Transcripts For CNBC Mad Money 20130805

Arrogance. When you own stocks, you got to be humble. Although, people recognize that humility doesnt come naturally to everyone. You have to recognize you will be wrong perhaps often. As the past few years have taught you, a painfully, your portfolio will get hit with things you never saw coming. Things you never imagined, let alone thought were possible. Who would have thought we had to worry about sipry ought banks what about abanomics. And one thing to be sure when you put a portfolio together is that at some point something will go wrong and it will hit you totally out of left field. Thats why dits so important t prepare for the next unexpected catastrophe, so you can make money in any market, or not lose as much as the other i go, because sometimes things dont go smoothly. How do we get ready for a calamity that we dont know what it will look like . One word. It is not hallelujah. But i always play it. They shout booyah, and im okay with it. But you if you say, im diversified and there are five stocks, it would be more constructive and productive use of our time. Yes, theres a reason why we play it every wednesday. Why i talk about this concept add nausea. Why i call it the only free lunch, kr jim cramers investin world. Even a hand book for employees. Even when i was a hedge fund manager, i believed in diversification. And travel drust is nothing if not diversified and i monitor it intensely to be sure it stays that way. If your portfolio is properly diversified, can you handle any setback. But can you come back from any setback. You will just lose less than the other guy. Thats all you need to do to stay in the game practically, which i said over and over, which is the real purpose of mad money. To stay in the game for better times. Usually when i talk about diversification, i mean making sure all of your stocks are not like eggs in one sector basket. And just to go over this again, because i can never say it many times, it means that no one sector, one segment of the economy should account for more than 20 of the portfolio. Lets say you own five stocks. Only one is a tech stock or healthcare or energy company. And only one can be an industrial. Only one can be a Food Beverage maker. What if youre not sure . Err on the side of caution. If a Company Fails on the same customers, same economic scenario, then you are not diversified. An oil driller and oil producer are part of the same sector or whatever. Hey, you want to be really tough about it, the food stocks are doing tricks over stocks. Im not doing this to be capricious or make it more difficult for you to invest. These arent vague technical its. When you are too concentrated in one area and the moment something bad happens to it, you want it throw yourself off a bridge because losses will be enormous. Im trying to prevent this from happening. Imagine if you own too many healthcare stocks, right before they were whacked by congress. Take obamas healthcare reform, you know that worked out for them. How about too. Banks before the final crisis or the reform in washington produced in response to the crisis. Or and this is something that soured a whole generation of people in the stock market, too many tech stocks going to the dot com bust. The goal of diversification is to spread your money across unrelated stocks. So when something happens that makes one good down hard wbt rest remain relatively unscathed. Can you even go higher . Thats the view of the diversification, and it is mandatory. But you know what . If youre going to prepare for anything, it is not enough to make sure your stocks dont overlap. You want all kind of markets. So tonight i explain the new diversification. How to make sure you own something that is an increasingly chaotic, difficult and unforgiving investing environment. Where diversified by sector loan is not enough. Sure we have benign moments but at any time we know it is a big up, small down, we end up kicked to the curb as everyone knows. And we wish we are diversified as a hedge. Against our own complacency and the fed loose loses control of the situation. There are five areas you need have covered for maximum protection and maximum upside. You need a dividend stock with high yield. You need a gross stock. You need something speculative. You need something foreign. And you need gold. Preferably bullion or coins or an etf that holds gold. You have a portfolio that can win in any market with all five basis. I will explain what makes all five areas essential and have stocks that fill each one so you can fill each position with the best possible names. Lets go over gold first. You need some gold because gold is a special property other ones dont have. One that makes this precious metal precious to any diversified portfolio. Gold goes up when Everything Else goes down. I regard gold as your insurance against economic or geopolitical chaos. You have uncertainty and inflation. All things that cause most stocks to decline. But also because the price of gold does go up in many