Some of the players were doing just okay. Some were hot as pistols. Some were just duds. I said i wanted to figure out which were going to go higher, just like everybody else was going to find out. He said why dont you try . It seemed in my house the radio was always on until pop put the tv on for dinner. We always watched the news while eating. I hated it because most of the news was about the war, meaning the war in vietnam, and it seemed frightful and scary and very real life, even when i was 9 years old, my mom was worried that i might have to go to vietnam. Fortunately the war was winding down by the time i got my draft number, and it was a high one, so i was spared from conflict. Right after the world news, they always mentioned the Dow Jones Industrial average, and they either talked or showed the most active stocks, and then the ones that had done the best or the worst. National video was often on the worst list, i discovered, hence the anger. So what i did was write the names down that i heard and i tracked them. Kept them in well, believe it or not, this ledger that i still have. Here it is. What a terrific game. I was trying to figure out the next move of a stock, even as all i knew was the name. Polaroid, xerox, national video, panam, united. Most of them were defense stocks and they went up a lot in tandem with the war. Hey, so i followed a lot of those, and a bunch of others. Look at that. Con air. Eastern. Rca. Admiral. After a year, i decided this was about as cool a game as was imaginable. I wanted to introduce it to my fifth grade class, so i did, show and tell. Showing them my ledger. Inviting everyone to play to see who could find stocks that went up the most during the week. I have to admit that not everyone was as into it as i was, but the coolest thing happened ever. My dads company represented the 3m corporation in philadelphia, selling tape and a fancy ribbon that bowed easily. Satin ribbon. Had to make the bows. Triple m was always coming up with new product lines, which it still does, which is one of the reasons ive always favored it. You should too. About fifth grade, pop came home with a new line of 3m he was selling. Games. They got into whats called 3m bookshelf games. Perhaps i wanted to know more about how the stock market really worked. The Company Created two games about business. Acquire about takeovers, which had all been the rage at the time. And stocks and bonds of which i am fortunate enough to have gotten a copy right here courtesy of george, who is producing mad money, who gave it to me for the holidays. I almost cried when george gave it to me. Ive subsequently asked the ceo of em to bring it back. They dont own the rights anymore. But the point of mentioning this, the stocks and bonds which george bought off of ebay, is the stocks are fascinating enough to get your kids started in them right now. Its easier than ever. Pick some stocks. Maybe not of defense companies, although they are performing at an odd and positive way. But of companies that are familiar to your kids, and have them track them, and guess which will do better over time. Not the city transport. Not the Growth Corporation of america. Not the pioneer mutual fund. Not the central city municipal bonds. But stocks that are real. So heres the bottom line of my childhood stock market obsession. Get started early, and then they play for life, because the stock market is a longterm contest, and one i think the earlier you get in, the more you can win. Im going to mickey in new york. Mickey caller hey, jim. I wanted to thank you for all you do. Your books and your show helped me do that at a very young age, which leads me to my next question. Ive been investing since i was quite young, i was wondering what type of changes i should make to my investing process as i get older. Its a generational thing. I used to say when youre 50s, switch to 50 bonds. No more. Interest rates are way too low. What i need you to do is find some conservative stocks that give you a good yield, and shift over time from the high growth stocks. And then i think you will be able to pick up some income and do well. Rick in arizona. Rick . Caller hello, mr. Cramer. How are you . Real good. How are you . Caller im doing great, sir. I have a couple of young children. Im trying to get them started in investing. The question i have is what advice and what are the most essential items or ideas of investing concepts do people need to know when they start learning about the market and investing themselves . The first thing they need to know is what they own. The idea behind that is to own things like disney. Its why i always tell people start with disney. Dominos pizza if you like dominos. Mcdonalds if you like mcdonalds. Go to the mall. Go to costco. Go to places that youre familiar with. Read the annual. Buy a share. One share. Get him or her involved. Get them started early. Teach your kids about the market. It is a very valuable lesson, and there are many more coming up on this special edition of mad money. Well be right back. Dont miss a second of mad money. Follow jimcramer on twitter. Have a question . Tweet cramer, madtweets. Send jim an email to madmoney cnbc. Com, or give us a call at 1800743cnbc. Miss something . Head to madmoney. Cnbc. Com. Welcome back to a bizarrely special mad money, where im trying to teach you life lessons in investing from my life. While i am not a dollar sign represented by a man, or a stock symbol for that matter, ticker j. I. M. I have stumbled around the stock market long enough in life to learn a thing or two, and tonight youre getting some of