This business. There are so many Different Things you need to balance in order to be a great investor that it can be hard to keep track of everything. Now, a lot of this stuff is much more important than the daytoday action in any particular session. This stock went up, this stock went down. Without the right discipline, the right framework, the right dare i say philosophy, youre going to get yourself into trouble. And thats why were all about discipline when we manage the travel trust for the cnbc investing club. Its why we constantly fall back on the rules, our investing guide to guide our Decision Making for every kind of market, and tonight, im going to share some of them with you. But i know that the big picture Financial Advice can be hard to process. A lot of its down right contradictory. Thats a keyword. We tell you to have conviction, to stick with the companies you believe in, and then we say you need to be ready to change your mind on a dime if the facts change . You need to be cautious but you also need to be ready to pounce on opportunities when they present themselves. You need to avoid chasing stocks that have run too much but you also shouldnt care too much where a stock is coming from if you believe its headed higher. Believe me, i get it. If you take all my rules literally youre going to be running around in circles while tearing your hair out. So tonight were going, cant resist. Tonight were going to take a step back, try to put all of this discipline stuff in perspective. Now, if you pick your own stocks, which you know i love, in addition to having a healthy balance of index funds which you know you need, the thing, well, lets just say what you got to have is good judgment. But obviously good judgment, investing judgment is not the kind of thing anyone can teach you in an hour of television or a year of television. Thats why i tried to help you build big habits, try to teach you about individual stocks and the whole market. I try to give you the tools you need to develop your own judgment, and why i focus on guiding you through the whole process more intensely, in my investing club. All my best investors focus on te teaching us how to think. I try to take my cue from them. I want to teach you to be a better investor. Otherwise i would have stopped doing this show years ago. The problem is its a heck of a lot to process, so what do we got to do . We got to try to put it in context. First and foremost, when youre managing your own money before any other consideration, you need to know yourself. Now, ive said this before, and ill keep saying it because its so important. You simply cant know which stocks you should buy if you havent taken the time to consider what your objectives are. You need to build up your wealth to make a major life changing purchase, like a home. Are you just trying to get a decent return as you save for retirement . Do you have enough money to burn that while youre taking a risk on speculative positions it wont hurt you . So many people dont do that, they put all of their money in speculative stocks hoping to hit a home run, and then, the truth is, theres no one size fits all approach to investing, and anybody who tells you different is dangerously misinformed or flat out lying to you, probably in order to sell you something, but far too often, people will invest in the stock market with the simple goal of making money. We all want to make money. I want it, you want it, but how quickly do you want that return . What are you willing to risk in order to get there . How much can you afford to risk in the first place . These are the crucial questions you need to ask before you start picking individual stocks. Why, because without a clearly defined goal, you have no way to determine which stocks you should be buying. Your 401 k or brokerage account do not exist in a vacuum. If kryoure trying to save for retirement, a stock like tesla may not be the most appropriate place to put capital. If you have a decent sized nest egg and you want Capital Appreciation, then higher risk Growth Stocks start to look a lot more attractive. In short, before you can start making judgments about individual stocks, you need to figure out what your own internal yardstick is going to look like. Thats the foundation of good investing, judgment, knowing what you need so you can find stocks that suit those needs, its called suitability, and its important. Maybe one of the most important parts of investing. Lets put it otherwise, lets say you want to fly across the pacific ocean, you do it in an airplane, you dont try to fly across the pacific in a ford fiesta. If you want to pick up your kids from school, taxing down main street in a 747 would be impactful, wouldnt it . In that situation, youre better off in the fiesta. How about renovating the home, do you need to go to home depot, power tools to get the job done. The ford fiesta is too small. A pickup truck, maybe a ford lightning, well, we hope because with travel trust likes ford, maybe that can do it. Now, this may sound simple, even down right obvious, but its the same way with stockings. When youre saving for retirement, you want low Risk Holdings that will give you a slow and steady return. For those of you who dont have time to Research Individual stocks, you cant go wrong with the basic low cost s p 500 index fund that mimics the performance of the border market. Look, ive recommended index funds endlessly, and ill keep doing it. They are phenomenal. At their best, they help de democratize the engine of Wealth Creation that is the u. S. Stock market. America remains a Growth Company thats business friendly compared to the rest of the developing world. When you buy an s p 500 index fund, youre