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Mad Money w/Jim Cramer 01/18/19

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This podcast is brought to you by TD Ameritrade when it comes to investing education, one size doesn't fit all TD Ameritrade helps you learn. Whether you're just starting out or an elite trader choose from articles, videos, webcast and more. Visit TD Ameritrade dot com slash education, member SIPC. My mission is simple to make you money on here to level the playing field for all investors. There's always more work in summer. And I promised to help you find it may have money starts out. Hey on welcome money. Welcome to Klay Mark do wanna make fans of is trying to make some money my job Cicilline, can you? But to educate teach them, so call me, one eight hundred sympathy CNBC or tweet me at Jim Cramer twelve weeks year. Just what you have to be on the top of your game playing a bug your head and deeply focused. I'm talking about the three weeks each quarter where we get bombarded with earnings reports from a whole host of companies. They report all at once. So why don't we get right to the game plan for next week because it is important week Monday. We've got Martin Luther King day. So the markets are close but Tuesday where you're from Johnson Johnson and IBM I think both will be battleground stocks. Jays doing very well here with an incredibly strong pipeline stock has recovered one since the big headline grabbing story about how the company may have hinted that it's baby powder allegedly contained specis, and we spoke to outscore see this your I am confident. Even if all allegations are true, which I don't think they are this issue shouldn't have destroyed tens of billions of dollars a month. Capitalization heckling the guy who sui JJ over his came on TV and said as much, of course interested. I don't know please remember though, when the numbers hit that currency will be used native IBM's about grumpiest people want to know whether this five percent yield or pay too much for Kramer favorite red hat. I think it was a Bolden billion acquisition. But what I want? I want to know if Jim Whitehurst the sea of red hat tends to play a meter ship role in the new combined company that will be positive Wednesday kicks off with Comcast pair come does. Never. We all hope that they'll give us some insight into the penny acquisition of sky, the big British. Satellite TV company, which was announced back in October. I think the deals terrific because Comcast has grown so large that the regulators frown them making more acquisitions here in the US stock is flat line, maybe this conference. Call can get it off the I can't wait for Proctor and gamble report to once again, there's currency risk but management has leaser like focus on growing this company again. And I think that we successful this quarter. Remember that last quarter was the beginning of Proctor's outperformance. I bet it continues you want consistency. Then check out the stock of Abbott labs, which is run by the incomparable miles white. This band is money in the country's medical devices, particularly its coast modern device, a less expensive version Krimmer paved ex-cons is selling very well. I bet Abba tells a very compelling story. It's been I've owned it for my child just forever. I am a huge fan of Greg haze over at United Technologies. I like his plan to split the company to Otis elevators climate control and aerospace. I think the parts are worth much more in the whole. But like Dow DuPont, which is just been. Not so hot the break-up is hard to do. And we'll weigh on the stock until we get closer to the actual corporate divorce could be an opportunity because Wednesday we to quality companies stocks that have been crushed Texas instrument Chee or also known as Texan on Wall Street, and Lam research, Texas Instruments has been as got a lot of business with apple and might be hurt by the slowdown cell phones. The far more interesting stock to me is lamb so highest quality semiconductor equipment make around its stock has been literally by the downturn. And flash memory prices. I think the quarter will be weak and there's a new CEO but with the stock down almost one hundred points. I also think you can start by lamb search betting that we're near a bottom. Maybe not at it. Well, won't happen. All at once you need to be ready to pick some up at the stock gets it. That's right. I am actually saying that lamb one of the worst performers is it a good level to start accumulating last week. When I was at the tape from Morgan healthier conference. I listen to Giovanni cafaro. He's the CEO Bristol Myers when he talked about his opposition of cells. He made me a believer. When Bristol Myers reports on Thursday. I expect he'll talk about how avenue this deal is for companies earnings. You know, what I think that after Thursday people are funny going to brace this deal. We've got doing railroad reports on Thursday to Union Pacific, southern I think both will be strong six actually pretty good number yesterday was asking usually pant. I spent the same to happen with these two Union Pacific has a new opera chief operating officer. Who's a disciple of late hunter Harrison the man who turned around CSX? So I'd be a buyer to any dip almost every single CSX line items. Good and both Union Pacific in Norfolk. Saw that I think are strong in CSX when it comes to freight. You know, I've been a huge huge fan of McCormick spice company. And I bet we hear some great things when they report particularly from their Franks hot sauce division. If you ever see this label in the supermarket snap it up. Let me know. Here's a while one freeport mitt brand, go copper and gold miner this Stockman. Perky of late by fen? Stephanie