Transcripts For CNBC Mad Money 20150914

I do it to help you be a better doityourself investor or better client. I do it with a spectacular team of people headed by executive producer, ra scree na gill gus and help of dozens of people responsible from all the look and feel of the show to the researchment we have a team that help helps me with memo and a head writer that has been our only writer since inception, cliff mason. My sister, nan and her husband, todds son. My nephew. The show has become a bit of a labor of love. We have been doing it for so long. We take it for granted. Tonight, im going to change it. Tonight, i want to talk to you about the show, its evolution and how you can best use it or worst misuse it. I am doing so because there is so much we throw at you that you might not be able to use it as effectively as we would like. I know this because i talk to enough people about the show and interact with people i have a pretty good idea why you come here and what you want. The show has evolved mightily. It was the outgrowth of a radio show called real money, when we first heard booyah, which i did in conjunction with a company i started called the street. Which i still write for it every day under the page site known as real money. I manage my Charitable Trust from this auspices. People were searching for specific investment ideas. I was happy to comply. We have a bit of the Great Recession which challenged the entire asset stocks as a way to save and make money. We had many companies. Big companies destroyed about i the down turn. Mostly because they had lent a lot of money and didnt have enough money to handle the losses that came from a dramatic decline in economic activity. I am proud of the fact that if you watched me, you might have avoided a lot of the down turn. I shouted from the roof tops that the feds were nuts and that the situation was far worse than anyone realized. No matter. I always find a tad ironic while even the fed acknowledged i was the only guy saying things were falling apart i was the only guy vilified for not telling people to sell. Dammed if you do, dammed if you dont. That era has changed. It changed me. It changed the show. It was more of a metamorphosis, nothing radical. I added language that was meant to describe the new manifest toe, the new reason for being. I now say every night this show is meant to educate, entertain, teach and i say it different times in different ways each night. That is havery important, very different from the original show. I think it is not enough to give you stock ideas. We have minimized them over the last deck ai last deck aid. We want you to understand the process and pick them for yourself or more important, we want you to understand the tok market to make a judgment whether you can do it yourself. Me, i love individual stocks, have for years and years and year. I think they can be tremendous vehicles. They can lead to great wealth. Our shows identification with apple, chipotle, pepsico, sales force, honeywell, bristolmyers, it hasnt gone unnoticed. We have tried to leave behind the new and hot ideas and give you themes that allow you to invest in more fertile sectors versus others. Themes that i hope it come alive with analogies, sports and others. Themes like the new frugality or living longer through Healthy Eating habits, social, mobile, cloud, i have written many books, proud of that. I know the concession of a street addict by autobiography remains a favorite. I think that get rich carefully is designed to be this shows new companion. A lot of what i talk about in the show, if you are having trouble, get rich, do it. I am cognizant that the market is hard. You have time burdens. You have demands. You may be bewildered despite my attempts to make it clear. I have emphasized i am not just okay with index funds. I insist that you use them. I would not own a single stock until i had put away at least 10,000 in an index fund through your ira or 401 k . I have addressed saving for retirement, tuition and emergencies in many shows. I have not ever point blank warned you off individual stocks. Let me do this. I would vastly prefer you to invest in index funds thand mutual funds. Individual managers do equip themselves. They move on and records can change and past performance is no guarantees. Which brings moo he to point number one. I am not a shoe or a Snake Oil Salesman for individual stocks. I am a believer in the asset class of stocks as part of an overall way to save money for retirement, tuition, vacations, anything your heart desires. I do want you to have what is known as exposure, a technical term to the stock market. I try might tilley to convince you that it is worth it to do so. Stocks have indeed created so much wealth over time. If you dont believe me, read Warren Buffetts amazen golden anniversary report to describe why stocks are tremendous as an asset class to own. Why do they work . They represent the sum progress of business and the prospects for business