betting on the longterm performance of the u. S. Economy. H historically thats been a good bet. Dont bother trying to pick individual stocks until you have at least that much money and an index fund and preferably more. Its the most important bedrock of your portfolio. Now, if youre looking to make slow and steady money over a period of a decade, thats retirement investing in a nutshell. You might consider certain kinds of individual stocks, especially consistent, steady eddy with big dividends. A 4 may not sound spectacular. That 4 return will double your money in 18 years, thanks to the magic of compounding. Youve got to reinvest that money, that is vital. You can get the same thing from treasury bonds. Stocks tend to offer the possibility of more Capital Appreciation than youll ever get from a bond. Of course, not every investor finds the retirement. Even if you are, that may not be the only thing to do with your savings. This is another important point, i like to break things up into your retirement portfolio, where youre pretty cautious and your discretionary, mad money portfolio, the extra money youre not going to need to support yourself after what the kids call late stage capitalism has ground you down, and youre no longer able to work. The discretionary portfolio is where you can take risks to generate higher profits. But, and this is a mighty big but, for the vast majority, the discretionary is more important that retirement. Its not just retirement. If you want to pay for a house to send your kids to college, you should take a more conservative approach to managing that money. Whatever kind of account you put it in, your strategy for College Tuition savings or future house savings should look more like your retirement portfolio than your mad money portfolio. Get to know yourself before you jump down the rabbit hole of getting to know individual companies, something we always try to emphasize in the cnbc investing club, as you know. The bottom line, trust me, i get it, when you get excited about a particular stock, you want to dive right in. First, though, you need to consider what youre trying to get out of the market. The answer to that question is not going to be the same for everyone. But Everything Else stems from it. You cant make judgments about stocks until you know what characteristics you actually are seeking. And you value. Tony in washington, tony. Hey, cramer, thanks for taking my call. Of course, tony, whats up. You know, when i was working and contributing to my 401 k , the only choices i had were mutual funds. You know, i never made any real money until i started buying individual stocks. I really dont understand why mutual funds are so popular. Lets give mutual funds their due. There have been some that have outperformed the market, and the 401 k plans tend to have an array of mutual funds that you can pick so you kind of craft your own portfolio. I happen to like individual stocks, and i like the s p 500 because i like a low Cost Index Fund that can continue to give me good returns and im a believer in that, so i understand but im not going to knock mutual fund industry, theres very Good Companies that do a great job. Lets go to rambo in california. This is rambo from san jose. How are you doing . Awesome. I have a question for you, one of the first metrics i look at when allocating an investment is the debt and enterprise value. In many cases a sound doubt, although a Company Looks attractive on a pricetoearnings perspective, it becomes far less attractive on an enterprise valuetoearnings perspective, especially in this high Interest Rate environment. Can you give us a sense of how you factor in a companys debt and enterprise value when forming your investment pieces . I think its a great question, and im going to be very cut and dried and very simple. I look at how much money the company has to pay in interest, how much money they make and if they dont make enough money to cover the interest, then its a sell sell sell, and every time i violate that principle, i go wrong. Look, before you start investing, you have to find out what youre trying to get out of the market, and then you set your goals at quarterly for you, and once you know what you need, then you can pick stocks, but not before that. From being flexible to the right attitude, im sharing more investing rules that might help you become a master of the market. And you cant miss this show. I want you to stay with cramer. Dont miss a second of mad money. Have a question, tweet cramer madtweets, send an email to madmoney cnbc. Com or give us a call. Miss something, head to ma madmoney. Cnbc. Com. This is american infrastructure, a prime target for cyberattacks. But the same aipowered security that protects all of google also defends these services for everyone who lives here. when the day that lies ahead of me seems impossible to face a lovely day lovely day lovely day lovely day a bank that knows your business grows your business. Bmo. Unnecessary action hero a bank that knows your business grows your business. Missing punches . Unnecessary check reversals . Unnecessary time sheet corrections . Unnecessary unentered sick time . Unnecessary go unnecessary go unnecessary when you can take this phone, youll be ready. Make the unnecessary, unnecessary. Let your employees do their own payroll. Heres why you should switch from chrome to duckduckgo. Duckduckgo is a browser you download to your mobile and desktop devices. Unlike chrome, the duckduckgo browser has privacy builtin. It comes with a private alternative to google search, which doesnâ– t spy on your searches, and it blocks cookies and creepy ads. And theres no catch. Its free. We make money from ads, but they dont follow you