Conviction. Sometimes they sound so super intelligent, much smarter than i sound, right . Lets face that. Here on mad money were not about sounding smart. If it were, i probably wouldnt have so many sound effects. Were about trying to get it right, what to buy. Buy, buy, buy. What to sell. Sell, sell, sell. What direction the market is headed. You get these things right and its a heck of a lot easier to make money in all the markets. In all my 30 years plus in the investing business the easiest way to get it right is by working hard and being as rigorous as possible. Theres no trick. Theres not five simple rules that would make you a multimillionaire overnight. Thats all hogwash. If do you the work and practice real analytical rigor you might learn something that makes you a better investor. A better investor is one who simply makes more money than the other guy and thats the goal. For the better part of a decade ive been running my own Charitable Trust at actionalerts. Com with the help of my cnbc contribute for stephanie link. We sent out every trade that the trust makes before we make it showing you with years and years of documentation where i went wrong and wrong. As part of my research for my latest book, get rich carefully, i went back on every single trade from the last five years to analyze what worked and what didnt. You know what . I got a treasure trove of valuable information. Tonight i want to take you through some of the most important lessons i picked up from going over the trust, best successes and more important worst blunders. Before i get down to details i advise you to do the same thing with our own trading history. You can learn a lot by systematically going over all of your past decisions. Know yourself, and you need not fear the result of 100 battles. So lets get started. Looking at the trust i noticed something is really counterintuitive. Sometimes the best time to buy a stock is right after the analysts cut their estimates for the underlying company, yeah. Arent we supposed to be buying all sorts of prizes. One of the best investment my Charitable Trust ever made was back in march of 2009, near the big generational bottom when caterpillar was going down and down and down for weeks on end, as they raced to clock their estimates ahead what have looked like a particularly bad quarter. Oh, the analysts, they all turned bearish at once after cats business globally took huge hits because customers were struggling to get credit for new machines and orders seemed to be cancelled every single day, right at dips of the great recession. When caterpillar reported, dip turned out even uglier than the analysts predicted an some firm slashed their estimates big for the year, taking it down as much as 50 . Can you imagine . But, and this is important, cats stock barely reacted to the bad news, falling only slightly and instantly stabilizing and returning to where it was when the hideous Earnings Announcement was issued. You know what that is . Thats the classic sign that you are looking at a bottom. Right then cat was screaming look at me. Look at me. All the bad news is out in me. The worst is over calling bottoms yourself can be dangerous and fraught with peril if you call too early and sometimes the market will call the bottom for you and thats what happened in 2009 with caterpillar. The analysts misread their estimates and bingo, a bottom was formed. It may seem counterintuitive to buy a stock right after the estimates were slashed. Used to buying them when they gun. Think about it, it actually makes a lot of sense. Wait until a stock has been derisked so to speak, until the bad news is totally baked into the share price and you can build a position that just might lead to tremendous proves down the world. Sure enough, caterpillar roared from the perch for months on end as by the improved and analysts had to raise their estimates from what turned out to be the levels that were far too low. Yet the big money made, they all made a huge amount of money because they bought the estimate cut, not an estimate boost, but the cut because cats earnings had finally troughed. Thats the key word, trough, and anybody could have caught this move by watching how the stock didnt get crushed, like youd expect after the hideous quarter and the last barrage of estimate cuts. Now, maybe some of you are saying, okay, cramer, that was march 2009. Generational buyout, once in a lifetime example. Let me give you a more recent example. Jpmorgan. Remember the incident with the socalled london whale back in 2012, the rogue trader who caused the bank to lose 6 billion by hiding ever and larger losses. As the market kept trying to get a handle on the magnitude, the stock kept going lower in sync with the estimate cuts and on monday the New York Times reported the london whale losses might total as much as 9 billion, thats it, but 9 billion for jpmorgan and several firms following the stocks slashed their estimates to match that New York Times figure. However, just like caterpillar march in 2009 jpmorgans stock didnt get hit on that last round of estimate cuts. You heard me. It didnt get hit. Instead, it flatlined. And then it inched up, ever so slightly when that news broke. Again, just like with cat the stock was telling you the estimates had come down too far. Sure enough, soon after as we learned that jpmorgans losses were not 9 billion. They were contained at 6 billion, not that much larger figure, and that was the moment you had to buy. The stock had been clubbed down to 31 over the previous month and if you bought jpmorgan right after the last round of number cuts, the ones that failed to take the stock down, you caught an immense rally. 