Craziest, wackiest, most random, frankly bizarre thing on television. But i know you wont find investing advice this good anywhere else. You know that too or else you wouldnt be watching, unless youre one of the people who tunes in to see if tonight is the night the show really does go off the rails. Which after multiple years of airing is always a possibility on any given night. Sorry, guys. Theres a tape delay. But keep watching. For those of you more interested in making money than watching my traipsing around like the crazy man people say i am particularly on twitter jimcramer, you can do everything i do, specifically actively investing in stocks, running your own portfolio rather than dumping your money with some buy and forget index fund or worse, fleeing for the false safety of bond funds. Particularly when we had record low Interest Rates, remember those days . Its something anyone can do, as long as you spend five hours a week doing the homework. Im condoning a couple of hours a week these days because the research is so readily available on cnbc. Com or from the websites of the companies youre thinking of buying or keeping up on. In fact, i think actively managing your own portfolio is essential especially after the crash of 2008, which proved the uselessness of index funds. Mimicking the market returns is not enough. Especially if youre not trying to get back to even. You have to do better. The only way the do that is by picking your own stocks and actively managing your own portfolio for your own tax consequences. But how do you start . Thats what were talking about tonight. Like i said this show is all about the method or methods to break through strictly quoting the method to my madness. How do i pick stocks . Tonight you get a piece of that answer. The truth that i have got far too many methods, far too many ways of picking out great stocks to cover them in one single show. But i want to give you some of the tools of my trade enough so that you can start to pick stocks like yours truly on your own or do better than i am. You dont have to follow as many stocks and i do to be successful. I follow a lot of stocks which is something that was recently tested by compatriots at the debarry inn which i coown and i do the eggs on sunday and the dishes there. At the bottom of the show its about educating you and giving you the ultimate insider perspective on how the market works and how it can make you money. Im not here to dole out stock picks, like if youre too lazy to get the fish, shop for them at whole foods. I want to empower you, and that starts with me teaching you the many tricks i use to pick the great stocks and trade them like a pro. Methods that served me for more than 30 years of investing and allowed me to get a 20 rate of return after fees at my hedge fund. This refreshes the show. And it guides me as i manage my own Charitable Trust which you can follow along, and another ten year labor of love where i gave away more than 1. 75 million in winnings. The product is really difficult to put out every day as we do. Now lets get rolling. One of the easiest potential ways to identify cramer names that wont always end up on the show is by watching all i cant believe they produce this every day, the new high list. Stocks on that list, the highest of the high, obviously have something going for them. And thats especially true when the market is in bad shape as only the best of the best can hit new highs when the market is falling apart. So whats it tell you when a stock is on the new high list . Either that its part of a genuine bull market or that the company itself has some serious momentum. No matter how they get there, many stocks keep going higher from the bottom of 2009, any market that more than doubles from the bottom has to be considered a great bull market even as we resist such labels. We saw that over and over again. The new stocks would hit new high after new high. Even after the bears said that the bull market couldnt be trusted. I missed out on one of the greatest rallies of history. And generally speaking things have worked out and continue to work. Im not saying that you can chase stocks that are hitting the highs because theyll keep going higher. That would be the ultimate in foolishness. Im not doing that. Im saying that if you want to identify stocks where do you start . You identify them with what will be winners in the future with winners already. Unless theres been a big sea change in the market caused by a gigantic political shift. Looking at the biggest winners of the present is a terrific way to start looking at what could be the winners of the future. Thats the thing about the market, its not always that hard to play once you understand that theres often more continuity than change. Things pretty much keep going the way they were going until something major shifts. Then you got to alter your course. Those tectonic course changes can be pretty radical, though. Thats why you have to be reevaluating your ideas and you should never dig in your heels when the facts change. Two incredibly important disciplines that i stress in my book getting back to even because its not only about methodology, but individual stocks that work at the time, but i regard it as indispensable. Even as we did get back to even and then some. But when youre looking for stocks to invest and when youre hunting for the bull market like i do at 6 00 p. M. And 11 00 p. M. Eastern, you have to start somewhere. Looking at the new high list has been, from when i started, a terrific way to begin. Now, dont just pluck names off the new high list because hey, those stocks will keep going up. Why dont i just recommend them on the show . Well, it would be lazy and irresponsible. I have many things, but lazy and irresponsible i aint. Anyone who sees my insane 4 15 a. M. Tweets jimcramer, i apply the same standards of rigor that i used to use at the hedge fund. I rarely trade them off the high list, unless theres an exception. What you should do is wait for something to pull back from the new high list. See, thats the best place to start. I like new high list pullbacks. The pullback preferably at least 5 down gives you a good lower price entry point in a stock that has a lot of positives going for it. You should be conscious of price and therefore try to buy on weakness, like you want to sell into strength. Im throwing