Feet up kind of sit back say all right, whos really doing well . Whos really doing badly . Were having this relentless daytoday analysis. Were still the thick of it. Which is why we need to stay rigorous. This is made more difficult by the shear number of new companies that have had the guts to come public. Lets start with next monday when we get results from clorox. The quintessential consumer goods Package Company that was run so well for so long. Ive studied this company long much to know that its in capable hands and i bet that tradition to good solid numbers that tae how will clorox to become a good Portfolio Holding for so many of you satisfied viewers; i expect good things. After the close, we hear two from two radically Different Companies with stocks, dennys and bio morin. Dennys report drad mat i can upside supplies but the market yawned because Rising Oil Prices turned investors sour on the restaurant group. Then the ceo told a great store pri. Gasoline has fallen since and weve seen dramatically fallen stocks in panera and buffalo wild wings. I bet dennys could do the same. We know from biogens recent december sthaentscent that it could be disappointing. Tuesday be prepared to be disappointed not from america but china. We get the pmi. I need you to be ready for a selloff that can impact our markets. Its always possible that we see a stronger china number someday. But chinas well lets call it the topmost important existential threat to anything good happening in the world. So be aware that china lurks like a hidden dragon or maybe even a crouching tiger and it can breathe fire and pounce on our stocks with a level of force that makes earnings irrelevant. Thats the case then you could get a buying opportunity when the quintessentially american cvs reports, thats charlie victor. Im amazed at how this Management Team has turned cvs into a true retail powerhouse with a health care kicker. I expect one more excellent quarter which is why you might have to be opportunistic and buy it on an irrelevant but powerful wave of chinese stock market related selling. You know what went virtually unnoticed this week . A further tieup between regenron and sanofi which owns roughly 26 237b9 of regenron. Theyre collaborating on an anticholesterol drug and that overshadowed this partnership announced later in week for the development of cancer drugs. Like regenron longterm but it might be greated on the growth of its older Macular Degeneration drug. If it falters on sales of that drug i dont think it will but if it does thats your next chance to buy the stock. And i want you to take it. Youll most likely be buying alongside sanofi which can accumulate regenrons stock in the open market. Disney reports after the close tuesday. Ive been hoping far bryce break so new buyers can get a chance to buy the premier growth stock of our time. There hasnt been one and disney hit a new all time high again this week. And you know what . At this point if you done own it, i would wait to see if you cant get disney on a chinarelated discount or shortterm glitch in the sales of one of its myriad properties you have with star wars and Shanghai Disney ahead of you and with those catalysts it might give you a quick entry point. We also get results from pioneer natural resources, pxds, thats got huge holdings thats been beaten to near death by this oil and gas selloff. All i can say is that as pioneer goes, so goes the independent oil and gas companies. Yes, pioneer is that power to feel the groups psyche. All eyes will be on rafflelph lauren when it reports. In company has been disappointing for ages and ill wonder if they cant break out on the funk because everyone else has. After the close, we have jackinthebox. I know jack which, like dennys didnt get its due when it delivered an excellent quarter. I bet the stock will be in sync with another solid showing. Two battle royal stocks report wednesday evening, tesla and fitbit. Both have a lot in common. Theyre exciting and they have muchloved products and the products people buy turn them into shareholders and theyre despise bid short sellers for being too expensive. Tesla is a cult shook the defied reality for years and it will continue to do so if you like the car, buy the stock, i dont care, not to up me. Not my money. I believe fitbit has created an ecosystem of health and wellness with its devices very much at the sent other that ecosystem and i dont think the marketplace understands the power of the cosystem or the platform yet. Maybe investors will get it when fit fit reports its First Quarter after becoming public. Ive liked this stock for 15 points now because of its great growth and it doesnt compete with apple, the watch, no matter how much people tell you that they have to contend with the cupertino giant. I do not think apple can wreck fitbit. Thats how strong i believe its ecosystem is. Thursday fresh off its sale of its generic drug we hear from allergen. And expectations have gotten high for this company. My charitable trusts owns and r it and were concerned about that runup but now the