going forward. They represent the wealth that companies create in aggregate and the sharing of that wealth with shareholders. You get to be along for the ride and i want you to be along for that ride in a responsible way. Most definitely owning an index fund. I like a fund that gives you a total return or encompasses all the stocks. All for one. Then, of course, go to the s p 500. For those that dont get it, the show has changed from one where we educate you about stocks so we can understand why an index fund might be worth investing. We know you like stocks or you wouldnt be watching or need to watch, which is why when we come back, well explain to you why we bother to delve into individual stocks at all after we have professed such indying love for index funds as the first way to go. Larry in massachusetts, larry . Jim, i know i have mentioned it before but i just want to tell you how much your nightly focus lessons remind me of roosevelts fireside chat. Well, president roosevelt was a great man. Larry, thank you. Sometimes my mom says, just say thank you. We need you out here, jim. Here is the question for tonight. When does an investment into a trade . We dont chase the stock or accumulate too much stocks to have to monitor . How quickly and at what percentage gain do we unload a small position which has gotten out of control, high quality problem and conversely, how quickly and at what percentage loss do we admit we got it wrong . I have shorthand for these. I like to take off now my rules have evolved. When you are up 50 , you take off 25. When you are up 100 , you take off, yes, all of you initial investment and play with the houses money and say, thank you very much and you got a good gain. Investment into trade, we dont do that. If something is an invest and labeled investment, it is an investment. If you didnt get enough in when a stock came down and moved up, kick that out for a trade. Investment becomes a trade when you didnt dpet the whole possession on. Greg in new york, greg. Caller jim, how are you doing . Im doing quite well. How about you . Im doing well. I have a quick question. Me and my friends are young investors in our young 20s. Do you think it is worth taking morris can when you are younger when you dont have enough money to put more money on the line and try to seek the higher profit . Greg, listen to me. Yeah, i didnt start with much money but i took big risks, because i had my whole life ahead of me. You got your whole life ahead of you. Buy stocks when they go down big. You have dpot that paycheck coming. Only older people who dont have enough paychecks left. You take that big risk. Thats what i want. Chris, chris in oregon, chris . Caller yes,jim. Thank you for taking my question. Thank you very much for all the great advice you have given me. Every position in my portfolio is captain cramer approved and doing very nicely. You are very kind, chris. Thank you so much. How can i help . Caller my question is, i have a ira equity portfolio that i dont plan to draw on for about five more years. Everything then is obviously reinvested into it. My question is about dividends. Does it matter whether you reinvest those dividends back into the stock that generated them or just reinvest them in the funds in general . Any time you can reinvest dividend, reinvest a dividend. It is a hard and fast rule. The power of compounding, one of the greatest single things that can help your money is the compounding of dividends. Teach a man to fish, the show is evolved. Our Mission Remains the same to make you the home gamer better investor. I am in your corner. Plenty of mad money ahead. Including how to plug into one of the markets biggest source of wealth. A huge way to win and a massive catastrophe if you are not careful. Mad money will be back after the break. Im taking your tweets. Good. Very good. You see something moving off the shelves and your first thought is to investigate the company. You are type e. Yes, Investment Opportunities can be anywhere. Or not. But you know the difference. E trades bar code scanner. Shorten the distance between intuition and action. E trade opportunity is everywhere. vo wit runs on optimism. Un on . Its what sparks ideas. Moves the world forward. Invest with those who see the world as unstoppable. Who have the curiosity to look beyond the expected and the conviction to be in it for the long term. Oppenheimerfunds believes thats the right way to invest. In this big, bold, beautiful world. Go to ziprecruiter. Com and post your job to over one hundred of the webs leading job boards with a single click. Then simply select the best candidates from one easy to review list. And now you can use zip recruiter for free. Go to ziprecruiter. Com. At ally bank no branches equals great rates. Its a fact. Kind of like shopping hungry equals overshopping. Announcer babies who are talked to from the time theyre born. Are more likely to have a successful future. Talking and reading to children in their first years has