that wisdom from the school of hard knocks. Dont you always love it at the beginning of a pro Football Game where they have the player say his name and his school, and some say the school of hard knocks. Thats what i attend when it comes to stocks. Youre getting the ontv version right here, right now. My fourth grade obsession with keeping a ledger to track stocks, and then ultimately to learn how they trade through the greatest game on earth. No, it wasnt monopoly. It was stocks and bonds. But with its little certificates and its game boards and its cards, it tells you about news and how that would send a stock higher or lower. Thats what this was all about. Now, i left the stock market games behind me by the time i got to middle school, which by the way we then called junior high. Where my obsession became sports and i was the second fastest guy in the school for ages. I ran track, of course. And the other thing i cared about was girls, whose movements were more elusive than any of this stuff. And they were more elusive than the ranges of stocks. That was a random walk down main street. I couldnt win for losing. Thats the subject of a different show. Maybe entirely. However, my father did ingrain in me the desire to save. Early on, i learned that even in high school, youve got to save. I saved as i bussed tables at the old block and clever, which we called the block and cleavage, because we were hilariously stupid back then. As a vendor at Veterans Stadium i sold first cold soda. Hey, ice cold. And then ultimately graduated into selling ice cream. Now, very quickly at that job, i learned the value of market power. Specifically cornering the market, and i paid people to give me exclusive right to sell ice cream. Hey, ice cream here. Vanilla and chocolate. On the 600 and 700 level of the vet stadium. Can you imagine how much money could be made if you had the only franchise in the whole upper deck, even for a team as horrible as the phillies back then . By paying those guys not to sell ice cream against me, i made fortunes, except the one time they gave me only strawberry ice cream. Talk about having to run from a customer. Or maybe when Steve Carlton would pitch. He pitched so quickly that i would get stuck with unsold ice cream and i would take a genuine beating. Talk about learning how business worked. The shelf life of ice cream on a hot july night is about as short as short can be. I might jest with you about your name. Sometimes you hear me calling you hey skip, or chief, or hey come on, captain. I learned these names at the ballpark. Its what people called me to get my attention to buy ice cream. I loved it for the false intimacy and i never forgot the monikers bud, i mean, partner. I made a ton of money. I opened an account at fidelity and contributed a little every week of my ballpark winnings. It was run by the great peter lynch, whos written two investment books. Two of the best investment books of all time. Theyre the ones i usually tell people to get after theyve read my books and say i want to learn more. I didnt save enough when i got to college. The money paid was work study anyway and it went toward my tuition and room and board. But when i got out of college, and after a lot of attempts to get a job in the newspaper business, rejected by more than 50 papers, i had every single rejection letter in a trunk. I landed a position in tallahassee, making 156 a month. I still keep a tattered pay stub in my wallet to remind me of how hard it was and how poor i was. Nevertheless, poor, 156, i contributed even then. I put a few dollars away when i could. Not long after i applied to and got a job at the now defunct Los Angeles Herald examiner. It was a horrible job. I was making 179 a week. It was more than tallahassee, but it was in a town that was about as four times as expensive as living in tallahassee. I was living in the fairfax district. Pretty sketchy. Around the corner from pioneer chicken, which was way too expensive for me to go to. A few weeks later, i was stalked and ultimately broken into repeatedly. Something the cops were helpless to stop. At the time, i was assigned a story at san diego, a Horrible School shooting. When i returned, everything was gone. Everything i had. So it began. My terrible but thrilling six months of living in my car, basically trying to get by. The only real upside being when you met a woman, it was pretty easy to figure out the inevitable end of the night query. Your place or mine. Now, i know this isnt your normal behavior, but as much as i knew that my ultimate goal was to save enough to get an apartment, people would take me in now and then so i could get a shower, change, maybe even get a good nights sleep. But you know what . I still never quit saving. I remember cashing my paycheck every other weekend and writing a check to Fidelity Magellan Fund, for what i could afford. You only had your gasoline, car insurance, and food expenses if youre in your car. Terrific savings on homeowners insurance, rent, wow. How poor was i, yet still putting money away . When i ultimately got mononucleosis, i had no health care. When the company mercifully put me on the road so i could submit some expenses for my daytoday. So i had to go to a migrant farm workers clinic to get fixed up. I still put away money, though. Even as i was making my weekly trips to the doctor, who was one of the best i ever had. The upshot of investing when youre living in your car, amazingly, giving money to the best stock picker of all time, i managed, through the years, 35 years later, to put enough money away to take advantage of the