company is armed with a 40 billion stock in cash bankroll, thank you, teva there are a lot of levers that can be pulled here. I want to see what molson coors says. Anheuserbusch took tap stop down it with. My favorite, though, if youre a fan of bar san miguel, many i small plate Mexican Restaurant in brooklyn remains domestic corona and modell low breaking constellation brans. I want you to buy that one on any weakness in tap following from the weakness in bud. Finally on friday we get the labor departments nonfarm payroll report and i think its safe to say there will be massive secondguessing in the feds decision no not signal a rate hike earlier this week. You know, strong number and a benign chinese stock market expect a selloff if we get a major change that says that theres even more hiring going on. Now, if we get a strong jobs number and white wave reports a good quarter friday morning but gets knocked down by the futures because the number is too strong, that may be Perfect Place to buy this organic and natural food maker. Remember, just because whole foods reported a bad quarter doesnt mean it isnt good for white wave. They are carried in so many stores. We have a plethora of earnings but remember the fed chatter and the potential stock market breakdown will play havoc with our stocks so keep one eye on earnings and the other eye on the big picture that lets you buy the stocks you want at prices you think are cheap enough to pull the trigger. Doug in missouri doug . Caller jim you have a great staff. Man, they make me look brilliant everyday. Everyday. Caller i have an airline question. Okay. Caller the price of oil is falling with some pundits calling for a further drop to 30, even 20 a barrel. Airline fuel costs are significant components affecting that bottom line. Is now a time to buy . If so which one . I like southwest air and i think its good but its moved a great deal as oil went down. Im not so sure oil will have the big breakdown you think it does. I think if anything oil probably stabilizes at the 43 level and if thats the case well lets let the Airlines Come down before you get back in. Lots of earnings next week, but china and the fed are still in the picture. Keep one eye on earnings and the other opportunity. Get on the companies that you like at super cheap prices. Speaking of the fed, were taking a deep dive tonight. Find out what yellens next moves could be for your money. How rising rates change the way you approach buying a stock and the impact on the international piece of a diversified portfolio. So stick with cramer. Mad money will be right back. Every Auto Insurance policy has a number. But not every Insurance Company understands the life behind it. Those who have served our nation. Have earned the very best service in return. Usaa. We know what it means to serve. Get an Auto Insurance quote and see why 92 of our members plan to stay for life. Uncharted waters. Thats where we are right now. Uncharted waters. Thats because weve never had Interest Rates stay so low for so long that its always a shock when they go higher. You need a guide to what happens as they go up. Which they will soon and how you can survive and maybe even thrive as they go higher. This show tonight is that guide. First we have to deal with the counterintuitive nature of the whole prospect of the fed raising rates and why it tends to cause such havoc in the market. Then we have to preposition ourselves in a moment of what amounts to be planned turmoil. After all, when the fed cuts rates its all about igniting the economy. When the fed raises rates its about reining in the economy. They are two different beasts with two different consequences. We have to explore whats worked when rates goo go higher in a different kind of environment than weve seen before. We have to explore profiting from from the decline and how its harder than it looks. Then we have to return to the principles that brought us here the best ways to make money, regardless longer term of the fed. First, lets discuss some common misperceptions buts about why the stock market can go down on good news and up on bad news. In the old days before the Great Recession we had traditional interplay between the fed and the economy. The fed perceived this job as helping the economy create jobs when things were bad and slowing the economy to prevent inflaigs when things got better. Makes sense. Its in everyones interest except short sellers to have a vibrant economy. We wanted to put as many people to work in order for our nation to be strong and allow people to participate in the progress greatness, and profits of the greatest country on earth. So when times get tough, the fed swings into action with its admittedly cumbersome tools to get things moving because it doesnt have the ability itself to create jobs cant put people to work, thats something only congress and the president can do and private employers. What the fed can do is move Interest Rates down to levels where its so cheap to borrow it can impact not just business but everyone. Allowing them to refinance, take loans, build things expand business. Put miss people to work. At the time when the Great Recession was taking hold the fed under ben bernanke misread the economy and thought it was stronger than it looked. Thats because he was focusing on the Housing Market which was way too high and raising rates repeatedly to cool off the market even as the other parts of the economy frankly werent all that strong. What the fed didnt know is that the Housing Market while only 10 of the economy, punches way above its weight meaning that it creates a ton of jobs and can produce a gigantic amount of debt as homes and apartments are built and purchased. The fed raised its shortterm rates 17 times between 2003 and 2006 stopping at 5. 