a huge impact on what they do with the rest of their lives. The fewer words they hear, the greater their chances of dropping out of school and getting into trouble. Talk. Read. Sing. Your words have the power to shape their world. Learn more at first5california. Com parents weve started this show explaining why we teach what we teach and why you want to own index funds to catch the profits and opportunities of stocks in ago g aggregate. For those that say we tout stocks every night and think index funds are a waste of time. What can i say . We are not going to change you over and win you. We do know. You need not bother to watch. Thats fine. We can live with it. Why do we even bother to do the show . It is a terrific question actually. Surely, i could have retired by now. I did well in a previous life, broker and hedge fund manager, i evolved to be one of the largest compound return, 24 . When the Standard Poors gave you an 8 index. I will come back to that number. I mentioned it now because i am lucky enough to be able to do what i want to do at this stage of life. Maybe i should go back to being a hedge fund manager. My late father thought i was much happier doing what i do now and he thought it would be a mistake to go back to that old life, because he thought it was too hard and i thought the show was terrific and really helpful, my biggest backer in what i was trying to accomplish here. Thanks, pa. So why ever talk about individual stocks then . First, with he know someone must want the information or it wouldnt have lasted as long as we have. This is a commercial product and the market has judged it to be worth something. Second, i do it because of six stocks, National Video, american ago gri no, maamics, st technology, Standard Press steel, giant foods, heinz and gantos. These six stocks are at the core of why i think this show can play a role in your Financial Education and get you to the point where you make fewer errors and have more of a chance to make money longterm. If you choose to invest in individual stocks as well as index funds, they are preferable for the vast majority of you. You are going to want to buy individual stocks anyway or you wouldnt be watching it. This brings me to the first of six stocks, National Video. When i was growing up, my fathers brother knew a broker. That brokers name was jack. I met jack once. I recall he played a lot of tennis. He had a really good backhand. My father worked hard and started at gilbals, selling mens slacks, gabber deans. When it was clear he wasnt going to get promoted, he decided to strikeout on his own selling toy carpet and games and boxes and bags, gift boxes to retails. Those that have heard my fathers eulogy delivered the day after he died, november of 2014, know that my dad had a really hard business life. He and his brother started the National Gift wrap box company to supply merchants with everything they needed to box, wrap and bag whatever they sold to their customers. He never had much competition. His customers were always going under. He was on the road trying to find the nuance. I remember endless days of discouragement. I was growing up. Those were the days my mom would tell me, go to your room, go to your room because pop got home. He had a hard day and didnt make any sales. It was tough for him to save. He had money in a bank account, savings and loan. It didnt pay much interest. I know he was always deathly afraid he couldnt pay the bills. One day, pop said he knew what he was going to do. He was going to buy the stock of National Video, because pops brother had heard from jack, the guy with the good backhand who was a broker that it was the next big thing. The stock of the millennium, so he to speak, or at least of the roaring 1960s. The stock went up dramatically. I could tell pop was elated. He bought more and more because it was going higher. In fact, that was really all about pop knew about National Video. Pop didnt follow it intraday. He found out how it was doing by reading the fivestar evening bulletin, at one point the biggest paper in the country which came out at the clothse o the market or turn on the radio and they would list closing prices. He encouraged me to follow it. I kept a journal of stocks i followed in the fourth grade. I didnt know any more about the companies behind the stocks beyond what pop knew about National Video. I wasnt playing with real money. He was. Sure enough, after he had put a sizeable amount of his life savings into National Video on the way up, it started going down. Like many people, pop didnt know what to do. So he would check in with his brother who checked in with jack, who told his brother, who told pop that all was well and he should keep buying National Video, which he did. All i can say is im glad for two things, one that pop never borrowed money to buy National Video and two, stocks bless edly stop at zero on the way down. Pop lost everything, everything. I didnt notice the changes back then. Lets put it this way. We