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