link was on halftime with me. And she was talking to me about it. It's interesting because copper has been real dog. We gotta find out what's going on here. I can't figure it out. But I sure like the way it trades. And you know, I like gold I was headed their balance sheet at the traders are all over that bad. Boy, I can't wait until after the close Thursday, these that's went into reports. And I wonder whether they'll nounce new CEO we spoke to interim CEO Bob swan last week when we out in San Francisco, and he was a bullying about his business Intel's put cheap stock. I buy both before. And after I think it's through fifty one any good news. How about Starbucks? Remember this stock took off last time CEO Kevin Johnson spoke on the quarter. I feel you might have stolen some of his own thunder. So unless he's got some positive news up steam about China, there may be nothing you to propel Starbucks higher. But it falls to the two fifties. I say to the fifties. Because it's in the low sixties you might want to snap some up a quarter. Hey, listen, we crazy market. You never know. I'm hearing too much chatter lately about how Western Digital might be concerned so concerned about. This balance-sheet that measure may action to address the baffled dividend. Colonel use more than five percent kinda surprising watching digital makes distress and flash memory chips, and they'd been seeing pricing falling through the floor for the latter product. Look, I am troubled by any stock that sells for just five times next year's earnings estimates, which is a tell that the earnings us miss will not be may. So stay tuned. Finally on Friday, we hear from Colgate in your Horton beholder. Kogo both have very important at this moment. There's been a lot of noise being made right now the Colgate may actually be ready to have one of its story runs. If years of underperformance, I dunno. It's not cheap at twenty times earnings, but if project and start doing well, and it has been coke. It might be worth a look too. But even worth a flyer. Dare horton. The housing numbers have gotten grim in this country in the industry itself has been damaged by rising rates, but is race seemed to level off. We've got a surgeon applications just week that should bow will for her. Let's see what they had to say still I prefer Lanar, and I liked KB home bottom on if more enough to worry about the wall, the shutdown that Chinese trade war and Jay Powell who am now. Lavely as mercurial next week's earning slate is going to drive the crazy. I can't recall when the forecast will be more important Sutton a much more important than the results. So stay close. We've got some good ones that could pop including Abbott labs and McCormick. And maybe Intel. Especially if they get hit before they report, let's go to Matt and Colorado. Kramer. I like that. What's up? Hey, I'm a big fan of the show. It's always talk about you all the time as I'm a collagen. I'm a college student right now. And I'm the first time investor in the market, and I just opened up my own portfolio a couple of weeks ago. And I'm just wondering as a first time investor like myself Ryan vet look into mutual fund, or should I maybe experiment and look at individual stocks. Okay. Very clear on this the first ten thousand dollars. I've been saying this forever must be an index funds before you buy mad money stock. You know what? It's funny. It's the late jet. Not funny. It's the late Jack Bogle insisted that about the should be my view, and I never went against Jack. So first ten thousand s fun in honor of Jack vanguard Irwin in New York Irwin. Yeah. Hi, jim. How are you? Okay. We lost a giant Jack Bogle vent their of the index fund testing. We're locked groups of people yet would invest in large best of stock to long-term growth by question to you is an age. Do you feel doubt Jones industrial average just thirty stocks in the chew? Accurate, indicator of balk at tenement raw great question only because I think it is a little out of this topic. I think what matters is yes. And people have hundred, but you know, what me talk about the market people still talk about the Dow so I've given in I'm tired of saying to people, you know, what Dow does it matter what you really should care about is the pay. But you know, what Irwin life's too short? They wouldn't came out the DAL. I care about the Dow. All right there we go. Okay. Next week's going to have you gone crazy for kisses Keith even more than earnings results. And by the way, just really clear this day is not just Martin Luther King's birthday is actually the birthday of my executive producer Branchini and kill getting who got dressed up to the Cajun. Stick with Kramer. Don't miss a second of mad money. Follow at Jim Cramer on Twitter. I have a question. Tweet Gramer hashtag mad tweets. Send Jimmy mill to mad money at CNBC dot com or give us a call at one eight hundred seven four three CNBC is something Ed to mad money Dutt, CNBC dot com. You love. Bravo. So do I I'm Megan Zegarra host of the daily dish Bravo's official podcast in each episode. I'm breaking down the biggest moments of the show. Plus, I interview the Bravo labs at the center of the drama. Subscribe and listen free on your favorite podcast app. How can you keep track of confusing market? Let me give you some advice that rarely ever steered me wrong. There are two things. I want you to watch one macro big picture. Everyone micro copy specific let's start with the big picture. If you want to know where to the stock market might be headed. I say keep your eyes on the bonds look about Mark is boring as all get out, but it's much larger than the stock market and more importantly, it's very important to the overall direction of stocks back in the day. When I was reading