didnt take much vacation and we sure didnt stay at the ritzcarlton or the four seasons when we went away. I remember ritz mocked mock apple pie made with the crackers. There was an important takeaway with the National Video. People are going to be tempted to own individual stocks to save or augment their paycheck. It is a fact. One of the precepts is to know how to invest in individual stock if you are going to do so. Think of the mistakes my father made with National Video and you will know why this show is set up the way it is. First, he didnt know anything about it. He had no idea how the company was doing, how risky it was, how it could go down as well as up and how it could go under. He relied on a stockbroker friend of his brother. He had done no work on it at all. He was at the mercy of the movement of the stock. He only knew to continue to buy rather than to cut his losses. Thats right. He had a tip. He bought the tip up and down, doing no work and he lost everything, a substantial chunk of his lifes savings. Let me give you the bottom line. Here are the many takeaways from the National Video story. Tips are for waivers. You must do homework if you are going to do individual stocks. If you cant do homework, own an index fund. If you fear losing money, dont own stocks at all. They can go down as well as up as was the case with National Video. I still dont know what it does. I could google it but thats for another chapter in tonights story. After the break, ill try to make you more money. trader vo i search. I research. I dig. And dig some more. Because, for me, the challenge of the search. Is almost as exciting as the thrill of the find. announcer at scottrade, we share your passion for trading. Thats why we rebuilt scottrade elite from the ground up including a proprietary momentum indicator that makes researching sectors and Industries Even easier. Because at scottrade, our passion is to power yours. It took Serena Williams years to master the two handed backhand. But only one shot to master the chase mobile app. Technology designed for you. So you can easily master the way you bank. I take prilosec otc each morning for my frequent heartburn. Because it gives me. Zero heartburn prilosec otc. The number 1 doctorrecommended frequent heartburn medicine for 9 straight years. One pill each morning. 24 hours. Zero heartburn. The 306 horsepower lexus gs. Experience the next vel of performance, and theres no going back. Lease the 2015 gs 350 with complimentary Navigation System for these terms. See your lexus dealer. Welcome back to a show of shows describing why this show is about and why do it to begin with. I dont even want you buying individual stocks until you own a diversified index fund. Own enough so it will be the biggest part of your savings, never stocks. We dont call the show mad money for nothing. We are using mad money only to buy the stocks. The rest goes into the index. You will learn how not to invest. Buying a Stock National video ignorantly from a tip through a broker and riding it all the way up and all the way down. That wouldnt happen with an index fund. We respect the right everyone has to try to invest in individual stocks. My father, had he diversified into an index fund or a basket of stocks might have had a lot more to show for it. Which brings me to the second stock object of the night, american ago gri no, maamics. When i got out of school, i knocked around as a reporter covering sports and government and made about 153 a week and homicide in l. A. After winning some awards for my coverage of the ted bundy murder in the florida capital. I didnt make much money either. I knew to open an ira. Whatever little money i had went to the Fidelity Magellan Fund run by peter lynch, the best investor of his day. I was determined to try to augment that mutual fund by buying individual stocks for personal account. I was going to do it the right way by researching the stocks, getting edge through the research, not through the brother and the broker, all that stuff. Where was i going to get that edge . I figured why not read all the period periodicals that covered stocks. I was helping to start a magazine called the american lawyer. Because of a kind sister that let me crash in her studio apartment in the village for a bit, i was able to save some money, beyond 200 beyond my contributions to the ira and decided to use that to buy the stock of american ago gri no, maamics, why . Because i read an article in the magazine which we got at work and that article said this orange grower was doing incredibly well. I would be on the ground if i bought it. I picked up ten shares of this 9 stock. I was in the ground floor. You know what ground floor i was in on, the cheap linoleum ground floor that i ended up sipping that cutty sark on, because the frost probably wiped out the orange crop and destroyed my investment. I should have given up right there. I didnt i just changed my m. O. What i did give up on was the idea of buying a stock off