calamities. I like it think of the gold position as a kind of stock insurance. Would you own a home without Homeowners Insurance . You wouldnt own a car without car insurance. You shouldnt invest without gold, because gold pays off when everything fails. This is not about upside, bit way. When gold went down big, it wasnt like oh, my, you have to get out of it. You cant see your insurance because your house went down big. This is about minimizing risk to your down side. Then at any given moment there is a whole host of sectors poised to outperform gold. But none work like an insurance policy, so how do you own this precious metal . Easy way i know, and im not the laysiest man, the laysiest way is to own the etf. But mostly known by its symbol god which owns the metal and it does a fairly good job of tracking its price. But its been known to go down harder than the actual physical metal in times of real stress. Thats become a genuine caveat for me. This is something new. 2013 showed you that. In the time since the gold etf became popular, we had almost no break downs in gold. When we had one that didnt track the metal as well as we thought, thats right, 1800 to 1300 didnt track the way i thought it would. Thats why the best thing you can do is call your broker and see if can you buy bullion. Actual physical bars of gold as opposed to the bullion cubes i like in my soup. Thats for investors who like lots of money and pay to store it in the depository bag. I know there is a big markup and i know you may want to go to the dealer but gold coins easily stored. They hold their value and have always held their value and thats why i like them. What about the gold miners . You pick the right company. One with lowcost with growing production. It can outperform the commodity now and then. Those have become very hard to find and they are not trading with the commodity and i want the price of i actually want the price of gold to be correlated with stocks. Gold miners can screw things up in countless different ways. They have management teams that can and do make mistakes. Listen, take out one of the best matters. Along with gold corps, gb, these are two of the stocks i got behind the show when the show first start and it did for many years. It had shut downs at its mines. Shut downs, delays, high expected catch cost. It got hammered and stayed hammered. All of these issues it rapidly grew production but couldnt pull it off. Then i recommend goal corps, gg. But then everything could go wrong with the business, fires, floods, expenses, that too ended up disappointing. I then tried the gold trust in the show. Companies that like banks for gold companies. They were worse than the ggs. When gold went down hard, they stumbled too in many cases. Like the miners far more than the metals itself, disappoint ppg take a chance on a gold miner, you have come to the wrong place. That does not mean, however, that i dont want you to own gold. It just means the real ray weigh to play gold is with, alas, gold ppt cost of getting the metal out of ground has gone sky high at the exact same time the metal has gone down in price. Nothing could be worse for a company than rising costs of making the goods at a time of falling selling prices. Can you do your homework and find a gold stock you are comfortable. But don expect me to press it on sh show in lightning round and dont expect me to endorse it if you shout it at me. When i come out of the exchange own go over to street. Com. Dont pick a gold miner if you agree none of them inspire confidence. Sure you want to take a flier and trade gold, thats fine. Maybe etf for junior gold miners. Again, ill bless that. But thats not protection against anything. Dont confuse it with the insurance role of bul yn or coins or the etf that i have in mind for your portfolios here is bottom line. You need to oechb gold for insurance. Gold coins are preferable. You arent buying it for appreciation. It gold goes down, dont sweat the program. You wont pan fik gold is on sale, you will buy more. When insurance is cheap you want to get all you can. Matt in texas. Matt . Hey, jim, thanks for take mig call. I need you to help me make money so i can send my daughters to texas a m, booyah. How do they trade when they only have so much to strt with to begin with. I say the first 10,000 is a fund. I have that in all my books. Then you have to go in and get over the idea that you need to have thousands of shares. Read confessions of a street addict. First thing is buy seven shares. Buy nine shares. I bought odd lots. You have to get into it. Dont feel like you have to put hundreds of dollars in one stock. Just put a couple hundred dollars in. Commissions are low. Thats the way it play it. Get your feet wet. You will get comfortable then get bigger. Lou in texas, lou . Caller jim, booyah from texas. Appreciate what you do. Do i best. Caller is it possible to know on trading day that a runup is from traders or institutional buyers or foreign buyers or Hedge Fund Buyers or whether the retail participated . And is