great bull markets of our time. Not to brag, but to teach. That money ultimately amounted to a fund well into the six figures. Not because of my capital additions. I stopped putting money away in that fund years ago. But because of the power of compounding with an amazing investor at the helm. I never touched it. I just let it build. I think the takeaway here is that i want you to save no matter what. Obviously the earlier the better, through thick and thin. When cnbc has those allstar managers on, if you dont have enough money or time to handle your own stock portfolio now, or can only buy one or two stocks, send the money in. As little or as much as you can. And heres the real bottom line. If i can still send those checks to the Fidelity Magellan Fund when i was living in my car, sick as a dog with jaundiced liver, kept warm by a bottle of jack and safe by a pistol by my side, the most down and out that you can be in this great country, you can put some money away, too. After the break, ill try to make you more money. Easo why do you feel exso tired afterward . Instead of refueled and focused, youre foggy and sluggish. Its that 2 30 feeling again. So how do you get your clear, alert feeling back . Have a coffee. Then another . Do this instead. Take one 5hour energy. In minutes foggy and sluggish is gone. Hello clear and alert. 5hour energy. Take it after lunch. Be clear and alert for hours. With hotwires low prices, i can cross even more places off my travel wish list. This year alone, i hit new york and texas. See, hotwire checks the competitions rates every day so they can guarantee their low hotel prices. Men hotwire, hotwire. Com. [ mixer whirring ] my turn daddy, my turn hold it steady now. I know daddy. [ dad ] oh boy, fasten your seatbelts everybody. [ mixer whirring ] bounty selectasize. Its the smaller powerful sheet, that acts like a big sheet. Look one selectasize sheet of bounty is 50 more absorbent than a full size sheet of the leading ordinary brand. [ humming ] [ dad ] use less with the small but powerful picker upper. Bounty selectasize. And try bounty napkins. We in the United States are competing with the best countries in the world. Look at the Global Competitiveness of American Companies by any measure. My life story can be your life story. You can start with nothing in america and create the american dream. Were riding the delicious magical money mystery tour tonight. I am giving you the life lessons i have learned the hard way, through decades of stock investing. I told you first how to get your kids started early. Then i told you about how nothing should ever stop you from investing. Listen, if i could do it living in a 1977 ford fairmont, you can put money away, too. Right now, i want to tell you about how i got started in an individual stock picking, something you know i still love and still believe in, after seemingly interminable periods of chaos. It is still totally worthwhile, if not lucrative. And yes, it is the reason i believe you watch. Certainly your inclination. That is much like the funny outfits, stream of consciousness references and of course the outrageous sound board, courtesy of when i used to have a radio show similar to mad money. It was called real money. If youre picking stocks, playing with real money, not just with a ledger, or with a game of stocks and bonds, you need to open an account. When i got started in 1979, there was no such thing as an online account. I had my money with fidelity, so i chose to put my money in an individual stock account there. When i first started, i didnt know where to look for ideas, so i turned to forbes. People at forbes, please do not take this personally. I read a nifty article about american agronomics. It seemed to be very compelling. So i bought first thing, ten shares, for nine bucks. A week later, frost hit and wiped out the whole crop. My investment was more than cut in half. I was completely devastated. The house of pain. But not defeated. I sold it out and took the capital. You know what i did . Went back to forbes. I bought seven shares of bobby brooks, a clothing outfit i had never heard of. Forbes said it would be a terrific buy. The Company Reported a bad quarter and my money was halved again. Fortunately, i had a decent job at a magazine called american warrior. I was making 20 gs and living at a less than swank studio. The cheap 400 a month rent with the sofa bed. Albeit twice the rent for a beautiful one bedroom in tallahassee. I was on the road quite a bit back then. After a particularly hard night on the town researching a story in kentucky, i fell in love with breakfast at bob evans farm. Finding out it was publicly traded when i went back home, i visited the huge fabulous midtown Manhattan New York Public Library and devoured everything i could about bob evans farm. They had magazines with articles, microfiche, a fourmonthold financials and investment publication with writeups that allowed me to compare with other companies in the industry. I bought 20 shares. E stock went up immediately on a good quarter and a stock split. I found out, know what you own. Like it even. What do i know about growing oranges . What do i know about womens fashion . But a good plate of scrambles and sausages served in an attractive setting with a nice waitress . A company that i found, a long tradition of good service. Nice enough growth in the midwest. Now that was for me. Next up, Standard Press steel. Now that became sps technologies. An outfit from my hometown. They made fasteners, screws for airplanes. Why sps . Because a buddy of mine from high school told me they