a wellreserved article from a good period. Caller and let it ride. It didnt hit me how to do it better. I got a call from a floend said a local steel mill called sps was hiring if i was looking for a highpaying job. They had a lot of orders and were desperate for orders. He knew i was struggling for extra money and might want another job. Those calls in the middle of a recession for a friend for a job can be like gold. I thought, why not look into sps and see how it was doing as a company . As a stock . I went to the midtown library in new york where they had all the periodicals and read up on anything and everything that was sps which changed to st technologies. They had everything at that library, business line, and you name it. There wasnt much known or written about it but what was written was pretty darn negative. Oh, well, it is not doing that well. Bummer. Then, i realized, hold it. My information is the most current possible. I have got a guy telling me they cant handle the business they have and need to add additional shifts of unskilled labor like me but the periodicals all read negatively. I had insight nobody else had. I was ahead of the story. These days, it is hard to get that edge. Edges do exist and we do our best to present them every night. Interpretations of news and events can augment those edges and analysis is very important. I had the pure play. I took everything i had, everything i had saved and i made a ton of money as the sps story unfolded, enough money that i decided to look around the office for more ideas. I was writing about lawyers who were working on mergers and acquisitions, all the public once. It was pretty clear the hot field for mna was about oil and gas. They were being gobbled up. I thought, why dont i find one that hasnt been gobbled up . I found a Company Called notomis, which discovered a large mind in indonesia. We were talking about 300 and bought that stock. I dont think i had to wait very long before i caught another takeover. At that point, i was hooked. It changed everything for me, my whole career plans. I put money into my mutual fund. Anything left went into individual stocks. I made enough money to pay for my first year of law school when i decided to go back to become an attorney. People would say, none of this is possible. The research which was so scanty back then is everywhere. Anyone can google any company and know how it is doing . Sps which was later taken over by precision cast parts and got bid from warren buffett. There are rules to make sure it is hard to get any other edge. Companies have to have full and fair disclosure of any news. That means some would say you cant possibly gain stocks as well and you might as well buy an index funds. I am not against that. I was investing in individual stocks alongside the bigger part of my savings. You can study and pick worth wile stocks that can augment your savings. Do it right. Have some edge and stay current on the company. Here is the bottom line. Remember, american agogrinomics and sps. Remember what one person says and i, that is not good enough. Have genuine insight that others might not have specially if it is against the grain of the consensus. You increase the odds. It is in the end about the odds. Any hard work and thinking you can do to increase those odds in your favor is going to make it more likely than not that you will succeed as a doityourself investor which should be the exact reason why you watch this show. Joe in new york, joe. Booyah, jim. This is joe from kings park, new york. Thanks for taking my call. Of course. A quick thank you for sharing your wisdom. I have a great staff that helps me. Thank you. My question is this. If i want to diversify and add three or four companies to my portfolio for the longterm but by diversifying, i would only be able to buy two or three shares of each company or would it be better to buy ten shares of one of them . What is the least amount of shares that you would invest . Ten shares. I have done many times ten shares and two or three at various times. I do favor an index fund for your First Investments and only if you have maxed out on index funds would i suggest you buy individual stock. Nobody said investing would be easy. Thats why i come here to help you put the odds in your favor. Genuine insight and time on your part. Dont worry. Well do it together. Stay with cramer. Awe believe active management can protect capital long term. Active management can tap global insights. Active management can take calculated risks. Active management can seek to outperform. Because active Investment Management isnt reactive. Its active. Thats the power of active management. Tonight, im telling how to increase the odds of successful, individual investing, using stocks for my personal history as a metaphor to tell the whole story. We have gone over why we start with index funds. We have seen the wrong way to invest by examining a failed investment of my dads, National Video and the right way, all