25 almost principally to cool the Housing Market. Then the fed turned a blind eye to how rapid these rapidfire increases did the Housing Market and by 2007 it was pretty clear to many of the important executives on wall street that things were very much awry. [ screams ] this was around the moment when i lost my temper on air to get the feds attention with my rant predict manager firms would go under because major investment banks had been the principal abettor of 7 trillion in the Housing Market and the 7 trillion and the fed were oblivious about the interaction between housing and the rest of the economy. They just kind of missed 7 trillion. At that point we were seeing a tremendous number of loans turning sour. I dont want to replay the unraveling or how many institutions were failed by it and jobs wiped out. Suffice it to say unemployment skyrocketed and the fed backpedal bud it was too late. The destruction was so great it crashed the worlds economies and took our Unemployment Rate to almost 10 by 2010. Roughly twice where it was a few years before. The fed did everything within its power and exceeded its power by cutting rates to next to nothing and then starting to buy bonds of all types to lower more than just the short rates than it traditionally controls. Highly unusual behavior. Fast forward to today. Were putting people to work at levels we havent seen in years and while wage rates have proven to be low and the Housing Market hasnt reached anywhere to close where where it was before the Great Recession, the fed has been able to declare a vaktory and move on from its intent to keep historically low rates historically low. So where does the stock market come in . Lets count the ways. First, the fed with historically low rates was able to stimulate hiring that allowed people to spend at stronger levels than they were during the Great Recession. Remember, we are a consumerled economy in this country. Meaning that twothirds of our economy revolves around spending. Not the exploitation of our raw goods, manufacturing them into finished merchandise and then selling or exporting them. Thats a huge part of the economy but not as important as spending so low rates allows consumers to spend on home, cars and themselves. It all produced a stronger day in translated to higher profits for all of the industries and the people who cater to them. Not bad. Number of autos sold in the country almost doubled from the Great Recession. We have much stronger retail sales and while home sales didnt spring back to life, a massive refinancing boom spurred spending. The low rates didnt do much to help big industry including the most important growth engines of the economy, nonresidential or nonresee as we call it construction. So these portions of the economy and the stocks and companies that benefitted from it went higher. Because the fed kept Interest Rates down that allowed corporations to issue debt that could let them expand or perhaps take over other companies which led to an amazing merger broom which helped stocks. The merger boom cant be underestimated, its importance, because it helps raise the price of all stocks in the cohorts where the takeover has occurred. And the cohorts were numerous and many. The bonds that financed these mergers gave institutions and individuals more income than treasuries could throw off so they were purchasing large amounts to the point where historically the amounts of money raised border on absurdity and the price of the money, the actual rate, is too low to be justified by longer term picture of the economy. No matter thats how desperate it became for yield. People always reach for yield and it ends up badly. Others reached for what we call bond market equivalents. That stocks that gave you yields well if excess of treasuries. This i liked. These stocks many of which in the consumer Package Goods industries and in oil and gas, utilities and Real Estate Investment trusts became much sought after as never before. As individuals demanded some income in order to be able to make money with their money. Do you know thats the mantra of mad money. Some people became increasingly possible as old certificates of deposits ruled over and new ones produced next to nothing. These had the impact of restarting the economy but it wasnt until oil prices were cut in half by a glut driven in part by u. S. Production