that a big secret . And is it important to me in my trading decision . I say no unless you are buying a huge amount. And so supply so to speak. Big institutional traders can pick up their phones and ask whos buying. But youre not allowed to reveal the name of the company but can you say if it is a meu fuel fund or hedge fund. But that is not important if you are buying a couple hundred shares. Only if you are buying a thousand to 1500 shares. Then it does matter, you need that information. The kiss of death, i think not mr. Gold finger. Get some gold in your portfolio. Whats the first one . I like bullion. If not bullion i like coins. If on coins, i like etf. If not etf then i bust the stock. Dont miss a second of mad money, follow jimcramer on twitter. Hash tag mad tweets. Send jim an email to cnbc. Com or give us a call at 1800743cnbc. Miss something . Head to madmoney. Cnbc. Com. [ male announcer ] come to the lexus golden opportunity sales event and choose from one of five lexus hybrids thats right for you, including the lexus es and ct hybrids. This is the pursuit of perfection. Time to have new experiences with a familiar keyboard. To update our status without opening an app. To have all our messages in one place. To browse. And share. Faster than ever. Its time to do everything better than before. The new blackberry q10. Its time. Aaa. Fffffff. Laclaclac. Hes an actor whos known for his voice. But his accident took that away. Thankfully, hes got aflac. Theyre gonna give him cash to help pay his bills so he can just focus on getting better. Were taking it one day at a time. One day at a time. [ male announcer ] see how the ducks lessons are going at aflac. Com you own to help you insure that you can make money in any environment . What strategy will work regardless of the state of the economy rather than the markets in bear or bull mode . You should own no more than ten or few are than five stocks in your portfolio. Any more that ten you will spend too much time on the homework. You will lose focus. Any less than five, and you wont be diverse foid. And that is an unsafe position that you never want to find yourself in. You always want to own something when rhett cal, something speculative. Leks con, here at kra america, and orthodoxy. Not only is it okay to own the tempting broke yn risky seeming stocks, that trade in Single Digits. I regard it as down right necessity as long as you follow my rules and sfek speculate correctly and wisely. I know this is opposite of anything youve been told. You have been told to focus on the stocks like the Dow Jones Industrial average because it is filled with blue chip names. Blue chip didnt help the neman brothers or Washington Mutual or General Motors when they were annihilated during the financial crisis. They say stick with the s p 500 because the individuals that give you this advice presume the homegamers like you, are brain dead. And incapable of analyzing prospects of publicly traded companies you might want it own. They dont think can you pick your own stocks. They dont think can you pick your own nose. So they assume you will do less damage to your wealth if you only play around in big household names. Stay away from tiny speculative stocks that you probably never heard of. Thats the smug conventional wisdom on wall street and among the intelligencea. But your veteran right here, ive been in the stock game for more than 30 years, and im telling you it is a completely and totally bogus view without empirical backing. These pros who dismiss speculation are completely ignoring the Human Element of this business. The emotional component of investing. The fact is, a lot of people end up investing poorly buzz they arent engaged in their stocks. They find the whole process boring and dont stay on top of what they own. If you neglect your stocks and dont dot homework then you probably wont do too well either. Doing stocks without homework is like gambling. Actually it is worse. I dent want you trading in general futures. Thats where speculation comes in. Just like you need gold and insurance to speculation chaos, you smeed speculation in your portfolio, like tonic against boredom. High risk, high reward speculative stocks are compelling. There is an undeniable mystique to owning something that trades in Single Digits. I respect that thp these allow to you stay engaged, keep your head in the game. As long as you keep a small amount in it. I say speculation you with the a long shot wont keep your fancy. One you will get bored with. One for people who only care about taking your fees. A portfolio without speculation is a portfolio never open on the pc or never input into the handheld. Thats unacceptable to me. You will just be pierd fired for those who have soup superstitions who think you are too dumb to manage your money. If you use the rules and disciplines that i give you, there will be truly massive exchange in the more well capitalized companies that are gamesafe. Some of the biggest wins in my investing career came from speculation. Which is why i come