ahead of the publicly available data curve back then. While at law school, i managed to trade daily using personal insights going to the Harvard Business school library, which had everything available including the research of pretty much every major Brokerage House as well as microfiche of sec filings of individual stocks. So what if it was about amonthold when we got them, it is wa better than nothing. We saw the beginning of the indexes of individual stocks, bundling first stocks followed by the value line company, an Influential Research fund and then the s p 500. I didnt think much of when they bundled the s p 500. I just didnt. I was more interested in individual stocks. I had big scores all about which you can read about in confession of a street addict. At no point did they cool the arbor for the individual stocks. I put a stock a week on my answering machine, which almost all made money. We were coming out of a long period of subpar market performance. Interest rates were about four, five times the way bonds are now. Money coming into stocks in the fervor was all beginning. How do i know this . Simple. When i started on commission in 1984, i used to get a call every day from none other than my mother, who absolutely loved the stock market and would call for quotes on her favorite stocks. I got her interested in stocks in the early 80s. Sh he chose to invest in the way peter lynch had started to teach all of us back then. Buy what you know and stay on top of it. She had been shopping in giant food, a very progressive superintendent chain. She asked me if it was publicly traded. She had bought 35 shares and was itching to buy more. What i would do is something i would tell you to do, read up on the wall Street Research and marry her experiences at the chain, personal insight, with the fundamentals of the grocery business. Goldman had what was known at the time as the axe, the best ann analyst on the street. I would read what he liked to say about giant. He liked it. I had a friend, tommy tisch, from the lowes corporation, who would send me a gym bag of research. Like an idea through personal experience, giant food. You read up with it with the bess the research and match those insights with those of other firms. If the axe liked it more, you might have a slight imperfection as other analysts got on board and started recommending. It. It was particularly helpful if the axe would trade out the growth plan, particularly regional to go to national. Investors would only pay more for other companies in the sector, meaning the multiple which is the price we are willing to pay for future earnings or the p. E. , could go higher. These days, everything is so much easier. Giant foods was bought by a dutch company. Had it stayed public, you could have gone to its web page and it would have everything you want, the stock price. No need to call the broker anymore. The negative here is that everyone has equally the same info. The original insight by my mother was the starting point. You cant substitute for that. As an aside, my late mom never lost her interest in stocks. She took sick with cancer in 1985 and she would call me every day at 9 30 to get her quotes on giant and other stocks she followed when the market opened. She did it to stay alert and keblthed to me. Goldman sachs gave me as much time as i needed to spend with her before she died. I never forgot how easy it was for a parent or son and daughter to talk about stocks which is a major reason some of you watch the show. I pledged to my mom i would do something more creative than make money with money, something fulfilled by the show. Despite all these different inputs, the process of picking winning stocks can be upended by events and the Great Recession and the ability of the competitors to knock it off in stride which brings me to the fifth stock, gantos. A womans apparel chain that the Goldman Sachs Research Department loved and had a close relationship with. It was heavily promoted by the firm. I tried to get my father to buy stock in the chain. Woe hear nothing of it. I asked him why. We had the best analyst on the street. He said, no one goes there. I told him that was impossible. It was way too highly rated by go goldman. My father said, lets take a trip to franklin mills, a giant outlet mall that he used to go he to calling on merchants. There was a gantos in the mall. He said, we are going to sit on this bench and camp out in front of gantos, busy saturday and make a judgment. We sat there for hours and hours talking and watching and only about a dozen people entered the darn store. I couldnt remember if we saw one guy or woman coming out with the bag. I shorted the company that monday and stayed short pretty much until the whole thing went to zero and got liquidated. Another lesson learned. Wall Street Research can be very wrong. Gantos. Made me skeptical. I am morphing a way that this show can bolster the process. I infuse the show with all the lessons. I try to imagine my mother