that increase increased dramatically because of our technology that we got employment and some wage gains that made it so the fed could at last declare victory. The bottom line, the feds done its job as best as it can and the regular economy takes over. What does that mean . Well, when you want to know what it means for the stock market i suggest you stay tuned to find out. I want to start with garrett in texas. Garrett . Caller hey jim, another hook em horns booyah to you. Completely absolutely. Caller i was curious with the rate hike looking inevidentable if in your opinion theres stocks that performed better after the Interest Rates rose. We know from jamie dimon at j. P. Morgan that when the rates go higher j. P. Morgan makes a ton of money. That includes xlf if youre so inclined because you dont want individual stock risks but the major banks are the beneficiaries. Glen in illinois. Glen . Caller booyah from chicago, home of the chicago mercantile exchange. As well as the bears, the bulls, the white sox. Go ahead. Black hawks. Caller a simple question for you, jim. For the retail investor, what for a person either buying or selling stock, whats your thought on using market orders as opposed to a limit or stop . No were always going to use limit orders or we should help get someone else to help us run money. We have to be hands on about our money or let professionals take care of it. We dont use top losses i talk about that. You either watch in the market if youre involved in it or you need help or you go to an index fund. All are okay with me. Youve got to know your own suitability. Thank you, fed, youve done the best job you can, now the regular economy is in control. Our special fedfocused show that you wont get anywhere else, believe me continues ahead with the consequences that are coming for both the market and the economy as a whole. What does it mean for you . Plus two reasons why its a mistake to just walk away as things on wall street get tough. And the changes you need to make with your money right now ahead of the major moves to come. Dont miss it, mad money will be right back. Now that the fed has declared victory over the war against unemployment we recognize there are consequences against the economy and the stock market. Theyre two different animals despite what you may hear. First those who think the stock market is wrong to go down when job growth is plentiful, you dont understand shortterm history even though you have a good grasp on a longerterm vision. Its good more people have jobs that the economy is healthier. Unfortunately, not everyone agrees with let that. Let me trace in this segment why some people feel that way and why i dont agree with them. First there are the people who believe the market has rally sod long solely because of easy money. These people believe once the fed has done its job and starts withdrawing liquidity of the smallest amount then the market must come down and hard because its been propped up by the fed for so long. These people are presuming four factors i think may not be sapped. Number one, they think the stock markets will hold market because stocks have been used as a surrogate for income. Surrogate income vehicles you call them and they will now lose their status. I dont agree with this point of view until there have been many rate increases. Rates are so low that even if multiple rate increases, sox that yield 3 will be more attractive versus bonds on a short term and intermediateterm basis. Second, the economy will succumb to increases in rates because its too weak to sustain the slightest move up of any consequence. I know that seems irrational but we have seen this economy experience whole quarters of dramatically lower growth and any time we get a belowaverage labor nonfarm employment number we will hear the fed acted too soon or is being too aggressive. These people are too dour i disagree well w them. Third critics say any time the fed raises rates the dollar will get stronger and a strong dollar is terrible for exporters in terms of translags when they go to calculate the revenue and weaker currencies dont as up to as many dollars as domestic sales and lost business to those who sell goods with weaker current sis. If you dont understand this remember foreign cars are cheaper when you have strong dollar which is why u. S. Companies always struck about how uncompetitive theyve become versus our trading partners. All these to a degree can be argued, you know they have credence. Think about the last fed tightening cycle. It went on 17 times over multiple years. If you sold all stocks when the rates started you missed out on tremendous gains. You hear that . You missed out on tremendous gains. But you did have to sell or have lost fortunes so the tightening cycle led to a con come nant decline in stocks so they will simply sell sell sell each time you get a tightening. I will describe what really happens after tightening but you can understand the tightening issue will spook people out of stocks too soon. Always. Its going to happen over and over. How about the