31 goes to 50, almost in a Straight Line over the next 12 month, and, that my friends, is a 61 gain hallelujah. Heres the bottom line, want to note single most reliable sign that a stock is bottoming, simply wait for the moment that the estimates are so low that they can finally at last be beaten and lucky for you the market will almost always tell you when that happens, as we saw with caterpillar in 2009 and jpmorgan in 2012. When the estimates get slashed and the stock doesnt go lower, thats the market screaming that a bottom is probably at hand. Can i go to leo in louisiana. Leo. Caller hey, jim. Look, always really appreciative of you, helped me recroup over the last years recoup the thousands that my socalled professional broker lost me. Thank you for those kind words. Go at it every day trying to help you. And ive got a fund set aside for my granddaughters college. Look, whats the deal with afterhours trading and why are we so cut out from that . First of all, not a bad thing youre cut off for it. Why . So often afterhour trading is misdirection plays, not unlike a quarterback giving it to a halfback but not really doing it, how he slips his end like a read option play. I feel its a fakeout city, wild west. I dont want you there. You can certainly get in it but why trade on no information. Thats just guessing. We dont guess on mad money but thank you for the incredibly kind comments and glad to hear about your granddaughter and the trust. Rob noncalifornia, robin. Caller hi, jim. Robin, how are you . Caller just fine, thank you. I am an obedient cramer gamer. Thank you. Caller and i have a question about market limit orders. I used to buy on open orders and often found that the stocks i bought were higher when i placed the orders. Right. Caller so i took your advice, which ive heard you say multiple times to use limit order and now i get the stocks at the price i order, and sometimes even a little less. Right. Caller i was wondering though can i even improve on that, the Brokerage Firm i worked at or use has additional stop like stop on quotes, limits on quote and a trailing stock on quotes. No, no, those are all tricks. They set that. Any time you take it out of your observe hands, when you dont determine what markets you want, doesnt matter, jim, youre being too careful. Can you really be too careful when it comes to your money . Thank you for the comments. Bottom fishing, everyone loves it, but how do we call that elusive bottom . By reading the signals the market sends us when the market has had a slide and the estimates get slashed but the stock doesnt go down. You know what that is . Thats the true sign of a bottom. Mad money is back. Dont miss a second of mad money. Follow jimcramer on twitter. Have a question . Tweet kramer, madtweets. Send jim an email to madmoney cnbc. Com or give us a call at 1800743cnbc. Miss something . Head to mad money. Cnbc. Com. And if i tap my geico app here i can pay my bill. Tap it here, Digital Insurance id card. And tap it here, boom, roadside assistance. Ontday ooklay, its axwellmay. The igpay . Otallytay. Take an icturepay onephay, onephay really, pig latin . [ male announcer ] geico. Anywhere, anytime. Just an aptay away on the geico appay. [ male announcer ] gseeing the world in reverse, and i loved every minute of it. But then you grow up and theres no going back. But its okay, its just a new kind of adventure. And really, who wants to look backwards when you can look forward . Everybody makes a mistake sometime. Thats classic investing advice from stock sage otis reddick. You dont just need to learn from your mistakes. Anybody can tell you that. You need to learn how to recognize what your mistakes actually are, and by the same token you need to notice what works. Okay. Might sound trite. Trust me. Its not. The thing about being human is that we have a very hard time acknowledging whats actually going on inside our own heads. Were full of all sorts of unconscious biasses, and that can make it incredibly difficult to learn frequents appearance. But, look, im not here to give you a psychology 101 lesson on cognition. Im hear to be your investing coach so i mentioned all this because its important to remember that you need to approach all the stuff empirically, and what do i mean by that . At my old firm i used to keep a box of trading tickets in my closet. Yeah, musty corrugated box. I spent a tremendous amount of time scrutinizing the buy and sell tickets looking for mistakes and patterns of wrongdoing that needed correcting and much more rarely for patterns of success that needed repeating. These days i dont have a box anymore but i do have the entire record of my Charitable Trust which you can follow along on actionalerts. Com and keep track of all my trades and all my reasons for buying or trading a stock. I recently analyzed the last five years of trades as part of my research for get rich carefully, my latest book, and it taught me a lot of things. Some of which might sound very hard for you to swallow. Thats why i approached this whole exercise empirically because the numbers, when at allied, dont lie, and what do they teach us . Ive got another counterintuitive lesson for us. Stop worrying and allow secondary Stock Offerings. When a Company Issues new stocks its bad news. Geez, well get killed by that. When the company does a secondary it tends to weigh on the stock for a long time. These days that totally reasonable fear of secondaries is also a mistake because Interest Rates are low by historical standards, true even after the big rate rise in the summer of 2003, companies can issue equity to pay back debt and derisk their enterprises. Thats why the deals are worth running to, from running from. For example, the Real Estate Investments trusts have done a huge numbers of secondaries and those deals have worked fabulously because, first of all, the Money Companies used to pay down expensive debt or cheaper debt that carries a lower Interest Rate. The money saved on these Interest Payments fall straight to the bottom line allowing managers to raise rates. Companies issue