were hiring like mad. Wanted to know if i was looking for a job. Paying good money. I had a job, but back to the library for more research. St technology. Solid company. No debt. But nothing in print about its hiring push. Ripe for a trade, right . No one had that skinny. You know it doubled not long after, and by that point i caught the bug for good. 23 years later, it wou be acquired by precision cast parts, one i still like and have liked for many years. Quality company. So now im figuring it out. The best investment ideas come from what you know, melded with the information gleaned from public sources, even as if they are as late and as hard to source as taking a surreptitious trip to the New York Public Library when i was supposed to be working. I didnt like the random way i was making money through this. I mean, you know, a friend from homes lucky call about jobs . So random. A hearty breakfast at Bob Evans Farms . I was thinking theres got to be a more methodical way, right . And then it hit me. Look around at work. At the time i was covering mergers and acquisition wars, profiling some, following the deals they were on, it seemed that every other deal was in the oil patch. One after another after another. Smaller to midsize Oil Companies were being acquired, and all i was doing was standing around writing about it. So i went back to the library, took out some editions of value line, a Stock Research magazine, and checked out the pages devoted to Oil Companies. I cross referenced them with other research to find out which could be acquired without problems. Even because they were public without a family owning them or because they seemed to fit the size and parameters of so many other deals that i was writing about. So i settled on natomas. A real gusher in indonesia. I didnt have to wait long. I almost doubled my money. Buy companies that will do well on their own as natomas was, but are still undermanaged, which is the consensus i found. That meant another oil company with bigger scale could do more with natomas, which was cheaper than it should be if it simply got rid of the management. As much as i had hit some winners, i was distraught that i had given up the ghost in those first few trades. At the time, i had been hanging around the track. Yeah, the track on weekends. Mostly aqueduct. Nearby. And i learned how to handicap by reading the books of a guy named andy beyer, the Washington Post racing writer, picking winners. They teach discipline, how to identify the best thoroughbreds to bet on, how to find the best long shots, going to out of the way tracks, where information was less wellknown and not betting willy nilly on every horse in each race. Find the one where is the payoff was more sure and bet big. Cut your losses if youre having a bad run. Every one of these lessons could be applied to the stock market. You can take a huge swing when you know what youre doing, particularly when others dont. Dont just gamble on stocks for the excitement and fun of it. Most important, be disciplined. Dont let your losses pile up. After five years in professional journalism, i decided to hang it up and go back to law school. The good news, i had saved enough to pay me for my first year, all in the stock market. I would never have been able to make enough had i just kept it in a savings account. An index fund would have made me nothing. Well, nothing at all. So heres the bottom line. You want to get started . Go small. Invest in what you know. Research it intensely. Back then i got all data from the public library. Now its as simple as a key stroke. The information is free and ubiquitous. Up to the minute financials, analyst presentations, brokerage research, and of course the Conference Calls that i tell you are musts if youre going to know what you are doing. Simple . No. Lucrative . You bet it is frank in arizona. Frank . Caller jim, whenever im considering buying or selling a stock, i look at the bid price and the ask price. Sometimes that price range is narrow. Sometimes its wide. How is that information useful in determining if its time to pull the trigger . Well, look, if you like the stock, im going to tell you thats irrelevant. What really matters is, because if you want to hold the stock for a while, you just have to hold it and forget about that spread. I used to buy stocks that had a we used to say they could drive a truck through them. Things are much easier now. Dont worry about the spread. Cramer, you are super. You are awesome. I a firsttime investor. You are inspiring me to get in the game. Your show is the best on tv. I want you to know that you have transformed me. Thank you, cramer. Tonights show is all about you learning from my attendance at the university of financial hard knocks with a major in investing. Ive taken you through the importance of Getting Started early. And saving no matter what. Ive shown you how to spot winners and avoid losers, all through looking at actual examples in my life. Now im going to give you a sense of how you can become a trader if you want to, and be a good one at that. Mad money has changed time and time again over the years. Its been on for so long and i have deliberately skewed it away from trading and much more oriented toward investing. There are so many obstacles to trading than investing these days. You have to watch your positions like a hawk. Its very hard to do. You cant really do your job at the same time and also follow the market. Theres so many people with such great sets of tools and the ability to be accessing information in realtime and theyre always going to beat you. Theres