being the caller and keep the skepticism my father taught me and how i can help present you the giants and the gantos. So you can understand the process of good investing. I want to show you it isnt reckless to try to pick individual stocks and those who say it is dont understand the process of firsthand experience married with research and buttressed by skepticism. It increases the odds of successful stock investing while minimizing the risk. My mom was no genius in stocks. My dad was a genius in retail. I would like to think some of that rubbed off on me. This is big. Like big big. At t and directv are now one. Bringing television and wireless together. So youll get your tv from home on the go. Which means you can watch movies while youre on the move. Sitcoms, while you sit on those. And even fargo, in fargo you can check out watercooler worthy tv at the water cooler. Yeah flip between the fight, the game, and the ballet you didnt want to go to. Binge, while you lose weight channel surf while you surf. And enjoy a good cliffhanger while you hang from a. Why am i yelling . The revolution will not only be televised. The revolution will be mobilized. Introducing the all in one plan. Only from directv and at t. Were talking tonight about the notion of individual investing and recognizing how i try to teach you how to analyze stocks you might pick if you have the time and inclination. If you dont, you can keep watching. I want you to invest in index funds, not individual stocks. Why . Because i cant have you buy a stock an a tip and do no research. I want you to have an edge or a catalyst or a personal experience where you can match that experience with homework, principally, research and the knowledge gleaned from the companys website, be skeptical at all times. Now, lets get to the final piece of the puzzle that alludes so many of you and make the process far more mystical than it seems. Lets talk about heinz, the catsup company that was bought by a consortium that sclus warren buffett. When i decided to leave Goldman Sachs after four fabulous years to run my hedge fund, the first stock i bought was heinz, a Great Management Team that could deliver earnings. A classic growth stock moving from the first world to the third world. We used to call it before it became the developing economy. It had a clear growth path ahead for multiple years. Plus, at the time when the japanese were nipping at the companies and the chinese becoming world power, i was confident they would never have world power. As long as i was Goldman Sachs, recommending stocks i needed to find, i could always suggest they buy more. I wasnt wrong. I would run the risk of losing a client. It was on the fly. Buying stock. Didnt matter. They want a performance. It started when the economy was beginning to heat up. The economy heats up. I watch that company. The meyers that i own, dropped and dropped and dropped some more. They were requiring what i didnt realize. The rotation of stocks of companies that were diversified industrial machinery business with earnings that would heat up, stop popping. I didnt get that. Started buying reynolds metals and phelps dodge to name a few yesteryear mining and mineral companies. I had this clause in my contract with my investors, one demanded by one of the guys, if my fund dropped by more than 10 , i would have to open the doors and let people out of their contract with me. I noticed each day my fund sank and sank and sank, because it was filled with best and nof br. We booted all my faves and started playing the rotation game and quickly got to even. A sobering lesson i never forget. If you want to perform on a daily basecis, you have to take action. There is only one problem. This rotation game is not one you can play at home. Without being almost a fulltime professional. Here is why. As that year progressed, the economy got hotter and hotter and hotter. These stocks kept getting higher and higher. At a certain point, things got too hot. People started worrying about Interest Rates going higher. Dont we know all about that. The next thing you know, the stock market, it crashed. All those cyclical plays were decimated. So were bristolmyers and heinz initially. They snapped back. Thats what happens to the best of breed, wellmanaged companies. I have now told you to use an index fund no matter what and only buy individual stocks with mad money using the right way, not the wrong way. Here i have detailed how a rotation can derail the best of the best for a short period of time. What we do on mad money is explain right up top why your stocks might not be following the fortunes of the companies underneath because of rotations and socalled macro events. As a homegamer, you can use the flailing of the Hedge Fund Performers to your own advantage by picking up the best of breed companies. I use that through the longer as an ex many amany of bhaes happening. I might bring you an executive. See if they fit into whats right or wrong in the mad money world view. I