Where theres always someone on tv or internet telling you to do the exact opposite of what you should be doing. They tell you to do the wrong thing with incredible conviction. Sometimes they sound super intelligent, much smarter than i sound, for example. But here at mad money were not about sounding smart, we are about getting it right, what to buy, sell what direction the market is heading, how it works, you get these things right and it is heck of easier to make money. Work hard. No trick. No five simple rules to make you a multi millionaire overnight but if you do the work you might learn something that might make you a better investor which is simply one who makes more money, because that is the goal. Not ideology not politics not view point making money. For the better part of a decade i have been running my own trust. As part of the research for my latest book get rich carefully i went over every trade over the last five years and realize what did worked and what didnt. Tonight i will take you through some of the most important lessons i picked up best successes and more important worst blunders. And before i get into the details, let me just say that i advise you to do the same thing with your trading history. You can really learn a lot by systematically going over your past decisions. Know yourself and you need not fear the results of a hundred battles. Looking back at the trust history i notice sometimes the best time to buy a stock is right after the analysts cut their estimates. One of the best investments my Charitable Trust ever made was in march 2009 right near the big generational bottom when caterpillar ks giant equipment manufacturer had been going down for weeks on end as analyst raced to cut their estimates for what looked to be a bad quarter. They were stloeing throwing everything at it. They all turned bearish. At once cats business took numerous hits. They were cancelling orders every day. This was at the depths of the great recession. When caterpillar did report it was uglier than analysts had predicted. And some firms slashed estimates for the rest the year taking them down by an extraordinary 50 . Can you imagine that 50 decline in earnings estimates. Is this is important. Cat stock barely reacted falling only slightly and instantly stabilizing and most importantly were turning where it was when the hideous earnings announcements were issued classic sign of looking at a bottom. Right there. Cat was screaming, look at me. Look at me. The bad news is out. The worst is over and the best is yet to come. Could be dangerous activity if you come in too early, you can get caught. Sometimes the market will pretty much call the bottom for you. Thats what happened in 2009 when cat ordered awful numbers, the stock barely batted an eyelash. When you think about it it makes a great deal of sense, you want to wait until a stock is derisked until the bad news is shaked into the share price and could lead to profits. Sure enough caterpillar profited for months on end as business improved worldwide and analysts had to raise estimates from far too low, particularly 50 cuts. Cats earnings finally troughed thats the key word, they troughed. Anyone could catch the move after the hideous quarter of the investment cuts. Some are saying that was once in a lifetime situation generational bottom. Let me get you another more recent example, remember the incident j. P. Morgan had with the so called london whale rogue trader caused hiding 6 billion. The stock kept going lower in sync with the estimate cuts. Then one day it was reported that they loss 9 billion, several firms filed suit. Slashed estimates to match that 9 billion figure. However just like caterpillar, march, 2009 j. P. Morgan stock had already been obliterator ated and didnt get hit, instead got flat lined and inched up slightly, like with cat, the stocks telling you the estimates came down too far. Sure enough we learned the losses were contained at 6 billion not 9 billion and that was the moment had you to buy. The stock was clubbed down to 31 previous month, if you bought previous month you caught an immense rally, matter of fact over time you caught a double. But it did go almost straight from 31 to 50 in a straight line, wow, 12 months 61 gain. Same with fed ex. Cut their numbers twice, everyone cut down and next thing you know you caught almost a double. You simply need to wait until the estimates are so low they can be beaten. Lucky for you, the market will almost always tell when you it will happen as we saw with caterpillar in 2009 and j. P. Morgan and most recently with fed ex. When estimates get slashed and market doesnt go lower, thats screaming that a bottom is probably at hand. Is there any signals we can look for to find out if a Company Might do reverse stock split. When a stock goes under 5 management feels pressured to do it. Ive seen it in my time and its almost always a tail that things are worse not better. Be careful of stock splits. I dont care for them. Lets go to lee in colorado. In the pikes peak region. I love it there. I heard you say when market rallies 1 or more consider saling, is the inverse true should you consider buying if a stock climbs on a down market day . Absolutely. Yes. When you see stocks like when we had days with really high momentum stocks bucked the trend of the markets decline, thats the signal when things get better we are going to fly. Youre totally right. Lee in california. Gus in california. I was wondering if a stock has a high yield is it risky. If the yield is much more than average stock yields its a red flag. Theres plenty of situations where the yield is high and everything is fine. If most of the good yielding stocks are five six, and you get a ten or eleven thats a red flag and its probably not sustainable. Listen i know the market could get confusing. If you are looking for a sign a stock is bottoming, wait for a moment the estimates are too low. The market will always tell you. I got your back too. Mad money will be right back. If youre looking for a car that drives you. And takes the wheel right from your very hands. This isnt that car. The first and only car with direct adaptive steering. The 328 horsepower