my old hedge fund, I'd always call in from the road the same way if I had to be away from my desk, I begin every phone conversation by asking the bonds that's so much mattered to me in the day-to-day basis. Get stock market investor seemly, forget the bond market all the time. They've forgotten two thousand the market told us the economy was softening right near the dot com. Peak. They forgot bonds in two thousand one minute was crew that interest rates own cash. We're far too competitive versus stocks and with this cause a massive selloff. They've forgotten. When the fed raise rates seventeen times in lockstep fashion in the financial crisis precipitating the worst downturn since the great depression over the past decade there were countless tape taper tantrums what we call them where some fed official will strike a hawkish tone and everyone freaks out that rates are headed much higher too quickly. More recently, we've had a kind of a schizophrenic leadership of bonds when the ten year treasury started breaking out above three percent early twentieth. Everybody panicked yet when it pulled back for too many investors quick to forget about the bull market, look at you. Never come surprise that long-term in straights are rising or falling. Bonds can punch your portfolio in the face. If you aren't paying attention a lot of people don't pay attention because as I said, boss or boring. That's why say don't forget always keep those bond prices and its traits right in front of you. When I was coming up at Goldman Sachs. I was trained to focus on bonds because bonds in the chew competition to stocks the competition. I most fear when short-term interest rates someone set by the thing. Go sky high you have to expect that dividend. Stocks stocks have companies with high yields like American electric power southern they'll sell off when long-term interest rates rise. The one to watch is the yield on the ten year treasury, then you have to start being wary that all stocks might suddenly be worth less than they were trading before it simple, the bomb market competition gets more attractive. The stock market gets less attractive. This is indeed zero-some game. Now, you should be especially worried about rising long-term rates that are caused by a pickup in inflation. That's a toxic brew inflation eats away at the value of long dated assets. Like equities because their future earnings streams, we'll have less purchasing power and higher interest rates. Don't just make bonds more tractive. They also make it more expensive for banks to. Len. And that puts a damper on the economy. Long time we had an ideal environment for stocks low inflation and low interest rates that's an incredibly benign backdrop, and I don't want it to low you into a false sense of security about the dangers of a big spike in rates. That's why you have to watch the bomb market. You know, what let me put this another way if this were basketball. I'd be saying that if you just watch the man with the ball, let's call him city group, and you don't watch what the other team is doing on defense the bonds. There's no way you're going to get to the basket. The men without the ball the bomb market can determine the stock action. Every time many people who got in this game in the last decade. Still don't even know what bonds or that's how benign they've been there. Trouble. When you say that the bonds went up today, they think that means interest rates are going up rather than what it really means. Which is that insurance going down? If you don't understand that bonds work, you're going to be at a severe disadvantage when it comes to investing in stocks. So keep your eye on the ball and the bond. That's right. The bond them without. Okay. What else do you need to watch on the MAC on the micro level? Now. Micro meeting the company-specific level you need to be very cautious. When you see unexplained resignations by T executives to put a button when the chiefs resign. Maybe you should go to yet. When you see a CEO step down for notice reason, you should presume something is wrong and do some selling shoot. First ask questions later, I've sold stock simply because the CEO or the CFO the chief financial officer resigned, and it turned out to have jumped the gun. There was nothing wrong. I'd simply by the topic. But in my whole career of inquiry. You don't many times I can recall that a CEO left for an undisclosed personal reason in a stock was still worth buying right there off the top by head what's visa Iraq. By brain to come up with other examples. I just can't think of any other because that's all uncommon there. Why simple CEO's don't quit for personal reasons? Not if they want to keep their bonuses CFO's don't quit for personal reasons either. He's a fabulous job you paid a fortune. They'll get to be a chief executive officer by being devoted your family. Well, you know, nobody gets one of these jobs without giving up a great deal. Of what most people enjoy about life things like family friends lights out competition, but is positions is so fierce when you finally lamb one. You don't happen leave not for no real reason when C suite executives leave for undisclosed personal reasons. It's almost always because there's something wrong at the company, hence by rule went high level, people quit a company something's wrong. You say, I know CEO quit because he had an epiphany about climbing k two or I know a CFO because she wanted to spend more time with family fine. Of course exceptions at some point somewhere, a CEO really will step down just spend more time with his kids. But here's the thing when you're investing in the stock market. It's not the exception. It matters. It's the rule. There will always be some situations where it's mistake to