around. Join the millions of people taking back their privacy by downloading duckduckgo on mobile and desktop today. Regular viewers know that ive got a lot of rules. The result of more than four decades of money matching business. First theres a broker, then a huj fund manager, then as a journalist and a commentator. Ive got rules for investing, for trading, what to do in a rally or selloff. Avoiding losers, all which should be stressed constantly when we show you the trust portfolio for the cnbc investing club. It can be a lot to take in. As i mentioned before, the point of all of these rules is to help you learn from my mistakes and develop your own judgment. I explained why you need to have a clear understanding of your own objectives before you buy stocks, more focus than trying to make money. Lets pretend you have done selfreflection, and you know what youre trying to accomplish. You buy individual stocks, enough to fill out a diversified portfolio, five to ten names. Thats what i want. Before you buy anything, i need you to do one more thing. First you have to do the homework. Now, ive covered this before, so ill give you the quick version. If youre going to invest enough money in a company for it to matter to your portfolio, you need to know what that company does. You need to know how it makes its money. You need to know how much money it makes. The internet has made this whole process much easier. You can go online and read the s. E. C. Filings, which contain a wealth of information. You can read the transcripts of the conference calls, which is the best way to get familiar with the business and the key metrics that will drive the stock. Feel free to read journalism on top of that. Google it. Listen to opinions, anything to familiarize yourself with the company itself, the way stocks trade, that can be daunting, the kind of homework we do for you on our favorite names, the cnbc investing club. Its a must to join people. After tonights show. Just sign up so we can show you the hard work we do. By the way, lately i have been starting with the web site. I have to admit, i like the companys web site because they have gotten so much better. The Actual Research is part of doing the homework. After you learn what you can and develop a thesis, a theory about why you think the stock is headed higher, you need to be able to explain that story to another human being. Ideally an adult to ensure it makes some level of sense. Walking down wall street, you see me, youre buying a stock, im going to say what does it do, you better know the answer . For those of you tuning me out because you cant stand to hear another word about homework, the califor craft as ill call t im done. Thats all about the process of preparing a stock. Tonight im focusing on the big picture. Lets fast forward a little. Once you have done homework, build a diversified portfolio, five to ten individual stocks, pick your favorites from the club. You know theyve been thoroughly researched. The idea here is that you should be able to do this in your spare time. Not that youll turn Money Management into a second or even third job. Lets assume you own shares in a bunch of companies that you genuinely believe in. You have a thesis for each one, right, you got to have one. Theres no sector overlap, meaning you have five to Ten Companies in distinct vindustris that dont tend to trade together. You can find out if its too much like another company, and sure, what you have in theory is an ideal portfolio. Whats the most important thing to keep in mind . Above and beyond Everything Else, you need to know your perfect portfolio wont stay perfect for long. The five to ten stocks you thought were winners, not all of them will stay winners. Some will stay losers, some will do nothing, and some of the companies will inevitably disappoint you. What can i say. The game is full of heartbreak. Which brings me to my next meta rule, always try to stay flexible. You have to be flexible because business by its nature is dynamic, not static. Things change, markets change, new competitors will enter the entry and under cut companies. Previously well run Companies Start executing poorly. Customers cancel orders, unforeseen events happen, and simply make a category of stocks seem less attractive to the big institutional Money Managers who dominate the market. You dont, they do. When Something Like this occurs, when the story of a company that you own shares in changes. You need to be willing to acknowledge that things are changing, that theyre difficult. If your thesis is no longer in tact, if the reason you gave for buying a stock in the first place is no longer valid, then you know what you have to do is sell, sell, sell. You have to, this is why you need to explain your picks to another person so you can recognize when your original ideas stop being workable. We get so many calls where people say they like the stock, bought it for x, and x is no longer the case. I dont like that, you need to be better than that. You cant afford to say i like it because of x, and x aint there anymore. This may sound straightforward, but experts peddle the idea you should be willing to hold on until the heath death of universe. How many times have you heard people say buy and hold. Nonsense. Dont get me wrong. I would love to hold a stock from here to eternity, but if the story doesnt pan out, you got to be willing to sell. The facts change. Thats why i always tell you its buy and homework, not buy and hold. There are two stocks i have given my highest plus, apple and nvidia, revolutionary companies with outstanding management. Even then, though, you still need to do the homework or watching the cnbc investing club, in case something drastically