at the same time i had to go with what i knew. i can tell you there was a ton of downtime and good business at the library nearby as well as up-to-date microfiche, all the

things i considered that i possessed. the first thing i decided to do was to work on finding one trading idea per week. you can't be all over the map. i discovered i had to look for stocks that could rally based on the other parts of the paper. an article on the front page, i got on a roll. i wrote a newsletter which was called "mr. bullish". i could do no trade unless i could explain what it would do. when you trade, you must trade with confidence.

you could be traded out by the market. if you want to trade with confidence. ask yourself. would you update a stock recommendation on your voice n mail? yeah, i actually did that. every single week. i had that level of conviction of my pick of the week. you have to have that. i was putting that money where my mouth was. and work i was getting and legal work for a professor who moonlighted during criminal defense case. and a publisher tried to get me to write a piece.

i didn't call him back and i got three issues of trades of the week and he wanted to give me half a million dollars to manage. and he had confidence in me. which was real money back then. almost immediately i lost a ton of it. you can't trade a huge ton of money at once. you can't put it all to work at once. you have to have an entry point that was reasonable and knowing

that you would be good whether it worked or not i violate my own rules and i confessed to marty. he was right i tried to be right about one idea at a time. going big when i had the most conviction. i paper invested in more active and truly traded portfolio. if you are going to trade, have an exit point because you need conviction would you be willing for the world to hear, hi it is me, i'm not here right now but i want you to try disney. if you can do all those things give it a try. stay with cramer. >> you have done your homework and you are ready to buy.

but how do you know when the time is right? >> ask cramer. "mad money" week nights on cnbc. aspirin, really? i haven't thought about aspirin for years. aspirin wouldn't really help my headache, i don't think. aspirin is just old school. people have doubts about taking aspirin for pain. but they haven't experienced extra strength bayer advanced aspirin. in fact, in a recent survey, 95% of people who tried it agreed that it relieved their headache fast. what's different? it has micro-particles. enters the bloodstream fast and rushes relief to the site of pain. visit fastreliefchallenge.com today for a special trial offer. visit fastreliefchallenge.com i played a round of golf.id in the last five hours? then i read a book while teaching myself how to play guitar; ran ten miles while knitting myself a sweater; jumped out of a plane. finally, i became a ping pong master

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tonight you are following the early stages of my own career. and i'm taking you through the importance of starting investing early. the ability of knowing what you own. now we are up to the professional grade and my time when i started at goldman sachs. you can always get the skinny of my goldman days by studying at the university of hard knocks.

first, that is where i began making money the ability to build a portfolio from the ground up. i had the best teachers in the world. hardly an hour went by when i didn't hear a great idea walking down the hall. but i learned from my customers. individuals can and do beat the market quite regularly. i wasn't allowed to invest anyone else's money unless i could convince people to act on it. i learned how important it was

to talk over a story with the individual. can you do that to someone if you were picking a stock? i knew that stocks go down. if the stocks went down they would be mine. what else did i learn? it was at goldman sachs how great the business could be. when an idea went against you had to get on the horn and explain how to cut your losses. i also learned to led your gains

run while you cut your losses. men in my class didn't know that much about stocks. he had been fabulous at their owner enterprises. i had a real tycoon. i told him work hard and get it right. he said he didn't want trades. he only wanted long-term investments. at the time i liked kimberly clark. he bought 8,000 shares and this was a big one. i thought he would thank me. but he was furious. he told me that i had said that kimberly would be good for the

long-term and he wasn't the left bit interested. he wanted to know if i was trying to churn him. just as you don't want to turn the trade into an investment. you don't want to turn an investment into a trade. if you have a good one, kimberly ultimately doubled. finally understanding how to create long-term wealth, a lot of the people who came into a great deal of cash. i was trying to figure out what they needed. i tried to urge them to get to

know them selves and their risk level of tolerance. would you prefer your money appreciate slowly? do you want to try to hit it out of the park with some of your capital? many of you are familiar with these lessons you have heard me say on many a night. then i got to the oil sector. there are huge places in this country that no one had discovered yet. i wanted oils and every day seemed like a great day in the oil patch and then one day oil plummeted.

i never intensionally avoid diversification. i learned finding solid ideas to build a portfolio to create long-term wealth in a way to suit the customer. consider yourself the customer of this show. all of the investors beat the market in ways that they like with people like me to work with them to put a plan into action "mad money" is back after the break. it's scary how much dirt your vacuum can leave behind.

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our tour of the early lessons of my life's journey in the market is drawing to an end. the importance of getting started early.

you learned about me getting started in the car. you learned how to find the good ideas and how to research them and learn them cold. and you stumbled along would me to find the goodness. i hope you have been able to take away a ton of information and glean insights from my mistakes and best of all, i want to wish you success, and to remind you when you win from the gray beards that you have to make money at home that the story of my life is very much the opposite and you can make money in different ways and yes, by yourself. stick with cramer. >> stay connected to cramer on madmoney.cnbc.com. in the last five hours? i played a round of golf.

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