sell a stock when senior executives leave I don't care because most of the time selling will be the right decision. This is the kind of rule that helped keep me in the game will hedge fund it's all about help you avoid losses. That's what matters in one way. You do that is by not taking unnecessary risk. Like betty. Companies where the CEO just resigned for undisclosed personal reasons. The bottom line if you went to get a handle the stock market you need to watch. Let's go on with the bonds that should be obvious that this point. But it's something people tend to forget, and when you're looking at individual companies remember that unexplained high level executive resignations equals, sell Giorgio and Illinois Georgio. Mr kramer. Thank you for all that you do I truly appreciate it. Thank you. My question is what percentage of a portfolio should be an index fund and how it in cash with the volatility of these huge market. Okay. Well, I lot of that depends on your age. For instance, I by the way index funds are fabulous because you don't have to do the work on individual stocks. And they give you a great diversification. When you're young age, you want to have one hundred percent in stocks as you get older, you wanna take that money out and take the money out. I've got in get rich carefully. And in Greeley, literally all my books, I talked about the different stages. But as you get older, you got to raise some cash that's the best way to put it. Let's go to blanket Nebraska believes Blake Buja, Jim curb market volatility. What advice you for the young investors out there compared to other older investors ride it out young people have their whole lives to make back the money that they might lose in the? Market older people while time gets shorter. And you can't make it back. That's why you gotta be a little more conservative. Okay. If you wanna get hit on the stock market bonds the word, and please when executive steps down without an explanation cells LaSalle and stick with. Pretty. Can be of good investor be a realistic investor. There are far too many people in this game who are not realistic either. They allow their motions cloud their judgment or they allow themselves be surprised by the inevitable. Let's start with the inevitable. You think people would get comfortable with that? Did it's talks can go down right at the dozens of corrections meaningful pullbacks we've had over the last twenty years if we get used to the process if people reasonable if we were real species, you assume that we would say something like, hey, let's prepare for the animal correction because it can be right around the corner yet aside from the permanent bears. Always do for pullback. Most people act like every correction is a total shock. Type of thing never happens. So every time the stock market goes down. There's a us contingent of people who seem totally stunned. Just caught by surprise. You know, what that's a bad attitude to me the corrections. Well, you know, what they're like, they're like, the rain. I know that Raines inevitable. So do you expect it to rain I prepare for when the rain comes? I am ready skied any I got an umbrella or a coder I stay indoors. That's how you need to approach the possibility of a pullback sooner or later, we going to get one as so best to keep some cash on the sidelines. Just in case that time turns out to be now, it's what we do for action wordsmith chapel trust. Of course, plenty of Gretchen is happening allegedly unexpected times in recent years, we've had a lot of major declines receded by terrific up days during which we made lots of money and everything will peachy in January twenty eighteen stock mortgage. Roar fire people were acting like ended unstoppable rally, but in February the averages they got overboard arrayed. It. Why do I mention this? Because the time to be most worried about corruption is the moment when nobody else is concerned. That's when we get those brutal supposedly unexpected the clients when everyone is euphoric I used to have ruled my hedge fund when I made two percent in a day on the upside two percent. I knew I was to expose. That's the word you use. I knew I was too long. I knew I had too much stock. I need my portfolio would kill me if we caught a storm. So as the market litter of my performance was swinging too much to the upside I pulled back sometimes furiously selling. Distract to prepare for the big down day that had to be right around the corner. Sometimes the correction never came and I had to swallow my pride days later back the stock that I sold, but when we take it with a major sell off, my hedge fund outperformed by so much that my client. So that I was g s I wasn't a genius. It wasn't at all. It was disciplined. It was preparation. Plus because I'd take something off the table in order to raise cash, I use that money to buy all sorts of high quality stocks into the weakness that I saw from preached you. Well, we may not be able to predict what a storm is going to strike, but we do have barometric readings that can be helpful immensely. Helpful depth of corrections are like grain, then aware, should you. Get your weather report. You know, what I pay for something? That's right. I like to follow the proprietary Stater in pours, oscillators, terrific indicator. That tells us when the market is getting overboard or over soul whenever this oscillator registers, plus fiber above that tells me we've come up too far too fast to the point where it's dangerous. So to me it plus five reading means you need to. Back aggressively and wait for Craxi. What do I mean by pullback aggressively? If you're nimble, admittedly, a big if you might want to ring the register on about half of your portfolio. Yeah. That's right. Not have to stocks. But