at it like this. When done wrong, swimming in under 10 stocks will lead to you truly gutwrenching losses. Confessions of a street addict. I have a bunch that cost me a lot. How do you identify the winners and avoid losers . Okay. There are two stocks that trade in this territory. There are companies aband yned and left for dead by Money Managers. In both cases can you get an enormous edge here. The kind that is impossible to have in the heavily researched intensely stocks of household names. Some of the big boys wont trade anything under 5 bucks. Youre benefitting from the what i called the classic price increase for the Money Managers bp large institutions, big safe mutual funds, they dont want it own singledigit stocks. They think they are too dangerous. They are afraid they will be questioned about why they own this junk. Why they risk money foolishly. The board of directors will ask them that. These Money Managers fear the done side from stocks that look broken. So when the fundamentals of one of these companies starts to turn, you can buy their stock. Buy, buy, buy. At terrific prices. It was pushed down to 4 bucks and change in 2009, courtesy of the financial crisis. Bank of america went to three bucks during the generational bottom in 2009. Sally may 6 bucks in 2009 or pier 1 which we started liking Single Digits not long after for pennies. And sprint behind at 2 bucks because we believe correctly and there are turn around plans with the soft plan bid that give you a triple. Or most recently, rdn, completely and utterly left for dead mortgage insurer. All were supposed to be trash. If you went dumbterstpster divi caught doubles and trips. These deals dont come along either everyday. Er with looking for secretariors that look like they can catch the imagine nation of the crowd. Yes, gunning for the next hot fad to sweep through wall street fashion show. Sometimes the fab will be backed up by genuine earnings power. Which is what we saw by little companies that make smart phone component in 2009 and first half of 2010. Now you know i aggressively recommend, like sky work solutions, to name some of the winners. But rare cases, the reality outpaces the actual hype. These speculative facts have a cycle of the may fly. So remember to lock in your profits. Sell, sell, sell. When you have them. So you dont get burned when interest in the suddenly redhot stocks waynes. Second, cut your losses. Before they became too large when a spek you thought would work isnt panning out. Youre not trying to find a stock to buy and hold forever. It doesnt work like this. You just want something that gets higher. When you ring the register, it doesnt matter if that stock comes back down later. It is not a license to own stocks of companies with bad or distributing fundamentals. Far from it. Thats the essence of irreresponsible speculation. You have to do just as much work examining a companys ability to stay alive, let alone thrive when you speculate. It is not the excuse for no homework, though many them you have the license to do that. It is just that mere fundamentals arent up to snuff. But if you dream a little here it could play out positively. Sirius logic, so many that people thought once were road kill. Do something speculative that is a key part of the diversification. Stable bored dom and rack up huge gains. And just because the stock trades at 3 bucks doesnt mean it is three card monty. Could be a triple waiting to happen. To you have to dream a little bit what could go right. And just like Everything Else on earth i bless that dreaming because it worked for me many times in my more than 30 years of investing and i know it can work for you too. Donna in texas. Donna . Caller hi, jim. Youre my rock star. Thank you, donna. Caller youre welcome. My husband and i manage our own portfolio. And to make it fun, we each choose two speck stocks. Im up 11. 3 percent in one of them and down 3 in the other. They have similar dollar values. How do i know when and what to sell. Bragging rights are on the line. I got win this. Youre not up enough. You got to let them run. Down 3 doesnt bother me. I think thats okay. Up 11, look, thats not enough. When we do speculative stocks we are going tore broke, okay . The rest of the portfolio, thats would be terrific. For speculation, no. Lets hold out for bigger gains np is what we do with those. Remember, not a big part of your portfolio. Ever had a dream come true . Consider buying a speck stock. It has excitement and risk, and im blessing it. But only, of course, for a small part of your portfolio. After the break, i will try to make you more money. I would like to know, are you long america . announcer at scottrade, our clients trade and invest exactly how they want. With scottrades online banking, i get one view of my bank and brokerage accounts with one login. To easily move my money when i need to. Plus, when i call my local scottrade office, i can talk to someone who knows how i trade. Because i dont trade like everybody. I trade like me. Im with scottrade. announcer