q50 from infiniti. Yeah everybody makes a mistake sometime classic Investment Advice there from odis redding. If you want to be a great investor dont need to just learn from your mistakes you need to recognize what your mistakes actually are and you need to notice what works. That might sound a tad trite, trust me it is not. The thing about being human is we have a hard time acknowledging what is going on in our own head. Were full of unconscious biases and that can help us learn. Im here to be your investing coach so i mention all this because it is important to remember that you need to approach all of this stuff imperrically, what do i mean by that . At my old firm i used to keep a box of trading tickets in my closet and i would look for mistakes patterns of wrongdoing and patterns of success that needed repeating. These days i dont have a box but i do have the entire record of my Childhood Trust which you could follow along online where we not only keep track of all my trades but all of my bullets explaining the reason for buying or selling a stock. Like i told you earlier i recently analyzed the last five years for my latest book and it taught me a lot. Some might sound hard to swallow. The numbers dont lie. What did it teach us i got another lesson you need to stop worrying and learn to love secondary stock offers. Weve all been conditioned to believe when a Company Issues new stock bad news for stockholders, or when Company Sales also bad news. Thats the way we think about these things. But it weighs for a moment and then it just keeps going on. But you know what these days that totally reasonable fear of secondaries, im banishing, im saying its a mistake. Because Interest Rates are still low, historically thats true even after the spring and summer of 2013. Companies can issue pay back debt and derisk their enterprises. For example the Real Estate Investment trust have done these deals and its worked fabulously. Because first of all the money is used to pay down expensive debt or refinance with cheaper date with lower Interest Rate that money saved straight to the bottom line allowing analyst to raise estimated once the refinancing is complete. Second stock up share price up. Third might allow the Real Estate Investment trusts to buy more properties leads to higher dividends down the road. Its a virtuous circle. You can find these deals at all sorts of companies that were hard hit by the housing smash. Take the martortgage company, Additional Capital allow them to purchase new homes. In february 2013 if you listened when i said buy the stock on the offering or ahead of the deal i caught a lot of flack on that as many assumed the issuance of stock signalled a top but there were plenty of institutions out there chopping at the bit because they realized the company could flourish in the virtuous circle i outlined. Thats why you had to take action soon as the deal was announced. Sure enough 8 8 in february later at 12. When you see deals you need to take immediate bold action. The opportunity wont last if you wait too long. Another secondary i think you should jump all over, the oil and gas pipeline players who are always issuing stocks to crisscross the country with pipeline to move gas to the rest of the nation. Pipelines are the cheapest way to transport oil and gas and safest versus trains. I0p i. But building is expensive. And master yielding contracts can be in dangerous stock, can get sold as people rush into bonds for safer yields. However when rates are stable you should jump all over these secondaries, they allow the pipeline to meet surge and demand from domestic oil and Gas Production and more capacity means more distribution down the road. You should aultzlways keep an eye out for secondaries deep in the hole. Meaning sold at lower prices than where they were trading at now. Many are priced deeply in the hole. September 2013 Company Announced wanted to sale 1 billion of stock, the brokers let it be known that linked in willing to sell soon after it was a good deal for all involved and stock returned right back where it was before secondary was announced. Once again gained favor with internet status people. Same thing happened with zillow priced secondary deep in a hole after another good quarter and stock jumped almost 100 . Now you only get stock from full Service Brokers as large clients do with these deals with investment bankers, these deals are almost always worth trying to get in on. Just rarely like in march 2014 did some of the deals go wrong. Weve now reached a moment where friefprivate have become public. In the past ive tended to 12450 shy away for fear the private equity firms knew something we didnt and the stocks were about to get clobbered. But thats too cynical. Theyve been refinance at much lower rates with the capital raised with secondaries. Again means immediate boost of earnings and subsequent lift of the stocks. We seen significant deals with dunkon brand, hca and aothers. Heres the bottom line forget conventional wisdom that secondary stock always means the company is trouble, theres many cases secondaries can make fabulous buying opportunities like when Companies Use the money to retire or when pipeline raise money to expand or when you get secondary newly private public back names and of course when you get a deep in the hole deal where the price is just too good to ignore. Much more on mad money tonight. Got to know when to hold them when to fold them. Earnings are great but not everything. Im dishing on the metrics that could spark a surge in the stock. Ill help you draft an all start portfolio, stick with cramer. When a rewards card is designed to sync with your life it gets talked about. So you can live the way you live, and enjoy all the rewards. Chase sapphire preferred. So you can. You can call me shallow. But, i have a wandering eye. I mean, come on. National gives me the control to choose any car in the aisle i want. I could choose you. Or i could choose her if i like her more. And i do. Oh, the silent treatment. Real mature. So you wanna get out of here . Go national. Go like a pro. Ttlwhun ]wual4m3qj w . 