have seen the best of breed does always win out in the end whether it be after the crash of 87 with the Great Recession of 2007 and 2009. My job is to keep an eye on that price for you to explain why the market might not be reflecting accurately whats going on at actual companies. Thats your chance to get in with them at reasonable prices. I augment these views with my other works and writings. My good get rich and my blog and Charitable Trust, which you can follow at actionownersplus. Com. That is the way to show you how big money works by playing with an open hand. It is more of an exhibit with emails. It can help you understand the rotations better than anything out there while producing good profits for charity. I have given away more than 2. 3 million. All along the way, a better investor at the heart of the show. I want you to understand how it works and how the mack innations of the pros int twine. I have made my share of is m stakes. My Favorite Company that didnt work out, i didnt do my own homework. I have a reputation for being too bomb bass stick. I am trying to keep you informed in an entertaining way. If i didnt try to make it a little bit of fun, it would have failed commercially years ago. I would have let down my mother, my father and all those home gamers years ago. Education is what it is about, as long as you know that the bottom line is, im doing my job and hopefully doing it right. Stay with me. Hey, everybody, i get your tweets all day, try and answer as many as i can. I thought i would give my hands a break and dig into some of your tweets on mad money. In real money, you said to be aware of firms financed heavily with debt. Is that ir a certain debt ratio or percentage to avoid . If you go to stay mad for life, i have a lot of rules. You have to make sure the debt they have, the interest they have to pay, isnt overwhelmed, doesnt overwhelm the company. Can the cash flow pay for that interest . Thats what you will get, cash flow versus interest. Here at number two, is there any virtue merit or possibility of returning the Gold Standard . We dont know that. That pegs it in a way so we have no flexibility whatsoever. I do think that owning some gold is always a good idea. Do it through the bouillon or the gld or periodically, i might recommend a stock. Those are the best ways. We have dolan brian j who said, great morning, teaching my fivedayold the value of investing at an early age on mad money. You no he what that kid has . Horse sense. He wants to know, could you define precisely value, good cash flow, low debt, momentum. What is the quality . Everything gets sold. It is best of breed. High Quality Companies are acknowledged to be the corporate leader in its sector. If the sector is a good one, this is the best of breed in the sector, i think you will have a good longterm investment. I prefer for you to wait until we get these periodic moves down. Thats when you pull the trigger. Buy good Quality Companies at prices you like. At jim cramer we know that Money Never Sleeps but do you . I always have had a sleeping problem. My sister has a sleeping problem. My father has a sleeping problem. We can not stay asleep as long as we would like. Thats why you see me tweeting at 3 30. He is wondering, who are some short sellers worth following and learning from . This is an industry world. What i am looking for is actually the best shorts, not the best short sellers. Periodically, the best short sellers are in the wrong stocks. I like to look at the Companies Case by case. Here is are 6 00 p. M. Show that replaces the nightly news, amazing coverage. I appreciate that. I am glad you watch it when it is on air. You get the scoop on the people who ca who tape it and watch it later. Understore, teo. Professor, so glad you are helping us. I read every aa and alert. Very helpful. Thank you for extra tv hours. Action owner is a companion news letter to my charitable strutru. My own money in a trust which i send to a charity and write about it while im doing it to analyze it. vo what does the world run on . It runs on optimism. Its what sparks ideas. Moves the world forward. Invest with those who see the world as unstoppable. Who have the curiosity to look beyond the expected and the conviction to be in it for the long term. Oppenheimerfunds believes thats the right way to invest. In this big, bold, beautiful world. I could get used to this. Now you can, with the luxuriously transformed 2016 lexus es and es hybrid. I like to say there is always a bull market somewhere. I try to find it for you right here on mad money. Im jim cramer and ill see you next time. Some people have the impression that these kind of facilities are, sort of, termed club fed. Club fed. Club fed. Club fed. Club fed. There is no club fed. Its an intimidating crowd. The whole white collar camp or club fed that really doesnt exist anymore. Thats a myth. When youre sent to prison, you die with your eyes open. You get to see your whole life go on, your whole world go on,