changes. I bring this up because people hate hate hate admitting when they have made a mistake. Once we make up our minds that things are great for say, cocacola, we dont want facts to get in the way of story. We like cocacola, but shut up, you cant afford to fall in love with any stock. Its a piece of paper. When you buy shares of a publicly traded company, youre not joining that stock in holy matrimony, for sickness and health, richer or poorer. You dont need to go to a judge to get a divorce. Its just a piece of paper. Acknowledge when something has changed. If youre buying a stock because you believe the company is going to take a ton of market share and fails to do, so dont move the goal post, dont search for reasons to hang on. Just get out of dodge. You must be willing to recognize companies can take a turn for the worst. Management can make mistake. Look, heres one that you probably know. Bed bath beyond, they spent 11. 8 billion buying back their own stock from 2004 to 2022, in an attempt to boost the stock price. It didnt really work. The company kept losing market share to online competitors like amazon, and the buyback couldnt prevent them from going br bankrupt. The darn thing still went to zero. Put the money in a mac, the Company Might still exist. You know what was their mistake, the guys running Bed Bath Beyond werent flexible. They kept buying their own stock, putting money into technology that would help them manage inventory, please customers, customer retention, and by the time they brought in new management to turn the situation around, i think it was far too late. Dont make the same error. When something goes wrong with the company you own, be ready to stop hoping and start selling. Listen, be humble and recognize a turn for the worst as bad as it might be, always seems to lead to larger lossing than you have accrued. A wise person says your first loss is your best loss. The bottom line, before you buy a stock, do some homework, come up with a thesis, a reason why you think the stock is headed higher. Once you own it, stay flexible. If your thesis doesnt play out the way you expected to, sell the darn stock as we try to do for the club. Dont keep bashing your head against the wall. Just recognize things dont always go your way, and then move on. Mad money is back after the break. Everything i do thats for my health is an accomplishment. Concerns of getting screened faded away to my astonishment. My doc gave me a script i got it done without a delay. I screened with cologuard and did it my way. Cologuard is a oneofakind way to screen for colon cancer thats effective and noninvasive. Its for people 45 plus at average risk, not high risk. False positive and negative results may occur. Ask your provider for cologuard. I did it my way adventurous music be ready for any market with a liquid etf. Get in and out with dia. This is Spring Semester at fairfieldsuisun unified. They switched to google tools for education because theres never been a reported Ransomware Attack on a chromebook. Now theyre focused on learning knowing that their data is secure. tonight, were zooming out and talking about the big picture. Its stuff you absolutely have to do if you want to manage your own money in the stock market. Before i get back into it, let me just say that if you dont feel like reflecting on what you need from the stock market, if you dont want to do the homework, if you dont want to watch the Underlying Companies and give up on their stocks when something goes wrong, nobodys forcing you. Theres no gun to your head. Its okay if stock picking is not for you. Thats why vanguard invented index funds. Its why the dutch invented bonds. You have plenty of investment options. Its why we created the cnbc Investment Club to help you understand the whole process. If youre going to play the stock market, you should put in the effort to do it right. I think stocks are the greatest engine of Wealth Creation in history. And you can harness that engine, make it work for you, only if you know what youre doing. A lot of this comes down to discipline. The stuff i have been talking about all night. Theres another ultra important component here, call it the emotional side of the equation, you needed right attitude toward the market. Without the right attitude, stocks will break you. I mean it, theyll break you. This is a brutal game, and you need to make sure youre in the right head space if youre going to play it. I cannot stress this enough. For many of you, managing your emotions will be the hardest part of investing, harder than picking winners, knowing when to cut your losses. Stocks being in an abusive relationship, but we keep coming back because long term, it is a great way to try to make money. The thing s unless you can perfectly predict the future, youre going to make lots and lots of mistakes. And when you make mistakes, well, and you lose money, it can be very hard to handle. It really is. You need the patient of the dalai lama to not get upset when you buy a stock and it falls off a cliff. Imagine what it was like before i mellowed out. I was the opposite of the dalai lama. When i got something wrong, i would flip out. I was not gyjimmy chill. I can tell you from experience this is not a productive attitude. I know better than anyone you need to try to remain calm because constantly getting mad at yourself just isnt sustainable. Youll end up running out of patience and giving up on the whole asset class. Im not telling you you got to be the dalai lama, you dont need to go a Buddhist Monk to be a bad investor. You cant afford to punish yourself. The market is brutal nenough. You need to have it on right every day if youre going to find opportunities. Yet so many of