so many different products that allow hedge funds to move stocks around like toys and youre really going oneonone with the big boys if you attempt to try trading at home or work. Its almost a suckers game. But theres some advantages that you have now that you sure didnt have when i started trading in my law school dorm back in 81. First, commissions are so, so much lower, so you can get in and get out without much friction and without much more after commission profit. Thats why im not worried about the spreads, as i said earlier. Second, the information you need is on your personal computer, even on your smart phone. Id have to call brokers all day, watch the ticker on fnn. Back then i didnt even know what price i got on my stock when i bought it. When i was in class, i had to use pay phones. No cell. You have to wait at one payphone while some kid chatted aimlessly to his girlfriend or someone called her mom. I was begging to get on the darn phone. At the same time, though, i had to go with what i knew. I knew individual stocks for all of the stories about harvard law, including the movie paper chase. I can tell you there was a lot of down time and a real Good BusinessSchool Across the river. All things considered, i possessed the best publicly available information around at that time. The first thing i decided to do, though, given the circumstances, was to work on finding one trading idea per week. My reasoning was pretty simple. You cant be all over the map if youre doing this as a hobby. I figured i couldnt take a lot of chances until i really knew what i was doing, and thats a very valuable lesson for you if you want to start trading. I discarded a ton of ideas looking for catalysts, upcoming reports, possible mergers. Stocks that could rally based on other parts of the paper. An article on the front page of the New York Times might be talking about some breakthrough in medicine. A brokerage report might discuss the potential for a new oil find. I go on a roll and started my first writing about the market. Yeah. I wrote a news letter. It was called mr. Bullish, which i mailed to my parents once a week. I clearly articulated the thesis behind my trade. Used to type it on my olympic typewriter. I would do no trade if i couldnt explain exactly what the company did. And why i liked it and what would happen. I had that level of discipline. No buying of anything that didnt have an exit strategy. I had to have an exit strategy from the moment i put the trade on. An important lesson made disciplined by the insistence of a written thesis before i pulled the trigger. When you trade, you must trade with confidence. None of this scare stuff. You could easily be shaken out by the Broader Market if you arent. You want to trade with confidence . Well, ask yourself, would you be willing to put a Stock Recommendation on your voicemail and update it every week . Hi, this is jim cramer, im not here right now, but i like monolith memories at 32. Darn it, i actually did that, too. Yeah. And i had that level of conviction about my pick of the week, which is incredibly important to possess. Of course, i was putting my money where my mouth was. I managed to augment the winnings with work i was able to get from my old employer, american lawyer, some freelance work for the New York Times, and some legal work for a professor who moonlighted during criminal defense cases. It wasnt before long that marty peretz tried to get me to write a piece. I neglected to call him back, so he got three weeks of trades all successful at that machine. When i met him, he said he made more money from my answering machine and he wanted to give me half a Million Dollars to manage. I told him i didnt think i was capable of that. He said he had confidence in me. After i gave him a tug of war, he actually did give me a check for half Million Dollars. That was real money back then. I had it in my hands, i was like whoa. It was too hot to touch. I set up another account. I went right to work trading. Almost immediately, i lost a ton of it. The house of pain. And i could see how i would have to wash dishes at martys house and mow the lawn for about 125 years to make back the 70 gs i had just blown to smithereens. My mistake, as Clint Eastwood told us so wisely, a mans got to know his own limitations. You cant trade a huge chunk of money at once. You cant put it all to work at once. You do so only after you had ideas that you knew had a chance to pan out. Knowing that you would be gone whether it worked or not to keep that discipline intact. I had violated my own rules and i had blown it. I confessed to marty my sins and said he should take whatever is left of the money back. Instead, he wanted to give me more money. He was betting that i had learned my lessons. You know what . He was right. I then reverted to my old style, trying to be right about one idea at a time, keeping the rest in cash. Going big when i had the most conviction. The way any good trader would do. I slowly but surely made it back. I also paper invested, a more effective, but not true trading portfolio. If youre going to trade, make sure you have a catalyst, an exit point where somethings supposed to happen and you are out of the stock, either way. Because you are trading, not investing. You need conviction and you have to ask yourself, would you be willing for the world to hear hi, its me, im not here right now, but i want you to take a swing at disney ahead of the analyst meeting. If you can do all those things, start small. Give it a try. Stick with cramer. [ male announcer ] nobody knows where or when the next powerful