And by you, of course i mean me. Thats why every year i like to hold a day of atonement to help you learn for my worst mistakes, tonight i will demonstrate how we can all improve by examining a number of calls on mad money and travel trust, explaining why they occurred. And what you can do to learn for me and do it better. Here are the biggest errors i see made, how i will vow once again to try not to make them even as different ones pop up to haunt me. Most of the thing i do wrong these days are not rookie mistakes, its rare now that i suggest a quick trade and it goes awry because anyone who has watched the show knows that i have moved away speedily against trading. Its been most of my time trying to show you investing, i have come to dislike the suggestion of daytrading, quick trading, i think it will hurt your chance of making money. Its wrong to trade unless you are doing a fulltime job and even then, i would not recommend it. Our mistakes really have to do with not doing homework, theres more and better homework than i did with my hedge fund, their savvy people who have been with me for some time and are really fabulous, a great team in the investing club too, i am being crushed by my homework, there are hundreds more Public Companies now than when i started. If anything, its the pposite of rookie mistakes are making, what we call them veterans mistakes . My errors are rooted in overconfidence and areas of judgment and too much glee from what has worked well before the has to work again, the blunders i make is i sometimes feel like ive seen a movie before and i know how it ends, investing in the stock market means in reality, its more like a close sporting event where you dont know the outcome and just when you are sure you do, thats where you get the big upset. The worst errors i made have to do a trust, either by being too trusting or not trusting enough, ive trusted too many executives with good track records who told me not to worry, these are usually people with a lot of credibility but eventually, you can start believing your own bs and at the same time, there are other executives i did not trust who perhaps upon closer view actually deserved a bit more credit. Most of all, i do this night of selfserve criticism and i do it all the time, i do it to remind me and remind you that while i come out here daily to try to get it right, im only human and i fall prior to all misjudgments anyone else my fall prey to, we have got to learn from them nonetheless. Let me start with a story that really gets me down, a story where i had too much faith in management power to have an objectively difficult situation, im talking about the ale of Johnson Johnson, one of my favorite companies, and to we finally threw in the towel and give up the position promptly in the summer of 2023. Normally, when we sell its because something has changed in the company or the industry, or the stock hits our price target, we set price targets if you subscribe to numbers members of the club, we care about chasing profits as we teach members of the club which chronicles the moves of the trust and details any trade for the trust makes, we care far more about containing losses when you control your losses guess what, the games take care of themselves, we did not sell the Johnson Johnson, i still believe they have one of the best form of pipelines in the industry along with a terrific medical device proponent. We gave up on Johnson Johnson because we were tired of being hostage to legal decisions that had little to do with the greatness of the storied company. Specifically they were neckdeep in lawsuits involving its baby powder and whether its one time key ingredient had traces of asbestos that mightve caused cancer. 20 years ago, i would have known equally that asbestos lawsuit equals cell, it is so long that i forgot how ugly they could get for shareholders, i forgot that asbestos is a magnet for plaintiffs. I believe j js lawyers had control, they had good resumes but you could have said the same thing about all about defense lawyers who lost cases in the 1980s. When these lawsuits first exploded, i said i know how to deal with this, i brought in the ceo on the show, after considerable out of research, i came to the conclusion they acted in good faith, they did know about did not know about the asbestos, the whole theme seemed like an accident, that was a misjudgments since then, there had been a seemingly endless number of cases filed against j j, while its won many of them, its lost big ones including a 2 billion judgment that made me believe i simply was not taking the plaintiffs side seriously enough, 20 years ago, i never would have bet on a company in asbestos litigation, thats a great way to light your money on fire. I forgot how tough these lawsuits were, i forgot how good the Great Companies who went under because of asbestos, it is that had nothing to do with it. Then j j came up with an excellent strategy, pay 8. 9 billion to the plaintiffs. More important, put immediate muddy money in the hands of the plaintiffs, i started feeling hopeful, another mistake, the Third Circuit court in philadelphia i find out later hates these agreements , these bad settlements, thats what they think. How can they not see that coming . J js lawyers were so optimistic and i was a full to believe them. In the meantime, j j had a successful ipl, when the Trouble Trust that owned j j, we were betting on the fundamentals of the company, we were betting on the thing that controlled the stock and that was the litigation. You never want to play that game, it is a game. I was far too sanguine about j js ability to get a settlement to the novel use of the bankruptcy code, the judge overseeing the flow bankruptcy filed with plaintiffs against j j. They found themselves to the mercy of the clients, the court ruled that j j was not in financial distress so it did not have a right, thats why i knew these cases would mount up leading to another procession of hard to predict verdicts, hence why we finally gave up on j j for the Trouble Trust, it did not matter that i thought they were not particularly