in these caveats because i dont want you to look at the new high list as your shopping list. But its a great jumping off point. Its an important one. Its a fabulous way to identify potential. I stress that word potential stocks to buy. You only buy stocks that have pulled back if youre confident theyll make a comeback for substantive reasons. You have to do all of the same homework you do before buying a stock. You absolutely must have conviction. Even if its a cynical conviction that the stock is going higher than it deserves to go higher. You know the growth funds cant resist stocks of High Growth Companies and they always come in and support their stocks after a few down days. They really do do that. Im telling you i know these guys. They do do that. The biggest caveat of all when shopping for stocks that have pulled back from their highs, make sure they havent pulled back for a good reason. Make sure that the selloff is extraneous to the business. Dont buy a home builder thats down if the Interest Rates flew up, because that could hurt the next quarter. It would have nothing to do with bristolmyers. Be certain youre dealing with a momentary troubled stock and not a company thats going down. The stock hasnt fallen from grace, its pulled back for mechanical reasons, profit taking, or some panic in the market in general. Those are the two main reasons. Now, more than ever thanks to the fact that stocks are traded like commodities by ultra leverage hedge funds and they make no sense in anything and the etfs that are more powerful, you will see them pull back for reasons that have nothing to do with the strength of their underlying businesses. And those are the ones i want you to buy buy buy. But if the fundamental picture changes, if whatever made that stock attractive goes away, then that stock is no longer a candidate. Sell sell. Buy buy buy buy. No. Dont buy. Dont buy. The story has to be intact or this method will not help you one bit. Well it isnt a hard and fast rule, i like the stocks that have pulled back 5 to 8 from the high. Less than that youre probably too early. More than that and maybe something is indeed wrong with the stock and you dont know it. Heres the bottom line. As billy joel said you may be right, i may be crazy. But at least theres a method to cramers madness. Watch for stocks that have pulled back from the new high list, especially because of a broad market selloff. Some of my best picks have come out in this process and hopefully some of yours can too. I need to go to robin in new york. Robin . Caller hi, jim. Hi, robin. Caller im a blonde who said on your family show that if youre single, im interested and i want you to know that i still am. Well, hey, you know, you never know. You kind of like put it out there. You never know. Caller im putting it out there and now im going to put out my question. Okay. Caller my question is about purchasing more shares of stock. I have a number of stocks that i purchased at low prices like Eog Resources at 30, lions gate at 11 and i would like more shares of these excellent companies. Given that the prices are now exponentially higher than what i originally paid, but i want more shares and the larger positions in these companies, do i buy more or do i wait for another bargain to come around . Robin, this is really difficult. I talk about this all the time with stephanie link. Its called violating your basis. I dont like to violate your basis, but lets overlay it with the stock is down 5 to 8 , you can start a new position mentally even though its part of an old position physically. Buy some of those high quality stocks. Lets go to joe in ohio. Caller a big brownsburg bulldog booyah to you, jim. Of course. Caller a question for you here. I have some older friends that were given Proctor Gamble stock when they were very young. They have kept that stock for 60, 70 years and its split many times, and they have become quite wealthy. My question is, how do you pick a company with the idea that youre going to hold the stock and watch it grow as it increases in value and splits . Well, i mean, the main thing obviously, were interested in the fundamentals. As long as the stock has good fundamentals and youre not too greedy, meaning you have once you sold off enough to be able to recoup your initial houses money, you just let it run. Thats always been my philosophy because thats how you really, really win big as your friends have. Methods to the madness of the market, number one. I want you to check the new high list for pullbacks and as billy joel said, you may be right, but i may be crazy. Mad money will 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. Booyah, cramerica. Mad money is approaching the 2,000th show. Why do i come in here every night . To level the playing field. To fight for you. To remind you that the American Dream is alive and well, and you have a fighting chance against the big guys. To celebrate our 2,000th show i want to know why you the citizens of cramerica watch. So i ask, why2k . Why is mad money important to you . Booyah, jim. Thanks for what you do for us little guys. I love mad money for the insight jim offers. Show me, send me a vine, make a video, tweet it. Share it on facebook. Use the hash tag, mmwhy2k and we might use it on the air. Can i get a booyah . [ agent smith ] ive Found Software that intrigues me. It appears its an agent of good. [ agent smith ] ge software connects patients to nurses to the right machines while dramatically reducing waiting time. [ telephone ringing ] now a waiting room is just a room. [ static warbles ] a wise man once said in a mad world, only the mad are sane. And nothing is more mad than the market. And yours truly is just crazy enough to know the landscape like the back of my hand. So tonight ill reveal some of the best tricks for buying and selling the stocks. Truly timeless investing wisdom, methods if you will to the madness. Thats right. Think of me maybe as the how about the penn and teller of the stock market. If that resonates with a physique thats more like teller than penn. I want to pull back the curtains to show you how a professional looks for stocks to buy and knows what stocks to sell. Theres no magic. Theres no hidden talent. Just a bunch of discipline. Disciplines that can make you mad money if you master them. Dont have to be a genius. You dont have to be that smart to be