stocks to expand their buses and that almost always produces a nice move up in the share price. Third, the newly raised capital might allow these Real Estate Investment trusts to buy new properties leading to greater earnings power and dividends down the real. The only Real Estate Investment trusts are found in all Different Companies hit hard by the housing crash and snapping back pretty furiously. Think about the mortgage insurance companies, a group pretty much left for dead, right, come on. Additional capital raised by their secondaries allow them to write more policies on new homes. You made a killing if you listened to me in february 2003 when i said buy the stock on the offering or even ahead of the dock. Right after the stocks went down, after the offering, didnt want you to wait. I caught anot of flack on twitter as many thought it signalled a top, not an opportunity. They plenty of sophisticated institutions out there because they realized if the company got its hands on more capital it could flourish. Thats why you had to take action as soon as deal was announced. Ratings prices secondary prices 8 in february and two months later a 12 gain. When you see these kinds of deals you need to take action, bold action immediately. The opportunity will not last long if you wait. Now theres another kind of secondary that i think you should jump all over, the kind that Master Limited partnerships do, the oil and gas pipeline players that are issuing stocks to have their expansion plans to have pipelines that are so needed to move oil and gas from texas, oklahoma, colorado, west virginia, ohio and pennsylvania to the rest of the nation. Pipelines are by far the best and cheapest way to transport gas. Constructing new pipelines section pensive and the companies that build them need to raise cash pretty constantly in the products, Kinder Morgan energy partners, mark up, mwe, the best players out there and they have become serial insurers of equity to expand their Pipeline Networks and the deal is almost all work. I have to warn you the Master Limited partnerships are super high yielders which means they could be dangerous stocks in an environment where Interest Rates are rising quickly and bonds are becoming much more competitive as an asset class. However, if were in a moment where rates are stable jump all over the partnership secondaries. Allow increased capacity so they can meet the surging demand from the explosion of oil and Gas Production in this company and more capacity means more dividends down the road. Third, keep your eye out for secondaries for whats priced as whats known deep in the hole meaning they are being sold at dramatically lower prices than where the stocks were trading when the deals were announced. For example, september 2013 when social media darling linkedin was trading 246, Company Announced when to sell 1 billion worth of stock to raise money for corporate purposes. The brokers who handled the deal let it be known they were willing to sell their shares well below that price, had to have a full broker deal, full Service Broker to know this, but you got the word. Buyers lined up to get a piece of the deal. Soond after linkedin raised 1. 2 billion, not 1, sold 4 million, 223. It was a good deal for all involved, and best of all, the stock immediately traded right back to where it had been before the secondary was announced. You only get the deep in the hole secondaries from full Service Brokers means you have to do business with them as the large corporate clients like to do these sorts of deals with their Investment Bankers who are part of full Service Brokers. When you see these deals almost always worth trying to get in on, last but not least, reached the moment when they are issuing secondaries. In the past i shied away from the indebted companies. These days thats too cynical. Thats right. I had to revise a lot of things to get rich carefully because a lot of things have changed. Some of the private equity firms have high levels of debt left over before the Federal Reserve cut Interest Rates a couple years ago and were able to raise rates from the capital they raised from secondaries. It means an immediate boost to earnings and subsequent lift of stocks. Weve seen performance after privatebacked deal, like dollar jen. Bottom line. Forget the conventional wisdom that says a secondary Stock Offering always means a company is in trouble and the stock will get poll waxed. Many cases where secondaries can make fabulous buying opportunities, like when Companies Use money to retire and refinance their high Interest Rate debt or when Master Limited partnerships raise money to expand or when you get secondaries from newly private public equitybacked names and, of course, when you get a deep in the hole deal where the price is actually too good to ignore. Mitch in california, mitch. Caller hey, jim. How you doing . Real good. How about you, mitch . Caller im doing well. My question is regarding adding tra options trading and i want to know how easy it is to implement options. In a book i wrote called getting back to even i have 100 pages that tell you exactly what to do in those kinds of strategies. In my book real money i talk about the very elemental options if youve never done it and getting back to even i talked about the sophisticated strategies you want to adopt in the option world. Tony in california. Booyah, or Something Like that. Something like that. Caller tony from Hacienda Heights in california. All right. Caller and my question is not about any one company. Its more like what mastercard did for its longtime shareholders and with the splits. I was wondering why other companies dont do that more often. Because its two words, two words, warren and buffet. Warren buffett decided not to split a stock and when he did that, people decided he knows more than we do. Knows its just artifice and eye cand