storm is going to hit. But it will. Thats why theres a new duracell battery. Introducing duracell quantum. With its high density core, its a quantum leap in battery power. The next storm is out there. But so are the heroes. So were giving a million duracell quantum to First Responders everywhere. Power. In the hands of the most powerful. Duracell. Trusted everywhere. Welcome back to this special autobiographical mad money, where im teaching you life lessons in investing from my life. Now were up to the professional grade. My time when i started at Goldman Sachs. Now, i had been courting and been courted by Goldman Sachs for three years before i got a job. It was then called security sales. Helping individuals in small institutions manage their money. I got a ton of history of those years, as well as some of what i talked about earlier. You can always get the skinny of my goldman days and the outrageous attendance stories of that year. But thats not what tonights show is about. Tonights show is about learning how to trade and investing by studying with me at the university of hard knocks, not just to give you cool, funny stories. I will dispense with the anecdotes tonight and try to teach you how to make money from the events that transpired at Goldman Sachs. Its fun to have fun. You can go read the books, but im about making money. First, thats where i began to understand the process of actual money management. Not picking a stock here or there, but the process, the ability to build a portfolio from the ground up. And i had the best teachers in the world at Goldman Sachs. One of the great Hedge Fund Managers of our time, lee cooper. Lee cooper was the Research Director at goldman. He put on an investing clinic almost every day of which i never missed a session. Hardly an hour went by when i didnt hear a new great idea to explore. But you know who i really learned from . My customers. Chiefly, wealthy individuals from all walks of life. It was at goldman that i learned something that to this day cant be understood by so many professionals in this business, including a lot of the academics, and thats that individuals can and do beat the market quite regularly. Why cant they know it . If they had only worked at goldman with me, they would see it. They would know what i saw. But no, theyre all theoretical. Im practical. When i was at goldman, i had what was called as nondiscretionary accounts. Meaning i wasnt allowed to invest anyone elses money with my own trading ideas or investment ideas unless i could win them over to make the purchase. I had to talk them into it. Remember, i was on commission and made money only with the buys or sells i could convince people to act on. There was no 1 fee or 20 . That came later with my hedge fund. Thats where i learned how important it was to talk over a story with an individual, to be able to articulate it in a way that made sense. Can you do that to someone if you were picking a stock . You had to know your stuff. I often asked the buyers questions about whether they knew enough about the stocks, their stocks, about the ones that they suggested to me that they wanted to buy. I wanted them to be as educated as possible about my idea or their ideas. Thats because i knew that stocks go down, and i knew that if it went down, well, lets say if it went up, it would be their idea. And if it went down, its on me. And that is just human nature. You can never say hey pal, that was your idea. What else did i learn . How about humility . It was at Goldman Sachs that i figured out how humbling this business could be. When one of your ideas went against you, you had to get on the horn and explain either why the person should buy more or whether they should cut their losses. Thats why you always have to recognize how fallible investing can be and how you have to understand what to do when stocks go against you. I also learned to let your gains run while you cut those losses. I learned the hard way. Many of my clients were terrific Business People who didnt really know that much about stocks. They had just been fabulous at their own enterprises, building up great wealth, not through the stock market, but through actual companies. So i had this real cantankerous client. A real estate tycoon. He had worked hard to get where he was, and i was working hard to try to get him as a client, trying to win him over. And it took me ages and ages. I told him when i finally convinced him that he should work with me that i would be judicious, that i would work hard, and i would get it right by him. He said pointblank he didnt want to trade. No trading, jim. I want longer term investments. At the time, i liked kimberly clark, the paper company, one that ive liked forever. Still do. I told this cantankerous client that i thought this one, knb, would be terrific for his portfolio. He agreed. I got it. I got the sale. He told me to buy a thousand shares. I got it almost immediately it went up eight points. It was a dream. I had a winner. So i called him. I said bob, bob, i want to ring the register. I want to sell the 1,000 shares of kimberly clark. I thought he would thank me. He was furious. He told me that i had said kimberly would be good for the long term, that it could have great gains over time. He wasnt the least bit interested in only making 8,000. Then he questioned my integrity. He wanted to know if i was churning him. Well, thats a horrible charge, meaning that i was just trying to generate commissions with his money. You know what . I was scorched and torched, but he did teach me a terrific lesson. Just as you dont want to turn a