actual economy . Rates are so low you need to see rate increases that takes rates much higher than they are now to see a genuine decline in the rate of growth of business. Not initially, a little pow, but if the economy is strong and the fed does its job well be okay. Once it starts humming the u. S. Economy is difficult to stop. So stop freaking out. I dont think you have to sweat these mauler increases but that is not enough to assuage those who think the fed will go on autopilot and raise and raise without being data dependent, something theyve said they wont do. This Federal Reserve post the bottom of the Great Recession is telling you its data dependent. Im not concerned well return to the old days of the Alan Greenspan fed. I think those days are over. Nevertheless, again, many dont trust the fed to do the right thing. I do. Many suspect we can be thrown back into recession without much problem. I dont. Now the dollar im giving you that one. Im concerned higher short term rates will make our country a magnet for money around the globe. If youre a wealthy individual or a manager of a Huge Pension Fund or muft in our country and new the low rate environment yourself, you would much rather buy our dollars and take them and buy our bonds. That will keep jacking up the value of the dollar to the point that all our exporters will be hurt. Its a real and genuine concern. Its one i am very on the fence about in terms of telling you what i feel confident is the right course of action about. Most wealthy people and Pension Funds want to stay closer to home and would prefer not to have to buy u. S. Dollars. Most important. Dont think for a second when the fed is raising rates its a better time for the stock market than when rates are being cut. It can be better for some parts of the stock market but i cut my teeth watching the late how will ruck heizer and he would introduce you to the greatest minds of the business every night. One of the best was marty zweig, a fabulous money manager who always preached dont fight the fed and dont fight the tape. Dont fight the fed meant when the fed was caught cutting rates you had a tail wind at the back and if you stay negative even if you thought the fed wouldnt succeed in getting the economy strong again you would lose money. Youd perform much worse than the overall market. As we know from this amazing ratecutting cycle zweigs wisdom prevail it had whole time. Those who doubted the feds resolve and there were many, many who thought the fed wez we used to hear this all the time, push you on a string they ended up being dead wrong. They were run over by the tape meaning that they the buyers swarmed in and bought every dip when the market was going down. Every single one and each time they made money as it seemed to good to be true. It wasnt. Now when you are buy stocks right now when the fed is raising, what can i say . You are violating zweig, youre fighting the fed. Rates that go up because Business Activity is good can be a positive for many sectors but with no longer have the fed wind at our backs and to not acknowledge that is to be a fool. So while i dont expect disastrous scenarios to pan out, i know the fed is the enemy of higher stock prices and it can be a powerful enemy if it doesnt watch how fast it raises rates. Believe me we will miss their accommodative ways for certain, especially around every fed meeting or disclosure or employment number from now on through the duration of the upswing. Still ahead, when the fed makes its move what do you do for yourself . Ill help you form a game plan of when to buy or sell. Then the stocks can succeed in a raising rate environment, hallelujah. Send your tweets jimcramer. Im about to answer your questions. Mad money will be right back. Why should over two hundred years of citi history matter to you . Well, because it tells us something powerful about progress that whether times are good or bad, people and their ideas will continue to move the world forward. As long as they have someone to believe in them. Citi financed the transatlantic cable that connected continents. And the panama canal, that made our world a smaller place. We backed the Marshall Plan that helped europe regain its strength. And pioneered the atm, for cash, anytime. For over two centuries weve supported dreams like these, and the people and companies behind them. So why should that matter to you . Because, today, we are still helping progress makers turn their ideas into reality. And the next great idea could be yours. Weve now gone over why we can expect the stock will be choppier as rates rise than when they fell. But theres plenty of good opportunities throughout because theres no Systemic Risk at hand and Many Companies earnings go higher when rates go higher not counterintuitive. How about the overall market . What happens when the economy generally does get better away from rates . In other words, what companies have stocks that do better when the economy does better despite higher Interest Rates . Welcome to the world of intense rotations have which have already