scottrade. Awarded fivestars from smartmoney magazine. Weve been bringing people together. Today, wed like people to come together on something that concerns all of us. Obesity. And as the nations leading beverage company, we can play an important role. That includes continually providing more options. Giving people easy ways to help make informed choices. And offering portion controlled versions of our most popular drinks. It also means working with our industry to voluntarily change whats offered in schools. But beating obesity will take continued action by all of us, based on one simple common sense fact. All calories count. And if you eat and drink more calories than you burn off, youll gain weight. That goes for cocacola, and Everything Else with calories. Finding a solution will take all of us. But at cocacola, we know when people come together, good things happen. To learn more, visit coke. Com comingtogether [ male announcer ] you wait all year for summer. This summer was definitely worth the wait. Summers best event from cadillac. Let summer try and pass you by. Lease this allnew cadillac ats for around 299 per month or purchase for 0 apr for 60 months. Come in now for the best offers of the model year. We all know the stock market is the endless capacity to befuddle even the stock analyst like myself. There is a good chance the Stock Investment doesnt work out could be a dog barking today i put a on my negative nelly hat. And say nobodys perfect. At least in investing. Why . A stock sadist . With the license to despair . Make people look you miserable . No. Because i want it help you compensate for your own fallibility. As an investor. Yes. Because i know youre fallible. Because i am too. I want to make sure you are as prepared as possible to help losses in the outrageous market or whips an squirms of the bears. To paraphrase the board entirely out of context. But also while being positioned to maximize profits when things go well. We want to keep new the game when things are bad and get you ready when things are good. Next up, you need a good oldfashioned growth stock. I want to you is a secular growth stock. This is nothing to o do with parochial versus public schools. Or the first amendment, which you know can i live without. In the secular growth, unlike cyclical smoke stack industrial growers, it isnt hostage to the economy and it will expand even during slow down. That stock can lift higher an higher. Like Jackie Wilson going on new highs after new highs for as long as the stocks last. What do you think about chipotle, old apple, paenera bread, starbucks. Yeah. These are pride well, were and are prime Growth Stocks. How do you analyze growth . Remember when we buy stock we are paying for a companys expected earnings per share. Basic algebra. The symbol p, times symbol bm, e times m calls p. Okay . The poll is the key. So right, the multiple times the earnings should figure out what the price of the stock is. Thats why we call it the pe mobile. It tells us what the company is willing to turn forest earnings. And the price earnings multiple and effect of the size evaluation special sauce is the companys growth rate. The m, remember, figure out the price after stock by looking at earnings times the m. M is heavily depend ept on the growth of the company. We will pay a bigger m or multiple more businesses with higher growth because that growth means earnings get larger and larger in years ahead. Remember with growth investing, it is all about the app years. Thats in quotes. The app years. Years well behind the next year that so many focus on. Protecting a high growth rate is nirvana for high stock investor. As a general rule of thumb, when it comes to high octane speck u lar grower, stock can trade it up a multiple twice as high. Before it gets too expensive for the vast majority of Growth Management Money Managers. And earnings per share at 20 clip, stock could o fly as high as 40 times earnings. Though it is too rich for me to recommend on this show and stock wont trade down to a multiple of one timeless than the growth rate. Or a nasty market that is just shower or growth or even secular growth possibility because of higher Interest Rates which makes stocks shrink because their larger earnings become less attractive. With the increased yield that people can get from cash or treasuries. By the same token, lower rates make Growth Stocks more attractive and cause the multiples to expand. Even more important when you own a high gross stock you need to be expressly sensitive and whether the estimates are increasing at a faster or slower pace. They can soar to new high after new high but remain cheap as long as analysts raising them are have share estimates each quarter. Now a stock like apple in the old days, when it could double over the course of 12 months and multiple is starter and increase even faster than the share price, thats what drove app toll 700. A constant beating of the estimates. Once that stopped, the stock u turned and oouturned hard. And a company be no matter how special