trade to an investment, because thats usually a sign that youre erasing a loss, trying to ferment why youre in it, you dont want to turn an investment into a trade. You have a good one, let it run for heavens sake. Bob was right. Kimberly ultimately doubled, and well, i was vindicated, despite myself. Finally i learned the Science Behind building a portfolio and learning how to create longterm wealth. A lot of my businesses involved people that came into a great deal of cash, like a power ball winner or someone that would sell his company to yahoo . These people tended to be rather unsophisticated about their money, even as they may have been sophisticated about Something Else in life. I regarded my first job as listening to their needs, trying to figure out what they wanted. Were they conservative . Did they want whats known as capital preservation . Meaning they didnt want to risk their money and make a little bit of it. Or were they aggressive . Did they want Capital Appreciation . Build that wealth quickly i tried to geto know them and i urged them to get to know themselves. Just as you should know yourself. You may think you want to get rich quick, believe me, you want to get rich carefully. Asl yourself, can you handle the pain of a market decline . Would you prefer your money to appreciate slowly and get most of it from fixed income, meaning bonds, or maybe from dividends . Do you want to participate in new issues . Try that. Could be too risky. Do you want to try to hit it out of the park with some, maybe im not the right guy for you. Many of you are familiar with these lessons. Youve heard me say them on many a night. I try to teach you how to know yourself. Finally this is when i learned the value of diversification. You have to understand that these were different days. You could have Oil Companies double and then double and double again in a very short time after they struck o and we figured out how big the finds were. The finds were pretty available back then. So everyone got caught up in oils. The families wanted oils for their personal account, the p. A. They called it. Every day seemed like another great day in the oil patch. Oil services, oil drillers, oil platforms, you name it. Then one day, oil, the commodity, plummeted in price. The saudis started pumping like mad. Some global tensions that jacked up the price were settled. They had cooled. Next thing you know, the bull morphed into a bear. Those who had nothing but oils, including yours truly, we were crushed. I had understood firsthand from right then the concept of diversification. I never again intentionally avoided diversification. Hence whi think its so important, because i almost lost everything. I worked hard to get it. Heres the bottom line. I learned from my early days the Core Principles of investing, finding solid ideas to create longterm wealth that suits the customer. Consider yourself the customer of this show, and remember all of my investors who consistently beat the market on their own, in ways they like, aided by people like me, who would work with them conscientiously to put their plans into action. Mad money is back after the break. As a parent, you always want to know where your kids are. Especially when they are on the web. So ask them about the sites they visit, the social networks theyre on and help them monitor what they post. You can help them stay safe. The more you know. We follow my love affair with stocks as a boy, to show the importance of Getting Started with stocks early. You lived with me in a car. You saw me invest in a mutual fund no matter what the circumstances, to understand the need to save. And you learned how to find the good ideas. I want to wish you success in trading and investing and remind you when the gray beards say you cant make money at home, that the story of my life at every turn is very much the opposite and that you can make money in many different ways with managers, with brokers, and yes, gloriously by yourself. Stick with cramer. Marjorie. I cant stand you youre too perfect. Even the inside of your dishwasher sparkles. Ok, so im the bad guy for being clean . You said it you know, you. Bababababa ladies lets not fight dirty. Hi, cascade kitchen counselor. See, over time. New cascade platinums triple cleaning formula delivers brilliant shine that finish gel cant beat. It even helps keep your dishwasher sparkling. New cascade platinum is cascades best. It even helps keep your dishwasher sparkling. Easo why do you feel exso tired afterward . Instead of refueled and focused, youre foggy and sluggish. Its that 2 30 feeling again. So how do you get your clear, alert feeling back . Have a coffee. Then another . Do this instead. Take one 5hour energy. In minutes foggy and sluggish is gone. Hello clear and alert. 5hour energy. Take it after lunch. Be clear and alert for hours. I like to say theres always a bull market somewhere, and i promise to try to find it just for you, right here on mad money. Im jim cramer. See you next time. Announcer the following is a paid advertisement for Armando Montelongo live events. If you are ready to change your life and take immediate control of your finances. If youre tired of hearing about the negativity in the news, and now realize that the government is not going to bail you out. If your gut instinct tells you that in an economy like this, there is a tremendous opportunity to take advantage of the growing foreclosure market and create total Financial Freedom for you and your family, youre about to meet a man that can change your future now. 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