begun since the fed signalled in 2014 that things were getting too good to stay accommodative. Normal times we would reach for industrials as earnings improve year after year and year over year because the economy is getting better. Remember how we look at stocks how did this quarter compare against last years quarter. But these are not normal times. The Big Industrial companies that would be the go h to stocks have become too dependent on overseas earnings to make that rotational move simple to predict. They moved overseas. Think of it like this. Our company is developing as employment and sales grow. Europe is getting stronger but no so fast as to make it so it can generate enough upside for most companies doing business there china while growing a great deal is slowing in its rate of growth. In other areas like latin america, they seem to have become an overall drag and some make me feel like theyre going away. So the tried and true Big Industrials cant be bought if they have large amounts of business overseas unless that business is part of a larger cycle like the aerospace cycle which is more dependent on getting new planes to meet demand than the overall rate of the national economy. We have to be extra vigilant to be sure what used to be automatic trades. Its what my old handbook real money doesnt look wo like that anymore. We have to be careful to buying Tech Companies with large exposure to europe. Many do but their earnings might not have picked up quickly. All industrials will be challenged by the stronger dollar that comes as the fed raises rates as foreign governments and investors seek our bonds from Capital Safety and appreciation. So what will work besides the banks . Companies that have the biggest year over year earnings revision chiefly u. S. Industrial without a lot of over overseas business. High Growth Stocks that do well but can get a boost for a better economy and restaurants and retailers that have benefited from growth already and Lower Energy Costs that meant so much to their bottom line. These gains will be in fits and starts and will be called into question for now on as the fed tightens. Thats okay people get gloomier and more pessimistic. Thats the way it is. But history is frankly on the bull side, at least in the early rounds of tightening as they tend not to call off the economy drastically even as many fear they will. Therefore thats where the bargains are created. How does this play out in the day to day market . Simple. Well have many threeday selloffs in the future. Thats what i predict. On each piece of news that could incite a rate hike on day one all stocks go down, thats the broad market selloff led by big hedge funds and mutual funds blowing out of the s p or selling the futures and crushing stocks. Heres the big switch. On day twoed if whth fed was on the bull side you had to start buying the bond market equivalent stocks or the stocks with a higher yield. That will no longer be the case. Now the money is going to gravitate to the banks because their earnings are going to go up and to the highest Growth Stocks, the ones that have seen the earnings go higher. Regardless of the fed and higher rates. Some groups will be hurt badly. While the housing boom never got off the ground housing stocks will get hit every single rate increase because mortgage money will cost more. Theres earnings estimates, theyll be slashed. Home goers have to hope higher employment mitt gates Mortgage Rates and banks can ease terms for those who get credit. Higher wages than future might help that as well as more job security and second jobs that become more plentiful. Overall the markets entire pricetoearnings multiprime minister tends to take a hit when rates go up for two different reasons. First whenever we are concerned the fed will tighten too quickly we doubt the earns will stay strong. You will hear talk about how this or that might be the peak earnings quarter or the that the entire market might enter peak earnings mode. That force down the pricetoearnings ratio for the entire s p 500 and thats what stocks are priced off of. Second, the pricetoearnings multiple shifts lower because people will worried about inflation. Why would the fed raise rates if were not in inflation. I know companies are stuhring growth to stop a deflationary cycle but there will be plenty of people seeing inflation coming and others say the fedding is behind the curb. Youre going to hear behind the curb. That will be people on there constantly. Were going to have to hold our breaths every time a wholesaler Consumer Price index number comes out because well fear that the economy is overheating. When you hear talk of inflation, youll hear talk about buying gold. I expect that to be something worth focusing on. This is when your insurance policy kicks in and thats been a drag for a long time. People buy gold because it retains the purchasing power when paper money loses it. Investors will embrace gold after multiple years of avoid dance. Theres one issue of gold to keep in mind. Its been in a bear market for some time and many producers