half the shares in each position that way all the time to cash on the sidelines that you can use the buyback your favorite stocks at lower levels with the storm is even if you're not at all nimble, you shouldn't be selling something to raise some cash when that Ostler getting that I buy from the S and P P company hits plus five, and okay, I understand maybe just want to take a little off. But people regressive wanna take a lot because that doesn't happen. Very often. By the same token when the later hits minus fought it means the market is incredibly over soul in that situation. We've usually come down so far so fast that were due for at least a term balance. It's work like that for years. That's a good place to put your cash to work if you haven't already by that point if the life cycle of cele- worst case scenario, there's no storm stocks go higher, and you underperform the average is because you have such a large cash position all admit that's a real risk. But look at it this way using this methodology my hedge fund, I gave my investors at compound twenty four percent return fees that was more than twice with ESPN five hundred getting them over the same period. As I say that's pretty strong evidence that avoiding losses on big down days. More than makes up for the possibility of missing some partial games on the big updates. Now. Let's talk about the other component of realistic investing. Yes, you need to accept that meaningful. Sell-offs are inevitable like weather, but you also need to stop yourself from making this decisions based on misleading emotions and the worst of those emotions is hope hope whenever I hear the word hope as in. I hope that doom stock does your we'll come back to where I bought it. So I can sell without thinking loss. I get furious. Or is remember the hope is not part of the equation repeat? After me hope it's not part of the equation, don't hope for anything hope is a motion, pure and simple. And this is not a game of a motion, or at least not jerem oceans every stock you won't because you hope it goes higher is another position in portfolio. Oh, that's not being filled by stock. You believe we'll go higher yet. I hear hope constantly that's fine. If we're talking about religion or sports, you know, the coaches some of these come from behind NCAA men's basketball teams, keep their players motivated to hope, but in the stock business hope it's a mistake. Why because it's the plants reason, especially when we're talking about stocks that trade in the single digits you tell yourself. Hey, I bought this at five dollars. Now, it's four dollars. I hope it goes back to five dollars. Then I'll sell how hard could it be to go from four dollars to five dollars right wrong. No company ever sits out to have a single digit stock. Most companies will fight tooth and nail to keep their stocks from going into single digit territory. So when you find something it sells for just a few bucks. The market is already rendered a harsh judgment. When you let hope become part of the equation. You can end up holding these low quality pieces of paper waiting for something. That will never happen. Forget hope. Ping. I forget waiting for higher prices. I say the thing to do is to cut your losses and move on to a stock. You can actually see can see going hard stock that you had done the work and believe will go higher, and it's not because a hope, but because of reason the bottom line it pays me realistic in this business. So prepare yourself for corrections. Big pullback, so great. There are Neville, and whatever you do don't make stock picking decisions based on home you need to invest in the real world. Not in a fantasy land created by your own hopes and dreams. Let's go to dick in Virginia day. Jim. I love your show. I listen learn and profit from your vice thanked in my jet, man. I have a general question about retirees and stuff more. I'm now seventy two years old retired and wondered even though I am welded. I buy most of your favorite stocks. I cannot risk large market correction might not have enough time to recover. The stock market is the best beagle for wealth-building. Should I consider the US being my portfolio by adding bonds or bond quivalent in even though we're in a rising interest rate environment or get rich carefully by being well diversified with stocks? I think that seventy I think you're many many years, but I think you should raise cash. I wouldn't I would say even I'm not sure about your work status, but someone Seventy-three death twenty-five thirty percent cash. Remember, I believe that we're going to leave much longer lives than most people think twenty five thirty percent would be fine in. Short-term cash. Okay because rates are going higher. And then we'll deal with it. Let's go to Pat and Colorado. Please, pat. Jim this is Pat from beautiful beautiful, Colorado. My question is this. I o one hundred and eighty nine thousand dollars on my mortgage. I'm concerned about a severe market correction. Sometime back you said, they usually happen about once every ten years I have enough money in my mutual funds and accounts to pay it off now. But should I face the tax ramifications of adding one hundred and eighty nine thousand dollars to my income next January. Thanks. Oh, your tax things. I usually say he got us speak to your tax accounting to be able to be sure I do think that you're look, that's let's put it this way. I think that that each to each his own that particular kind of thing, but I will say that we've had corrections more frequently than ten years, and that's really the issue. I do expect them a lot more frequently these days because if that a much more of a market that's been up line over multiple years on let's be real it pays to be real realistic. That