culpable, it did not matter that the fundamentals were terrific, what matters is that through this litigation, they were potentially there for billions and billions of dollars almost and losses, then they do not want to have the position that is precarious due to lawsuits in the fundamentals, this business is hard enough without playing litigation relet via the jackpot Justice System we have, i dont want to wake up one day to discover that some runaway jury decide they were at fault not because of stockholders but because of claimants, ive seen this happen several times where companies absolutely had it coming, i dont think j j is one of them, they have a tremendous Balance Sheet too but so what . It does not matter what i think, thats what the jury thinks, you do not bet on friendly juries within it best asbestos suit, that worked against them, well endowed company that should be allowed to file for bankruptcy, i did not think the ultimate upset was worth hoping for, given the age of our legal system, there is no way to tell if this was big. Thats why we had the travel trust done, i like betting on businesses, not lawsuits and lawyers who gain them, if you ever find yourself betting, dont try to fight it just because you love the company, like i did with j j for so long, believe me, there are better and easier ways to try to make some money , lets go to eric in florida, eric . Thanks for my call. Of course, whats up . My question, do you advise investors or home gamers take their first 10,000 and put that into a lowcost index fund . I do. My question is as is home gamers build wealth over time, the weighting of that initial 10,000 from an overall portfolio perspective if you are doing it right, you know becomes less significant, what do you recommend home gainers maintain as a weighting in terms of that position and would you also maybe advise adding cues or iw im quite the what a great question i got to tell you, yes indeed i think a more about the small investor than i do the smaller one but if you save overtime, what you want to do is probably get it so thats about 50 of your portfolio at minimum is the index fund that you can have some other stocks that may be miss some bonds as you get over, i do believe the index fund is the bedrock. Lets go to sean in massachusetts. Thank you so much for taking my call, thanks to the ladies that got me check in. You talk a lot about s p 500 or something similar, my question is should i change my current investment in my 401 k plan through my employers for the vander guard and x. 500 at 500 , should i put it with the current plan . I am very conservative to me, i want to diversify and that means index fund best, it sounds like you are doing it very right, im incredibly conservative when it comes to retirement money if you ever find yourself betting on a brutal set of lawsuits, do not try to fight it just because you love the company like i did with j j so long, you must believe me when i say there are better ways to make money. Silicon valley bank to boeing, im sharing the pain ive experienced in the years ive been around. I got to tell you something. The best strategy on how to handle it is what we you learn tonight, dont fret, you and i will get through this together, stay with cramer. A force to be reckon with. No, not you saquon. Hm . You your Business Bank account with quickbooks money, now earns 5 apy. 5 apy . Thats new yup, thats how you business differently. Rylee from rylees realty hi this listing sounds incredible. Lets check it out. Says here it gets plenty of light. And this must be the ocean view . Of aruba . Huh. This listing is misleading. Well, when at t says we give businesses get our best deal, on the iphone 15 pro made with titanium. We mean it. Amazing. All my agents want it. Says here. inviting pool. Come on over too inviting. Only at t gives businesses our best deals on any iphone. Get iphone 15 pro on us. the market just like real life, failure is a brilliant teacher, what can we learn about failures of the last year . What do i need to atone for . Let me talk about one of my most eyecatching fumbles in 2023. We had the 10 best performers in the s. A. P. 500, look at stocks that keep winning. One of these was a Company CalledSilicone Valley Bank which collapsed a little more than a month later, when i talked about it, it was up 40 and everything looked fine to the point where i recommended the darn thing, that was a huge and ridiculous mistake. Silicon valley bank experienced an actual bankrupt, kicking off the whole mini banking crisis, i got thrashed all over the place when i make mistakes you know what . I dont care as im tougher myself, any one of these glasshouse critics could ever be but i think it is a teachable moment, everybody thought no one saw it coming, thats no excuse. If you look back to two days before the collapse of the 2023 covering stock, 22 of them had either by her hold on it with an average price target of 292, congratulations. Even he had a 90 price chart on this thing. Even the most negative thought it was a 90 stock, to be sure, its no excuse that everyone got it wrong, you dont want to show everyone, you watch it because of me and i let you down. The Silicone Valley Bank run was one of those events that blindsided everybody, how did we get it wrong . Let me tell you a story. Once upon a time, Silicon Valley bank had a fantastic business going, it got its start as a normal regional bacon Silicon Valleys thanks to its footprint and its land of innovation, the bank of choice for a huge chunk of our nations startups including the founders and top executives. In the end, they were doing anything and everything for the startups and their top guys banking. Even lending them money using nonpublicly traded stocks as collateral. In more recent years, they made moves expanding research and investment banking, offer the same type of customers, the stuff giving Silicon Valley banks relationship with tech startups, you had a lot of reason their strategy would keep paying off, for many years, it was incredibly successful, their average positives grew from 20 billion in 2013 to 48 billion in 