must beat the estimates or stock will go lower. Just a fact of life that many in the cold code of apple dont want it admit. It resits even the downward pull. Have you to be careful when you play a fast grower. Especially after it is rising for a while. As soon as the Company Misses a step, the Second Quarter is merely good enough and not better than expected, the moment we learn the growth might be slowing, even just slightly, that stock will start getting pounded mercilessly. And i kgot to tell you somethin, that pain can last for years and years. As it goes through a painful process of george ka stanza multiple shrinkage. Years of momentum. It can last years as seekers pay less an less for kbrad yoully slower money growth. All of the managers get shaken out and it is value oriented and investors become interested or enticed. Please dont hang on for the full ride down. It lasts too long. Sell, sell, sell. Can you circle back at a letter level if growth restores to levels where it was once a market darling and something that happened very rarely, not maybe on one hand. Bottom line, to have a portfolio that works in every market need a secular Growth Stocks that has room to run. Trading higher an higher. Stay with cramer. [ male announcer ] frequent heartburn . The choice is yours. Chalky. Not chalky. Temporary. 24 hour. Lots of tablets. One pill. You decide. Prevent acid with prevacid 24hr. Could save you fifteen percent or more on car insurance. Yep, Everybody Knows that. Well, did you know some owls arent that wise . Dont forget im having brunch with meghan tomorrow. Who . Meghan, my coworker. Who . Seriously . Youve met her like three times. Who . sighs geico. Fifteen minutes could save you. Well, you know humans. We are beautifully imperfect creatures living in an imperfect world. 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Buy high yielders and reinvest dividend in those stocks is still, even with Interest Rates going higher, one of the greatest wayes it make money out there plain and simple. It allows your investment to compound over time. Money from dividend compounds dividends. People think it is about safety or generating income in your retirement. If you go back to january of 1996, thats the way back machine. About 40 of the return from s p 500, 44. 0 is from dividends. This is wall street gibberish for growing your money. They do represent a fabulous safe haven in difficult markets if the yields are high enough. Not just for retirees that care about capital preservation. Though they did a great job on the front providing yields are high enough. Investing in high yielders is first and for most one of the smartest strategies for making money. Also one of the safest since dividend stocks have a cushion called yield support that helps them hang in there when Everything Else is provided. They eventually get to a level that is attracted for investors, too hard for them to ignore. Thats why i devote so much time on the show in books to dividend investing. It does work in a higher Interest Rate environment provided that the stocks come well off their highs and represent bargains on earnings and Earnings Growth not just because they have a big number attached to them. Why i like high yooeld yielders. Their share prices fall so hard. Sell, sell, sell. Causing the yield it skyrocket even though they didnt change the dividend. Why i like stocks of companies that raise their dividend. One of the clearest management can send. One with steady reliable growth and a company that we are pretty darn sure wont cut the dividend just raised any time soon. I have seen that happen but only a handful of times in all my years of investing. This is a bankable supposition. Companies dont recognize conditions when they are toward fall apart. Even better are the outfits put through dividend increases for 20, 30 or 40 more consecutive years. We call these dividend aristocrats. Think about 3m, emmerson. Now thats stability. Other than accident high yield boost, how do you analyze a high dividend stock . Just like when learning it drive, think safety first, please. A very high yield can be a signal that dividend is sustainable. Thats red flag and means that dividend could be cut. As we saw from so many Mortgage Real Estate Investment trust when Interest Rates went kerflooey. Thats why the stocks have to have a rigorous. If it seems in danger, stay away. What do you look for . First and above all, Everything Else, we look at earnings per share. My rule of thumb is that if a company has earnings twice its dividend pay out we know it can sustain the dividend even in lean times when earnings shrink is what happened in the great recession. In that case, youre home free. If not, go to step two. Look at what is known as cash flow. Especially important when dealing with companies with a lot of machinery or other heavy Capital Invest chmt cause high depreciation and amortization costs. Think high yield players like verizon and at t. As communication that doesnt come cheaply. These amortization cost doesnt come out of