is their money is back to the brain. You don't need me to tell you that the internet has been kind of a double edge sword that's true in every area of life including investing. Sure, the web makes everything more convenient. You have all sorts of mation of able to push a button something that was unimaginable. Got started. In this business is much harder to do the homework in the old days. It took real effort these days ever, these searchable, but for all the ways in which the internet makes the process easier. It also creates new problems, and when we have new problems we need new rules to help contain them. For example. You absolutely have to be able to explain your stock picks to another human being if you can't do that. You have no business buying the stock in question. Here's the thing and the old days this rarely came up, but the rise of the internet took away one of the most important brakes on the process, one of the most important warning systems, which is talking to another person about what you want to buy. It used to be that you had to talk to approach her now with the stroke of a key. You can buy the let's say stock. A workday or a square without ever having to tell another person why you're doing. So why is that an issue? Why do you need to explain the stuff to someone else? Anyone else? Does that be professional, by the way? It could be anybody preferably an adult, but you can fall back on explaining to your kids if you have to buying stocks is the solitary event to solitary, but we're all prone to make mistakes, sometimes big ones to human. If you want to cut down these steaks, you should force yourself to articulate to someone else. Not just yourself. Why you like stock Gino how they make their money? Do you know how their earnings are supposed to look if you don't then you're setting yourself up for trouble? I always say this problem, particularly in biotech could he may the questions. Lightning round the people asked about so many people owned biotech socks without even have the Vegas understanding of what the underlying companies do or how they could possibly turn a profit Eire's you to be able to articulate a thesis for owning. Every stock your portfolio to someone anyone they give it as. A test to make sure you've actually done the homework that way at the sockets, slim, you'll know whether to cut and run or buy more if you don't actually know what your you own believe me, you're going to get slaughtered on the next to climb. And there's always next climb. When I was at my head's fun. I always made my employees sell me the stock. What are we sell it to me like a sales person for I would buy if you're in a position where you're picking stocks yourself get someone to listen to you and let you articulate your reasoning. That's what's so important. I also like to ask people what's going to make this dog go up. What's the catalyst? Or have. We missed the move in this over vague stock. That's up one hundred percent already this year. You know, you get a lot of those questions to and of course, once your edge. These are all important questions. If you can't answer them, you shouldn't be buying and look the ability McKay. She decisions is not the only thing you need to be wary of on the web. There's something else you need to be aware of the internet has vastly increased the power of the Wall Street promotion machine. Now, I've long believed that home game. Or professionals alike. Simply don't have enough respect for in this this promotion machine. I on the other recognize when Wall Street falls in love with the stock. It will go much further than anyone expected its efforts to hype that stock to high heaven consider the case of valiant, okay? Which is changed his name valued. The big pharmaceutical roll up that was one of the most heavily promoted stocks in the last decade, its shares soared to the two hundred dollars in rain, actually, and then some on acquisition. If aquisition is analysts routinely raised numbers why because management would slash costs and raise prices, but when the political environment change, the analyst turned on valiant and the numbers fell apart plus to make matters worse. It turned out that the company had embraced them bunch of shady practices to bolster its results within a few months. The darn thing had plunged from the mid to hundreds to the mid twenties. Took valiant almost two years to bottom, and before then it fell all the way to the single digits in on the way back it became. Came Bals health. Whatever changed the name to the thing is valued should never have been trading above two hundred dollars in the first place. The only reason stock had reached those levels to begin with considering the endless pure of new companies on old was because the analyst plush machine was so darn powerful and the web amplifies the reach. So anytime you see nearly unanimous Bush just from the analyst community on potentially dubious merchandise. I think you gotta be where you should be where in the words of public enemy, please don't believe the hype one last thing, and this is really true of all media both online and offline whether you're watching TV or webcasts it pays to be a critic yet, it may sound crazy for the host of a cable TV show to make this argument. But you can't believe everything you hear on television. Lots of times executives say whatever they want on air knowing they can get away with it. Lots of times fund managers come on Aaron tout their holdings in sure they have to disclose when they own something. But they really tell you whether they're. In it for the long term or the short-term import is that ever make a big difference? You need to accept this, given my general coaches that when you hear on TV is probably right. But no