us approach the market with lets say an inferior attitude, an inferior state of mind. Our heads are clouded with negativ negative thoughts that throw us off target. Let me be your stock market therapist for the moment at 300 cl dollars an hour. The worst of the worst, when you think to yourself, if only i, as if only i would have pulled the trigger ahead of nvidia, or i could have made a fortune. Dont get hung up on the woulda, coulda, this is a wasted damaging emotion, destructive to the psychology you need when youre making investment decisions. For a long time, i took it to the extreme. A couple of big losses, things i got wrong. I would be obsessed, going over the big miss. This was the wrong thing to do. Not anymore. It took me a long time, but eventually i was able to see just how destructive playing the game could be. This is a key rule we stress to members of the cnbc investing club where we highlight exactly what the messy parts of Money Management is. We do it not just in the emails. We also do it of course in the morning meetings and in the home stretch. If youre an emotional guy like me, you may need to trick yourself into a more productive pattern of thought. I have had to build in all sorts of methods of tricking my mind into not playing the game. Just clear touout. Use the ticker on social media. Go back and buy it for heavens sake. Dont tell me what you could have done or should have done different. You didnt. Whether you walked into a big loss or missed out on a big eight, its irrelevant. Stop beating yourself up about it. The bottom line, the stock market can be punishing enough. You dont need to make things harder by punishing yourself. Dont play the if only game. If you need help curving this kind of destructive thinking, go to that extreme. Take the stocks off your portfolio watch. Youll be surprised how much better your Decision Making pictures when you stop the woulda, coulda, shoulda, and the obsession. Lets go to joe in new jersey. Joe. Mr. Cramer, thank you for taking my call. Youre welcome, joe. I want to say that i have learned from you, and i have earned from listening to you over the years, thank you so much for that. I like that. Learned and earned. Its going to be adopted and used in tomorrow owes show. Whats going on . My portfolio has grown significantly, thanks to you. Thank you. And theres a lot of qualified dividend paying stocks in there. Dividends that are being paid are being reinvested, and its almost equivalent to my earned income salary. Im 58 years old. And i plan on retiring next year at 59 with a modest pension. Do you think this would be a good move . Absolutely. Absolutely i think it would be a good move. Youve got the wherewithal to do it, and thats what matters. Never bet against yourself, long life, and youre going to have to stay invested more than people realize. Im one of the few people in the world, a person 75, 80, should be 50 in equities, i need that because i dont want people to bet against their longterm existence. The stock market can be punishing enough. You dont need to make things harder by punishing yourself. Youd be surprised how much better your Decision Making comes when you stop the woulda, coulda, should a. More mad money ahead, tips i wish i would have had when i started invests. And jeff marks and i are going to be answering your questions about the stock market, so stay with cramer. In the u. S. We see millions of Cyber Threats each year. That rate is increasing as more and more businesses move to the cloud. So, the question is. Cyber attack as cyber criminals expand their toolkit, we must expand as well. We need to rethink. Next level moments, need the next level network. [speaker continues in the background] the network with 24 7 builtin security. Chip . At t business. That first time you take a step back. I made that. With your very own online store. I sold that. And you can manage it all in one place. I built this. And it was easy, with a partner that puts you first. Godaddy. upbeat music constant contacts advanced automation lets you send the right message at the right time, every time. constant contact. Helping the small stand tall. Your shipping manager left to find themself. leaving you lost. You need to hire. I need indeed. Indeed you do. Indeed instant match instantly delivers quality candidates matching your job description. Visit indeed. Com hire pers matching your job description. Time to win is running out in our prize packed kick off the savings Monopoly Game hurry in to play for your chance at over 25 million in prizes and money saving offers like this, and this, or even this. Plus, you still have a shot at up to 100,000 in guaranteed prize money. Stop in while you can still win and shop your Favorite Brands sporting the kick off the savings monopoly tag for unlimited bonus game tickets at lucky let me give you a piece of advice that would have saved me lot of cash, and even more heart ache back when i was running money professionally. This is some genuine sage investing wisdom from the late great maya angelou. Quote, when someone shows you who they are, believe them. The first time. I know she wasnt talking about publicly traded companies, but man, if the shoe fits, i say wear it. All night i have been trying to hammer home important bedrock principles of investing, principles we show you how to follow in the cnbc investing club all the time. This is another essential one. When some Company Shows you who they are, believe them the first time or to put it as bluntly as possible, when a ceo tells you that business is bad, take their word for it. Dont try to make excuses for them. Just get the heck out. At least until the smoke clears and you get a better assessment of the damage. Let