completely honest. You just need to know what youre doing and put in the homework. Thats where cramer comes in. Maybe less of a sad clown and more of the fool from king lear, something to think about. Nothing of that. Lets move on to more important things like how to find stock that are great buys. Earlier i was talking about picking off stocks that have pulled back from the new high list because you get a cheaper entry point in a stock thats a proven winner. You dont want to buy names off the new high list because youre paying too much for them. You can get a better deal if youre patient and wait for some weakness. Given how volatile and crazy the market has become, there are few occasions when it is at all justified. But sometimes the stock is so hot, so sizzling that you just got to buy it. Wherever you can. As soon as you can. Because its not going lower any time soon. You wont find these often, but when you find them, you have to buy not all at once. If you think the stock has so much mojo you wont get a pull back from the high, i bless it, buy 25. Worst thing that happens it goes higher and you grab a quick profit on the 25 and find another stock. Believe me, theres always another stock to find. Theres always another train coming into the station and leaving it. All aboard i have one exception where its indeed okay to buy a stock on the new high list. All right. Only time. If you see insiders buying the stock when it is at a 52week high, thats a clear sign you do want in. Its a rare thing to see happen. But in my experience, as rare still this method of picking stocks doesnt work it. I love it when i say insiders buying at the high. Its a great sign of their confidence in the business and who knows if the business is doing well than the people running it, right . Normally insider buying ranges from meaningless to small, in its own insufficient reason to buy a stock. A lot of times youll catch insiders buying the stock because they want to give the impression of confidence, to create the illusion theyre doing better than they really are. If theyre seen buying their own stocks then the market will smile upon them. They play the system. Thats fair. But it means we ignore insider buying because it can be flimflam and window dressing and that kind of thing. That said, when you get truly colossal insider buying buy buy buy buy even if its not at the high, you might want to take another look at the stock in question. Its a powerful endorsement when they buy a whole lot of stock. Oh, yeah. Its really the volume of the insider buying that declares the sincerity. But were only focusing on one sort of insider buy, buying at the high. Theres nothing more arrogant and yet telling than when an insider backs up the truck for his own stock sitting at the 52week high list. Theyre saying, we know we rock. Our stock has been en fuego and well buy the stocks hand over fist. Were buying at the high. I checked this out nine ways to sunday. Corporate insiders arent fools. With some notable exceptions occupying the wall of shame. Not everyone deserves the benefit of the doubt in this business. After the financial crisis and the market melt down at the end of 2008 i know a lot of people think all ceos are a bunch of crooks. Especially those of you who got burned owning fannie mae and lehman brothers. Healthy skepticism is one thing. A total unwillingness to believe anything positive is something. Now getting the stock to a 52week high list and buying a bunch of shares is a good reason to give the ceo the benefit of the doubt. Theyre not going to buy at the high unless they have an unshakable conviction of the company or perhaps they have been contacted about a potential purchase. Most investors arent smart enough to wait for the pull back. They dont think there will be a pull back and nothing more bullish than that. Sure i want to wait for a pull back but thats the best of all possible worlds. It doesnt happen that often. Heres the bottom line. One more method in cramers madness, you might want to be buying too. Lets go to karen in ohio. Caller hey, jim, my husband and i got a letter from a company that we have stock with that wants to purchase back 350 million in shares. They said they were going to pay a minimum of 22. 50 a share up to 25. 50, which is approximately 14 of the stock that they own. When is a good idea to do this . If you really need to raise cash, thats a good idea. Otherwise, i want to own or buy to be honest. Lets go to russell in florida. Russell . Caller hi, jim, i was wondering could you tell me the advantages and disadvantages of stocks versus mutual funds and which one youd recommend for someone who is nearing retirement for a steady stream of income . For a steady stream of income, there are a number of mutual funds that actually are income oriented funds. You have to look at them and look at the three and fiveyear records. Thats what i like to do. Individual stocks i like because i can control my tax destiny, my basis destiny. Mutual funds im along for the ride. I dont know what they own or what price they buy at which is why im so hesitant to recommend mutual funds. How do you find stocks that are great buys . One step is to follow me and the next the next is mad method number two. I want you to look for insider buying at 52week highs. Somethings going on when you see that. After the break ill try to make you even more money. You caught cramer on a good night. Im not going home to sip that cheap scotch on my dirty linoleum floor. By the way i apologize to dewars, which i once suggested was the linoleum floor scotch of choice. Its actually pretty good stuff. But no, im in a manic mood. Well, lets just say im pretty darn productive under pressure when im in high gear. So im revealing many of the secrets, the methods to the madness. Pull out your pencil and paper. Start jotting things down. Because what im about to tell you could be incredibly useful. Better than giving you stock picks. Im giving you the best ways to pick stocks. Im teaching you to invest and trade like cramer, if not to be like me because i have some emotional issues frankly youd prefer not to emulate. Like really off track. So far i have been giving away two of the precious secrets, two i use at the hedge fund at the Charitable Trust. Unlike lady gaga i play with an open hand, not a poker face. Allowing the subscribers to see all my trades