more than that same goes for the web, except you have to be a lot more careful because there's a ton of junk information uninformed commentary online. That's just the world we live in so repeat after me. Just because someone says it on TV doesn't mean it's true. I hate to say it, but you're being naive. If you simply believe everything you hear that's one reason why we only bring high levels ecu's on money, they can still mislead you. But at the CEO of a public company outright lies about how their businesses doing. Let's say their legal bills will really start that up. But generally speaking, you see a lot of money managers coming on television for variety of legitimate reasons. These guys aren't always well vetted and often Madurese can't help themselves when it comes to being promotional. So here's a good rule thought if money manager is on TV, and he's movies lips. He's probably talking his book when someone comes on and says that some plunging stock is by do you think? Hm that sounds like an opportunity. No instead, you should wonder. He must be really stuck in that pig by. I always be able to explain your stock picks to another human being and never take anything on faith in this business dot from the community and not well, let's say from the money managers who loved come on TV and talk their book, Jimmy and Delaware. Jimmy. I'm doing well. How about you, sir? And doing great. My name is also Jimmy. So I had a question regarding of whether it's better for the money who's getting into stocks to whether they should go in with general knowledge, or they should take the time and learn more because I'm currently nineteen and a have a lot of money in like, cryptocurrency, then I've been making money there and our the duffer diversified investment. But I don't know much about stock. And so would you suggest that meet buying general companies that I know about is a good thing or bad than that should take the time. It's quick question. Jimmy, it depends on whether I like to have the first investments B index funds. And particularly if you don't have time to do the homework, which I described a lot of listened to conference call reading through the documents seeing some analyst research, then I really think it should be in an index fund. It's no surrender. Okay. And after you build up that steak, and you're still interested in buying stocks and wanting to do a little homework, then I think, it's okay. But to not have a lot of knowledge and by stock I think that's a recipe for defeat. Beat denisa. Minnesota police Denise, hey, Jim, Bo Yaar, and thanks for all of your hard work for a health. Thank you say, Jim, can you? Explain Dutch auctions, and why accompany has them and what a shareholder should do about them. Well, that's a company trying to show you, basically, they think the stocks worth more than it is in they're buying the stock up by and typically what you wanna do is you wanna ten or to it. You're not going to be able to get all of your stock done, you'll get the rest of the dock back, but it's nice way to make a little money. And I think coming to do it are showing that they have tremendous belief themselves in the last one that I really love was the old Jordan Morton, frankly, didn't fenders really good for everybody quite always be able to explain your stock fix to know that you would never take anything on faintness business. More my rules of engagement and your tweets after the break. So stick with Bremer. No matter. How smart you're no matter how well informed. No matter how lucky sooner or later, you're going to make some sub optimal stock picks fix. It happens to the best of every portfolio has a few duds at the difference between a good investor and a bad investor is how you handle your losers. People seem to have a natural version to sell losers professionals and amateurs alike, hate doing they keep hoping operating under the assumption that a sinking stock is wrong, and it's direction they rationalize it the weakness or lack of interest. They see we'll be fleeting and that people soon will recognize the value of their stock the one that's in question. That's all well and good until you need money. Maybe wanna raise some cash because your portfolio's cotton a little to stock heavy, maybe have some real life expenses that require you to put together a lot of money in a hurry. Maybe your money manager with some investors want their money back. That's always chopped. Right. Go you ever read confessions of a street addict? Holy cow. I got a whole chapter about that one. Well, then how do you decide what to say? Sell. This is where the tendency to hold onto our losers shows that sinister side a lot of investors sell their best performing holdings rather than the worst performance yet. They will sell their winners to subsidize the loser. You then get a self-fulfilling spirals the band stock. Stay band, they usually keep going down. And with fewer winners. Your performance will get even worse. This particularly dangerous. Majer because bad performance triggers yet more redemptions from your clients. And if you're if you keep selling winters to give the money back, it creates a vicious cycle. Dow individuals do the same thing you only have to find out about a capital to invest right rather than take your medicine the loss, you know, take a loss far too many people prefer to hang onto their worst performers. Thus my rule never subsidized losers with winners. My vice to anyone who stuck in the positions quite simple sell the losers and wait a day. If you really want them back go buy them back the next day. But once they're out in portfolio. I gotta tell you. I doubt that you'll even be tempted to buy back that stock by the same token, you can't keep hanging onto low quality stock