me read you the rest of that maya angelou quote, theres another valuable insight for investors, she continues. People know themselves much better than you do. Thats why its important to stop expecting them to be something other than who they are. The same thing holds true in the corporate world. A companys executives are going to know the business better than you will, unless theyre being negligent. Thats why its so important to listen to what ceos and cfos have to say, whether on the quarterly Conference Show or visiting you on the show or someone elses show. High level executives are your best resource, thats why we put them all the time. Dont get me wrong, you cant take everything that comes out of a ceo east mouth as gospel. There are plenty of executives who are promotional, who talk like they had rose colored glasses welded directly to their face. I try to ask more skeptical questions, an alarm goes off during the interviews. I dont want to get snowed. I dont want to hurt you. Thats what i did with the spacs and ipos in 2020, and 2021. Felt like the whole market ran on hype and nothing else. Occasionally ceos can be misleading, also known for flat out lying. Lying about Material Information is what we call a crime. Sometimes you need to take what they say with a grain of salt, if not a full carton of mortons iodized. You might be surprised by how many straight shooters you find at the highest levels of corporate america. Some are honest, others dont want to go to prison. Good call. Either way, they tell the truth. Again, when we have someone on the show with a track record of being extremely candid or both, i try to point that out to you. It matters, when honest, smart executives tell you something is going incredible well, i think you should believe themm. When jensen huang, the visionary ceo came on the show in september 2022, the stock had been eviscerated for the better part of a year. Everybody was giving up on tech in the face of the federal reserves rate hikes. He told an incredible story about nvidias ability to reinvent itself. Nvidias engine, less than a month later, the stock bottomed, four months later, we witnessed the birth of the Artificial Intelligence boom. One that nvidia had been planning for ages. They had the best chips by far and built them out aggressively in advance. Nvidia is making new all time highs. By the way, we told you to stick with this one for the charitable trust. Nvidia was always able to reinvent itself in the past. We told you to hang on when things were at the most ugly in the tech bear market of 2022. Something very similar happened with marc benioff, the ceo of salesforce during the depths of the great recession, another important travel trust name from the get go. He explained his Cloud Software company would be fine and we should just, well, he just said its going to be the future of the industry. He said there had been no slow down in his business, even though there was slowing everywhere else. He was right. If you listened to him, you made a killing. Whenever a companies annoannounces a shortfall, you need to wait 30 days before you think about buying a stock, especially if they give you a preannouncement. They figure, hey, bad news must be out already. Wrong, in practice i found that other than some rare exceptions, the opposite is the case. When business is so ugly that a Company Comes out early it means more bad news is ahead. Companies likely just to slash their forecast for the next conference call. If they go so far as to preannounce or give bad slash, things are going to be terrible for a while. Why . It all comes back again to maya angelou. When someone shows you who they are, believe them the first time. The negative preannouncement is the first time. When management preannounces a bad quarter, theyre not just looking at the past. Theyre looking at their order book for the future. Believe me, if there was hope business would get better, the company wouldnt have to cut numbers between the regularly scheduled quarterly reports. If they thought something could get better not worse in the next 30 days, they keep their mouth shut. Preannouncements or severe guidance cuts signal ongoing weakness that you cant be tempted bid. Thats why i recommend waiting 30 days before you think about buying this kind of stock. Thats another rule we try to follow religious for the cnbc investing club. You may miss great opportunities every now and then when a stock bottoms. That can happen. Most of the time, and i have studied this extensively, after 30 days, you will have sidestepped another brutal leg down. 30 days sounds arbitrary. I found enough homework on the question, and it usually takes a month for the bad news to get baked into the stock price, and its okay to start buying. Bottom line, sometimes it can seem like we live in a post truth world where its impossible to know who to believe on any particular issue. But even the most skeptical among you should believe executives when they preannounce an earnings shortfall or cut their forecast to well below what the analysts are looking for during the regularly scheduled report. These people dont like slashing their numbers. They do it because they dont see much hope of things improving before the companys scheduled report next quarter. In the wake of a shortfall, you have to presume the stock wont be bouncing back anytime soon. For the next 30 days, treat the darn thing, you should trust her investment advice. Mad money is back after the break. sfx stone wheel crafting the biggest ideas inspire new ones. 30 years ago, state street created an etf that inspired the world to invest differently. It still does. What can you do with spy . all toooo youuuuu sean i wish for the