2018 and 186 billion in 2022, their stock caught fire along with the market start guy rocketing from 220 17 to an all time high of 700 and 63 in november 2021, in 2022, svp got collapsed, stock plummeting back to below 200 by its lows in early december, that aggressive rate hike makes clients a lot less valuable, higher rates makes it harder for startups to get funding, the market shutdowns of the more mature ones cannot come public in order to raise more cash, you dont want to be the banker to startups, the ipo markets were frozen, i assumed that was big into the baked into the stock price, baked in. Still, why was i so optimistic that they could go higher when i talked about a level a little over a month before it went under . Thats because the banking crisis came from out of nowhere and this bank fell apart practically overnight right after a group of great analysts sold themselves to these guys, to get it right, there are such smart people, i thought they would have checked this out better. It seemed reasonable but it was wrong. Remember, i need to get it right for you, not nathan. Remember how 2023 started, in january, we got cooler inflation readings and macro numbers which led many of us to think that the fed was winning the war against inflation, we figured it might even begin cutting rates at the end of the year but i never bought into that heavens, if that were a benign scenario had unfolded, the market would have opened up again in the first half and it would have been just fine after all, they been in the business for 40 years, i assume they know what the heck they are doing, these assumptions turned out to be flat out wrong, after an illfated commentary, the Economic Situation turned on its head, that started heating up again, valentines day, the quickly had the feds, something that we confirm shortly before the bank run beef when he made some remarks on capitol hill, its still a coincidence that Silicon Valley bank imploded two days later, it had one, but two problems, none of them are readily apparent until they smacked us in the face, first, the deposit base was too concentrated in portfolio companies, they took this money and made some very aggressive investments in longerterm government bonds, with a little extra insurance, they were rate hikes crushing bond prices, normally it is fine, you just wait until maturity and get your principal back, big deal, when Silicon Valley banks Venture Capital gets her money overnight, this company is forced to tell so as per folio to use losses, in the banking business, you need both a steady source of capital and a stable bond portfolio, Silicon Valley bank had neither, a real bad mismatch that somehow was busted by the regulars, they needed capital badly but cannot raise it even as the positive outflows were coming fast and furious, its time to get out. Their response to the regulator seeing the bay close bank closed it better, thats what happened. We talked about svb positively, we were giving our best opinion with the information we had, information blessed by the regulars. Shortly after him and the macroEconomic Situation changed, i wish i circled back to this one and told you to forget about it at that point but man, none of the analyst got this right either, they were not that forthcoming about the level of risk, we knew how reckless the firm was right before the bank went under, they ran their money in a way that made them and sanely vulnerable to losses, i also did not count on those who departed yelling fire in a crowded theater on twitter, will the bank run into existence . Who thought they would do that, most importantly we were too cursory and chose to rely on public documents. We should have gone deeper than that because we came to learn that while the regulators were very strict and systematically important financial firms, they were a lot more lenient with banks adopting non systematically important like svb, so many of us got Silicon Valley bank wrong because we were on regulators who were also wrong. They were asleep at the wheel be for the many financial crisis, they were more aggressive once the horse left the barn, still no excuse, we need to be better than the regulators in the case of svb, we werent. I wish we had been more pressing with this one, when i get it wrong, i always atone for it. Mad money is back after the break. Unnecessary action hero. The nemesis. It appears that despite my sinister efforts, employees are still managing their own hr and payroll. Why would you think mere humans deserve to do their own payroll . Because their livelihoods depend on it . Because they have bills to pay . Hear me now, paycom return the world of hr and payroll to its rightful place of chaos or face a tsunami of unnecessary the likes of which you have never seen theres no surefire way to prevent accidents at work. So talk to your agent about workers comp insurance from pie. Or visit pieinsurance. Com and get a quote. Safety first, then pie insurance. So this is pickleball . Its basically tennis for babies, but for adults. It should be called wiffle tennis. Pickle yeah, aw whoo these guys are intense. We got nothing to worry about. With e trade from Morgan Stanley, were ready for whatever gets served up. Dude, you gotta work on your trash talk. Id rather work on saving for retirement. Or college, since you like to get schooled. Thats a pretty good burn, right . Got him. Good game. Thanks for coming to our clinic, first ones free. We are on the subject, mistakes are made, and to learn from them, we need to talk about trust issues. Sometimes im way too tough on management and give them too free passes, right now i want to highlight a situation where he made a lot of mistakes, believing too much in the great ceos and ability to turn around a broken company, sometimes they are in such bad shape, there is no coming back even if they bring in a tremendously talented management team, maybe a ceo can turn things around, turning it around is a process that can take years and years, not something you want to bet on out of the gate, if that is exactly what i did with footlocker long after they brought in