the actual cash though. The cash flow can give you a better idea about whether or not the dividend is sound. I know this can be confusing. Many times i feel the lightning question, like verizon with a big mobile and growth stock, it is then that i remend people some people cant be healed for earnings pure creations. You have to organize cash flow in the income statement, Financial Reports that companies file. Lets get in caveat. If you cannot understand how to monitor cash flow dont invest in any company where it is super important to understand cash flow. As much as i like them, it isnt work risking being wrong about calculations if im not around it help you. You also have to look at the Balance Sheet to make sure there isnt a lot of debt coming through in the near future. That too could necessitate a dividend cut. Finally, action collected dividend. Like the x statement, record date, mad money we only care about one thing, one date with dividend and that called the mustown date. The last day you have to buy a stock in order to have the next dif depd pay out. That is put out by the street. Com where im on the board. The must own date is the day before the x date. Thats all you need to know. Here is the bottom line. If you want it embrace new diversecation with the old sector kind, be prepared for every market out there you absolutely must own a high yielder dividend to protect your stocks. They are also a terrific way it make money. Remember, stocks have to come down first to make it a high yielder. Whats not to like . Scott in pennsylvania. Scott . Caller jim, booyah. Booyah. Caller thanks. So jim, speculating on small stocks with rumors of unconfirmed reports like a big product win can make for big gains. However if they are wrong you expect the stock to drop more quickly. Im in that situation with a stock. It was trading o not a very low pe multiple. Ive done my profit taking but the stock is now in a multiple. If rumors are not true will the vermont valuation on earnings help support the stock from dropping too much. In a rising Interest Rate environment that may not be enough. In a rising not viernment, we wont pay up for them because rates are so high we want to be na bond. I know that sounds weird but there is that competition built right now into the stock market. Ron, hello rb ron. Caller hi wp i want it thank you for everything oou youve done for me. Ive read all your books. Thank you. Caller im a 56yearold disabled person. I supplement my disability with high yielding stocks, prepeared stocks and closed and hugh full fund. Okay. Call kaut . Caller lately in the prefer etiquette grry. Late think theyve been going down as well. What do i do . I cant reinvest the dividends. I need the income. Do i scale in at lower levels or do i why dont you wait until here is what i like to do. In that situation, i literally like to have some cash. I would take something off the table. I know you dont want that. I know you want the income. You you got to take something off the table in order to put it back on the table when the Interest Rate rise goes further along. Take some off, put it in lower. If you get through the thick and thin markets, i want to you shoot high. Sky high. Go for the higher yielders. Particularly the ones accidentally high because the stocks come down. Not because the dif dent is be a normally high. Stick with cramer. Youd do that for me . Really . Yeah, id like that. Who are you talking to . Uh, its jake from state farm. Sounds like a really good deal. Jake from state farm at three in the morning. Who is this . Its jake from state farm. What are you wearing, jake from state farm . [ jake ] uh. Khakis. She sounds hideous. Well shes a guy, so. [ male announcer ] another reason more people stay with state farm. Get to a better state. If you have high cholesterol, heres some information that may be worth looking into. In a Clinical Trial versus lipitor, crestor got more highrisk patients bad cholesterol to a goal of under 100. Getting to goal is important, especially if you have high cholesterol plus any of these risk factors because you could be at increased risk for plaque buildup in your arteries over time. And thats why when diet and exercise alone arent enough to lower cholesterol i prescribe crestor. [ female announcer ] crestor is not right for everyone. Like people with Liver Disease or women who are nursing, pregnant or may become pregnant. Tell your doctor about other medicines youre taking. Call your doctor right away if you have muscle pain or weakness, feel unusually tired, have loss of appetite, upper belly pain, dark urine or yellowing of skin or eyes. These could be signs of rare but serious side effects. Is your cholesterol at goal . Ask your doctor about crestor. [ female announcer ] if you cant afford your medication, astrazeneca may be able to help. [ female announcer ] if you cant afford your medication, for the strong and the elegant. For the authentic. For at home and on the go. For pessimists and optimists. For those who love you a little and those who love you