amazing whnew iphone 15 pro spy . jason sean do you mean this one the one with titanium . Its so light. Dont touch it. Maybe stealing wishes from the birthday boy is not your best plan switch to verizon and get iphone 15 pro on them. sean what . jason yup, and on an Amazing Network sean and i dont have to ruin anymore birthday parties jason yeah, that ship has sailed. Lets go get you the iphone. Here we go, come on hon. vo get iphone15 pro, apple tv 4k and 6 months of apple one. All three on us. Only on verizon. Every day, businesses everywhere are asking is it possible . With comcast business. It is. Is it possible to help keep our Online Platform safe from cyberthreats . Absolutely. Can we provide health care virtually anywhere . We can help with that. Is it possible to use predictive monitoring to address operations issues . We can help with that, too. With the advanced connectivity and intelligence of global secure networking from comcast business. Its not just possible. Its happening. Ive spent a lot of time here tonight talking about the many ways in which you can make mistakes. And the need to guard against them by knowing when to admit that youre wrong. Let me be crystal clear, the market can be just as wrong as an individual investor, just as wrong as you. Maybe youre smarter than the market. Contrary to what so many of the gray bears claim, the market makes mistakes every single day. This is my next big picture lesson for you. Dont just assume that the action makes sense like so many do. A lot of times stocks go up or down for the wrong reason or a stupid reason. Its something we try to walk through with you in the travel trust of the cnbc investing club because so many times the market, people will try to come up with theses that dont exist. When a Company Reports earnings, the stock goes down, naturally leaves the company, often that will be true, but its not always true. Sometimes there are other forces at work, stocks will go down in the initial Earnings Release and bounce right back. How many times does that happen or vice versa, which is why im telling you not to jump to conclusions until after you have listened to the call. Especially in the middle of earnings season, with hundreds of Companies Reporting every day, the market makes a ton of mistakes, but its not just about errors in judgment. The truth is the stock prices do not always reflect the underlying fundamentals, the actual facts and figures. The fundamentals are a big part of it. Over the longterm, the most important part, theyre not the whole picture. You have to understand a stock market is a market, its prone to distortions. When adam smith wrote about the invisible hand or free market capitalism he forgot to mention its the hand of someone with bad reflexes, and possibly some kind of neurological disorder. The poor guys needs to see a doctor. Stock prices do not reflect the reality as if by magic, theres much perception on wall street, and the mechanics of the Money Management business as they are a product of the fundamentals. I tell you all this time about short squeezes, the mechanics of the market, cant handle the short sellers. This is why its possible to beat the performance of averages by investing in individual stocks. You would never be able to exploit opportunities. The point of the game is you can spot stocks that are mispriced because there are stocks that are mispriced every day. Why do i bring this up. When the action is as irrational as i find it often, it can be frustrating. I want you to be able to take advantage of the moments where stock prices are simply wrong or at the very least, i dont want you throwing up your hands in disgust, nothing seems to make sense to you. Let me go over some of the larger distortions i have seen in my time that are in play right now. For instance, i spent a lot of time talking about what i call the etf of stocks, a major issue for me. For most of my investing career, you could bank on the fact that half of a stocks performance came from the sector, how the sector is doing and how wall street felt about it. It was never 100 the companys fortune, unless theres a takeover. Your average company was in control of about half of its own destiny. This was a good situation for stock pickers, as long as you avoid sectors out of favor with the wall street fashion show. You could research companies, trying to predict which ones would do better than their competitors in the sectors in favor. The rise of etfs has changed the equation, sector etfs, and gimmicky ones, the dozen or so that own faang, amazon, etflix, google and alphabet. The stocks with incredibly well run companies can be dragged down by a rip tide. Faang is the most ridiculous example. Netflix catches a cold, the other three stocks sneeze, even it has nothing to do with the advertising business of meta. Strange. A lot of times youll get situation where is sellers throw the baby out with the bath water. If the Worst Company in an industry reports bad numbers, the whole group tends to go down. Even if everyone else is doing well, these are opportunities. We saw them with the Cyber Security stocks in april of 2023. One of the worst offers in the industry, a Company Called tenable, reported bad numbers. Whole groups sold off. It was one of the greatest opportunities ever to buy the stock of palo alto networks, panw. Sometimes the market is up too. Youll see Companies Report good quarter after good quarter to no real effect. Suddenly Money Managers say hold it just a second, things are going well there. The next time they report strong numbers, the stocks soar. In those cases you need to be patient. I keep saying, the market gets it wrong all the time. Youre ancient people will come on tv