just because you're hoping for uptake over all that's a real good idea. Look, I get it. Nothing's more exciting than a takeover nothings as lucrative. You can put on a lifetime's worth of gains at a day from a takeover. So people go to great lengths to try to capture. These moves that includes. By a lot of bad companies to catch the thing about bad companies. They really do get bits and reality typically, what gets acquired or great companies with cheap, stocks dot crummy copies with stocks that seem cheap. But in fact, pretty expensive get so many people by this junk merchandise because they think a takeover will save them. Which brings me to my next rule never speculate on takeovers of companies with bad fundamentals. The odds are that you'll end up owning something that you could go down much more than that. Much more than you ever thought. Even as it is very limited upset, even if a bad company gets takeover. It might end up coming at a much lower price than what you initially pay for the stock. That's the thing about bad companies. Stocks tend to go lower deservedly you can do much better buying a well run company. That's in good shape and can still get a takeover bid. Then you can't buy a company that's doing poorly unlikely to get a bit. It makes sense not many big companies get acquired because not many managers can turn bad companies Copeland's, so don't wait around with a company with lousy fundamentals to be taken over you could be waiting a very long time. If you just moved on you could've bought the stock of a high quality company that's likely to give you much better performance and a well run company, you can get away with speculating on a takeover because even if there's no deal you have other ways to win. And when the stock of the company goes down, you can constantly by more into weakness. That's something you can do with a company it's going from bad worse while you were waiting irrationally for lightning strike. The bottom line never sell your winner to subsidize your losers, if you need to raise money for whatever reason just take the darn loss and sell something it's underperforming. And absolutely do not speculate on takeovers and companies that are deteriorating fundamentals if a possible, takeovers, the only reason you have a stock. That's not something you should stick with Kramer. This is the most interactive show on television. I like to brag about having the smartest audience there is that's u k Markelle let's get some of your tweets. First a tweet from at both flags watching arm with sun. Forgot him Kramer, Liz in the Fash tag marvel universe. Dad tweets. Awesome. Oh, yeah. That was just fun. I broke that cop. It was one take. It was really kinda crazy, and I am forever. Indebted to the fabulous people couldn't John fabric that do those movies. And here's a tweet from Bing, dude, making big Moe vests says at Kramer, a new investor less than three months in. I've always been eight saber. But how do I develop discipline as an investor? All right. Here's what you wanna do as an investor. Why don't you just by small? Okay. This is what we do for actual plus dot com for the club. And then at the stock comes in you've got more room. But. I want you to do it. So that you don't the discipline is going to make it. So that you're not going to be able to necessarily make much money should like we're trying to cut off our losses. And that's why we start small okay now tweet from at Dary seven seven four to six seven three nine was like your pin numbers. Jim clamored? Do you ever sleep? I see on TV early in the morning and very late at night and the answer is I rarely do sleep. And I have pulled a use of all nighters within the last three years. I wish that went to case. But it is true. And now it's from at info infinite Nolte action, Kramer, very much looking forward to some perspective tonight. Is there such a thing as market inertia with amount of money moving in the market is this like steering, the Titanic jetski mad tweets built from Jefferson. No, it's not. And I'll tell you what we don't have that much money coming in. I mean, literally the money's been going out. So the fact that the market's going up is really just a tested the fact that there's this core. Group of people who are not leaving there being just like Warren Buffett. They're putting a huge amount of money index funds. And that's okay. That's not a Noushin believing in America, and believing in progress, I have no problem with now tweet from at Mike Munro, and w at Jim Cramer. Thank you for being the voice of reason and keeping our sanity amongst all this market craziness. Don't know what we do. Without you. Hashtag minutes. We take Jim Cramer hashtag mid money has criminal. Thank you. Look. My goal is to make it. So people don't freak out. All right. There were times when I would tell you listen, you do have to go and those have happened when their systemic risk meaning risk. We can't assess whether the system's going to hold but most of the risks. We see are really just market Rhys that are not in sync with how the strength of the country and the strength of the companies. So I will warn you. If I think the things are really coming unglued, brother wise. My job is to try to put it in perspective. Thank you so much. That's very nice tweets throw. Nice next. A tweet from at common stock OMG Jim Cramer's part of jeopardy question. I would have totally got that answer. Right. My daughter. My youngest daughter just loved that too. She's on that that's made it. And now she knows I have a show. Thanks kramer. We really do have fun. Alexa. There's always promised find it just for you right here. Oh, man money. I'm Jim Cramer. And we'll see you next time.

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