who thought gold would go to the skies dont the money to find gold. With the sole exception of rand gold which fixed its Balance Sheet and enhanced the gold prospects position i would not trust any gold miners. I would stick with the gold etfed on gold bouillon itself stored in a safety deposit box. I dont see any inflation at all. That see i recognize so much activity was spurred with lower rates at the end of 2014 so its reason to believe think you will hear a lot more about inflation than you do now. It will become vociferous from some managers who are making bets against the stock market or radically underexposed to bonds and stocks because they fear a rising market. They wont tell you that but thats whats happening. This is something that always happens, the bears portray whatever is negative in the worst possible light and they scare you into thinking its the end of the world. Economy economy was weak, the worry was it would never get better. Now the worry will be its too strong and the fed has lost control of it. Dont worry, i will be there there to try to rein them in and cool emotions. As i had to do in the down side they will be as loud mouth and righteous and biased as usual without ever revealing their true portfolio stance or admitting they are just being political. Heres the bottom line. Youll want to move towards more economic stocks but be cognizant that International Stocks may not do well because of a toostrong dollar while gold might once again shine and come in vogue as inflation talk permeates the airwaves endlessly going forward. Stay with crimer amer job we know this market is going to change its color ration. We know we will be fighting the fed and will have to be more careful allocating capital. We recognize the stocks will be sold and the bonds with low interest bearing paper, those could be very dangerous. Maybe then we should cover the topic that i know many of you might be thinking given that fighting the fed can be very difficult. Tough job, even though a better economy will produce better profits. So lets do something i never talk about. Lets cover short selling i never recommend short selling. I wont tell you to bet against it, thats not my job. Im not allowed to go short on my charitable trust. But when i was at my Old Hedge Fund where karen cramer was, she shorted everyday. It was her strength. She loved the short side. So heres what im going to do a long time ago she wrote wrote down short selling rules to live by and im going to give them to you. Not much commentary just straight out. They are timeless even if some of the examples now seem a tad quaint is rule one has dust on the it. She called it the businessweek cover rule. At the time trading publications like businessweek, forbes, fortune, they were incredibly powerful. They you have been featured companies on their covers and when they did the stocks levitated higher. So she had a rule she said never short a company that you could imagine would be on the cover of a great publication. I have augmented this rule and its simple. Never short a bestofbreed company. Theres so many crummy companies out there, why short a company thats a standout that can be considered the best of the best. Move on. Find Something Better to do with your time. Ask yourself, can the company be taken over . If it can, dont short it. In my years at my hedge funds i was short three takeover targets. Two had tremendous fundamentals and the third that has the most perfect headandshoulder ever thats a negative tech pattern like we do on the charts. The ones with the wicked fundamentals turn out to be disasters. Not in time for me but for the acquirers. In one case it was a total loss. The third . I guess acquirer didnt care about the technicals. And in all three cases i could have guessed i could have guessed a takeover could have occurred. There were rumors of all them sometimes its just too risky to bet against the Worst Companies if you think that someone stupid enough to buy them and there are a lot of stupid acquirers. Three, never short a stocks because it seems like its overvalued. Its the most common mistake. Never try to call an irrational top based on sales or earnings. There will be some mutual fund out there that will keep the ball until the air and crush you for longer than you can take it. Some stocks seem expensive and then grow into their market caps like chipotle. Others just get more expensive because they fit the demands of the wall street fashion show. Still others have no earnings like many biotechs but they get business soviet union anyway. It doesnt matter if you think something is too expensive. Beauty is in the eye of the beholder or the buyer from that matter as we know from the people who were short farm asset. Wow. Those were horrendous. Four, never actually use common stocks to short if puts are available. If you dont know how to work options, i have a complicated primer in how to get back to even puts got me out of the stock losses i had. Puts will keep you from being bought in. Meaning a Brokerage House that lends you stock cant demand