and tell you thats not true. Theyre not true. The caveat is sometimes when the market makes a mistake, its not worth trying o fight it. While the markets are often irrational, they can remain irrational longer than you can stay solvent. Your goal here is not necessarily to be right. Its to make money. Sometimes that means being a little cynical about other peoples expectations. I hear people say, i was right. That guy made money. I was right. You were wrong, that guy was right. Heres the bottom line. Dont assume stocks go down. Dont presume they deserve it. In the immortal words of clint eastwood, clint made a point. You know what he said, reserves got nothing to do with it. The market is going to make mistakes. Your job is to recognize doing something wrong and try to take advantage of it. Stick with cramer. Have a fun weekend. Unnecessary action hero unnecessary. Was that necessary . No. Neither is a blown weekend. With paycom, employees do their own payroll so you can fix problems before they become problems. Hmm get paycom and make the unnecessary, unnecessary. See you down the line. This is american infrastructure. Megawatts of power, rails and open road, and essential services of every kind. All running on countless invisible networks, making it a prime target for cyberattacks. But the same aipowered security that protects all of google also defends the systems running americas infrastructure. For these services. For the 336 million of us living here. I always say my favorite part of the show is answering questions directly from you. Tonight im bringing jeff marks, my portfolio analyst, and partner in crime to help me answer some of your most burning questions and were going to take a look at some of your mad tweets. For those of you that are a part of the investing club, hell need no introduction, for those who arent members, which is a shame if youre not, i hope you will join, and i would say that jeffs insights are back and forth, help me do a great job for all mad money viewers. You see a lot of the stuff that jeff and i talk about in the show, now you get to see it in realtime. We do this in the monthly meetings, give you an indepth look to the portfolio club, and answer burning questions too. If you like this, join the club, for heavens sake. Were going to go right to the questions. John in arizona asks, when profit is taken or there is a sizable cash on the sidelines, how would you pick a stock to add to my portfolio. I want to start out by talking about the oscillator here. Because if theres a lot of cash on the sidelines, jeff, im not that interested in putting money to work if were over bought. If we are looking at ideas, a couple of ways to go, sell stock in one area, look in the same industry but a better run company, you could buy that. We call that high grading the portfolio or if youre looking at something completely new, maybe its something, you know, industry up on the rise or just a good dislocation of value but at the end of the day, were looking for High Quality Companies to buy. And you and i take that back. Med tech, people may like medtronic, but we have g health care, we go back and forth and compare. It could be netflix versus tesla. We do everything but the main thing that i want to point out is if the market is really flying, its okay to have the cash. Cash does not hurt. Next a question from mike in maryland who asked how can an investor choose which is more likely when the narrative flipflops back and forth between recession and strength in the economy so often . So here were not traders. We have a lot of special situations that are not dependent upon a recession, dependent upon strengthening the economy. When we have it, we like to look at our sector, and figure out whether that sector, for instance, lets say were picking something we dont know. Were buying air conditioner company. Air conditioner companies, you should sell them. But if there is a secular case for an airconditioning company, im thinking about carrier because i like it very much, then it really doesnt matter, because theres such a huge amount of money coming from the infrastructure plan. Im saying those words, expansion and contraction usually do not play that much of a role in our stock pick. I think thats such a great point you made, and thats something you taught me if youre willing to get your hands dirty, study a company, you can create your own narrative of whats happening in the market . Thats what i really want to emphasize, we in the club do a lot of special situations. Were not hostage to the whims and slings and roarsarrows of t economy. Lets look at ivan on twitter who says im starting to think that jim cramer is a time traveler from the depression era. No, thats photo shopped. Theres tno way. I was in the philadelphia lot. This is the new york ine. Immediately i know that this isnt right. And by the way, just so you know, jpmorgan had his pictures, he was the first ever to be photo shopped because he had what was known as a cauliflower nose, and it was hideous. No pictures of him, one sp spontaneous one. If he was photo shopped, im photo shopped. Is that when they used to call it corner at the Stock Exchange . Corner. All right. This is it. I like to say theres always a bull market somewhere, right here on hi. Im brian sullivan. Tonight. Hope . Or unhealthy hype. Testing weight loss drugs, on kids as young as 6. Another week, another failure for the speaker. How long will the capitol hill drama drag on . Solar meltdowns. Paying billions in taxpayer subsidies. Good news in detroit. We may finally have a breakthrough in the autoworkers standoff. Staggering tesla. The sum elon musk has lost just this week. Unload your unwanted stuff. A new app could make se