a lot. For ultimate flavor and great refreshment with or without calories. For carefree enjoyment. For those who have a lot to say and those who have nothing to add. For those who want to choose and choose. For every generation. For us. For everyone. Forever. Im bethand im michelle. And we own the paper cottage. Its a stationery and gifts store. Anything we purchase for the paper cottage goes on our ink card. So you can manage your business expenses and access them online instantly with the Game Changing app from ink. We didnt get into business to spend time managing receipts, thats why we have ink. We like being in business because we like being creative, we like interacting with people. So you have time to focus on the things you love. Ink from chase. So you can. Hey, all night ive been preaching and teaching trying to show you how to build a portfolio of stocks that can work in any type of market. From the nasty picnic for the bears to a pam pa lone why Style Running of the bulls. You will always have something by filing what i call a new diversification. By a sector that i push endlessly ensures wont key off the same bad news and get beaten to bits. At the same time. The diversification strategy means whatever the mark set doing you will always have at least one approach to invest that should pay off big time, if you do it right. Lets go over again. First you have to start off with gold either through etf like gold that follows the performance of precious metal or in my favorite bullion or gold coins i know no longer trust any gold miner to deliver what you need for your portfolio. We have nothing for the infomercials that pushes it nonstop. You do need gold. It goes up when virtually every other stock or currency declines in economic chaos. You need speculative stock. Something trading for less than 10. Either one that wasnt on wall street or that they never heard of. Boredom in a short period of time. It should keep you engaged enough in business to motivate you through an hour of homework per week. That would be optimal. Remember, i need you to stay focused on all your stocks and you put a little money in speculation it stay focused on them. Third, you need to prove ate whole lot and deliver gains and things get worse which is why you must have some exposure to growth. A high secular growth stuff with powerful momentum. Big payer in the massive multiyear gains from reinvesting. That the keyword, reinvesting dividends. Thats four positions. Now we need one more to be diversified either by sector or strategy. Last piece, you have to have foreign exposure. As painful as that might be. A genuine intering inial company in another country that may be doing better than the united states. It is often the caboose of the economic train. We sometimes go from china, locomotive worldwide, from india, germany. You still want it have something foreign, purely for the sake of international forum. You dont even have to bet on anything thats exotic like a chinese company, brazilian company, indian company, though those companies have been and maybe will be again, with the maturity of the middle class. The middle class brings with Financial Stability with spending. Canada is one of the healthiest economies in the world. One that handled the financial crisis and recession bet are than we did in the u. S. You might want to go south of the border. It is one of the lowest inflationary of on earth. Theres a basket of european stocks all beaten down or think of one of the conglomerates. Just as long as not every dollar is invested in the u. S. Security. That is a hazard to your Financial Health because we want to be diversified from the security of the currency. Bottom line, country doesnt matter as long as it isnt here for this last position in your diversified portfolio. If you are building a portfolio in any market, one diversified by strategy, not just sector, you cant afford to keep all of your eggs in one basket. It is way too easy for them all to get crushed. 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How much do you use indicator reports . I use them very little because i build a model from the ground up. I listen to companies and make my own mosaic of an analysis from that. Not from the top to bottom like other people. They are lazy. Next, jim, youre a great person and role model. I admire you very much. Best of luck in everything you do. Lets go have a cheese steak and ginos and celebrate our greatness. Next from sultanspeaks. I wants to know the strategy if you are sit awning 25 profit, cash in . 100 . 50 . Double up . Booyah. You are done after the the half. This tweert wants to know, jim, what is similar to jpm . Those are the ones im focused on, otherwise we just look at the website and look up what they have to say and that will do it. Stick with cramer. Were cracking down on medicare fraud. The healthcare law gives us powerful tools to fight it. To investigate it. Prosecute it. And stop criminals. Our senior medicare patrol volunteers. 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