the stock and close out your short without your consent. That was something that happened by the way in halcion days after shake shake became public. If you dont understand what that bought in concept is check with your broker or if you want to hoot, go read confessions of a street addict where i teld you how it hurt me for hundreds of thousands of dollars. If you are shore something is going down but you arent sure when its going down. Use deep in the money puts and go out far in time. You will never again paying the extra rig is to go out in time. Its always worth it. Stocks stay up longer than you think and a lot longer than they should. Rule number five never be part of a gang tackle short. If you ever hear of a bunch of people shorting the same stock that youre shorting, i can tell you, you will be a dead man. They will break ranks if things get tough and take the stock up with you. Karen would always ask me does anyone have this call . Or worse, does everyone have this fall . If the answer was yet her answer was no we arent going to short it. There is way too much risk that it can blow up in everyones faces and that it will capitulate and destroy your time honored lovable trade. Finally a very key lesson for your sharper traders and Hedge Fund Managers out there. Its not cool to short. Karen short sold for a living and it can be gut wrenching and harrowing and rewarding when you are right and mind numbingly painful when truly novocain free when youre wrong. Theres nothing suave or gallant or beautifully intelligent about shorting. Hedge Fund Managers like to brag about their shorts they think it distinguishes them as brilliant, intense, rigorous thinkers. Same as going long karen would say, except you cant quantify the loss. Short seller good luck you will need it. Whats a better way to go . Simple, if you dont like the market or think it will go down a lot and youre concerned, sell some stocks raise cash trim your stocks. Rate them. Rate them. We do it at actionwords plus. Com. We decides which ones you dont want to keep when things get tough. We rate them on friday. As long as the fed was cutting rates and staying accommodative, tax was rarely king at least for long. Though the government would squabble enough to make it worthwhile. Im simply saying the market is getting more difficult because you dont know when the fed is going to act. So why not build a bigger reserve . Each time the fed raises rates you will put it to use. But you will have to put it to use because as you have learned tonight theres plenty of places that do very well with higher rates. You need to be in them. Bottom line i know you might be itching to short. I am just begging you to realize theres substantially more down side and you must be more disciplined if you are going to pull it off. Much better to raise cash and be ready to deploy that cash in the next fedrelated downturn as the fed alas is no longer your friend. Stay with cramer. Can it make a dentist appointment when my teeth are ready . Can it tell the doctor how long you have to wear this thing . Can it tell the Flight Attendant to please not wake me this time . The answer is yes, it can. So, the question your customers are really asking is can your business deliver . Xco0 you know i love to tweet but i love to talk. Lets step away if my phone and answer your tweets without that 140 character limit. Lets get to it. What is the multiple that needs to be with divided by pricetoearnings ratio to find out if the stock is cheap. Ill explain this in a simple way. If the company is growing faster than the average company and sells at a multiple lower than the average stock in the s p i think you might have a bargain. Enough room to dance like they do at coyote usually. Only when they close the place down and plea a doesnt fall from the bar. Theres always room at bar san miguel. Next uhoh, ill get with you on the next show. Stay with cramer. And accessible anywhere. My drivers dont have time to fill out forms. Tablets. Keep them all digital. Were looking to double our deliveries. Our fleet apps will find the fastest route. Oh, and your boysenberyy apple scones smell about done. Ahh, youre good. I like to bake. With at t get up to 400 dollars in total savings on tools to manage your business. Dont fight the fed. Dont fight the tape. I like to say theres always a bull market somewhere. I promise just for you right here on mad money. Im jim cramer and ill see you next time. Narrator in this episode of american greed. Car trouble. Its an urgent letter telling you your Factory Warranty has expired. It looks legit, as if coming from toyota, subaru, bmw, but this pitch comes from Darain Atkinson and his brother cory and their multimilliondollar business built on fear and lies. Im telling customers, oh, were just like the warranty you bought at the dealer, and im like, no, were not. Narrator they promise to take care of their customers cars. But what they take is their hardearned cash. It was a money grab, and they were gonna get it as fast as they could, and they were gonna get as much as they could