5 [ x4c8q6hcy 76luu , h tt ff muyi1;huikp 3uzu and the most advanced vehicle stability system in the industry. Youll ride with a feeling of complete freedom and confidence. Visit your canam dealer and test drive the spyder f3 today. If ever there was a musician who understood the stock market it was kenny rogers we got to know when to hold them when to fold them know when to walk away know when to run. Its fabulous Investment Advice and after painstakingly review trusts i got suggestions when you should fold them if not walk or even run from your positions. Let me remind you im not just blowing smoke. Not just sharing my opinions. Everyones got one, they all stink. No, im sharing the results of my research of what works and what doesnt. Research for my book. So in the spirit of gabbling cash is not always king when it comes to stock. If you buy a stock because it is on a pile of cash. You could get hurt. Pel get lulled into buying stocks at high levels because necessity had so much cash on the books. You probably heard this or that stock is a gigantic percentage as if cash is good news. Maybe in theres extra income but actually acash by itself means little. What does matter is how that company puts that cash to work. Intel, cisco and microsoft give nice size dividends but they havent met much. These titans have also bought back a lot of stock. Im not against stockbuy backs but they often bought it back badly maybe too high at times, maybe opportunistic weakness as i see on the best i see which is apple. Comes in agreggive when the stock is down but not when the stock is moving higher. The bad buyers pick up stocko believious of the moment. I think the cash sometimes is wasted on undisciplined buy backs at not great prices. When you see a company doing that, you know what maybe its not the right time to invest. Maybe think about another stock. Contrast with one of the best performing stocks since the generational bottom in 2009 that is wyndham worldwide raun. He buys back stock when it can make a difference when others are unwilling to step in and take advantage of the weakness thats when wyndham comes into the market plus they wrachet up dividend far more than expected. Every year excess cash goes to you the shareholder, he doesnt sit on it and watch it grow at a ridiculously low rate of return thats slower than watching paint dry. No he is part of a new breed of executives, you stick with him you own windham and you get your cut of the business. Hes the model of what many Tech Companies need at the helm. Someone who understands the stock price going higher is very important and recognizes it is part of his job to figure out the best way to make that happen. Let me tell you another sign you should fold. If you have a company blaming their customers on the poor performance, time to walk. Back in 2011 juniper was trading in low 40s and blamed japan for lack of orders. Sounds right to me the company was devastated by fukushima and other disasters. I bought into it. I stayed. Seemed right. Soon it dropped to 30s. More worries about missed orders this time from europe and United States. Still stuck with them because the company had a ton of cash. It was clear europe had a lot of problems. I ascribed it to the fact u. S. Government was a customer and we got the budget freeze. Wasnt until the stock dropped to the 20s that i realized it was a darn lame alibi. Turned out major competitor cisco was kicking junipers butt. Customers wherebying else where which i didnt realize until we dug deep into ciscos quarters. The information was there to be had. But only from a competitor not from the Company Source itself. Simple moral. When the Company Blames the customer, check to see if the customer is buying from a different venter. Know when to hold and when to fold. When a company is sitting on a mountain of cash and doing nothing, thats a stock you dont want to own. And when a Company Blames customers a, always be skeptical, those customers may be giving their business to another player. Now to paul from texas. Id like to take a second to thank you and your staff for all the energy and time to help us home gamers to participate in the market. Thank you im just trying to teach people to be better investors and im doing my best. Thank you for saying that. How could i help. Yes ive been looking at mlps i know you discuss those on your show. Yes. Im trying to find out if you can teach us the additional homework and data to look at before decide chgwhich segment of an mlb to buy. I got to tell you, i have to put together so much information on mlps. I piece it together from all Different Research houses. I use rbn, a terrific oil Analysis Company by rusty brazil who has really helped on those partnerships. For the most part i try to listen to the conference calls. These companies are very trans parent. Thats why i like Kinder Morgan they tell you what you need to know. Tammy in iowa. Hi jim. I love your show. Thank you. However, i am new to the market and dont have any investments right now. I wanted to do some homework how maybe i should start out on some investments. Well you know what. I want you to paper trade. I want you to buy stocks, get the feel for it. Dont put real money out. I want you to feel what it is like to lose money. What you would do if the stock went down. Trade on paper. I even made my traders at my Old Hedge Fund learn by trading on paper first. Then when you get very confident you can use your real money and i bet will you know exactly how many to buy and how much homework to do. Bob to missouri. Hi jim, this is bob from kirkwood, missouri. Okay. I would like to get your opinion on covered call strategies, like, say, you got a stock, or say a stock is one or 1. 2 beta file on the market and go out no three months with 8 to 10 premium which i would be happy with and you collect Premium Options and dividends. A lot of my friends like them. I have always shied away and heres why. Because i dont like to cut off my upside. Same reason i dont like to sell put that can make it so my down side is much bigger than i thought. If i own a stock i own it for Capital Appreciation and income. If i sale a covered call i feel like im missing out on some of the best reasons why i buy a stock to begin with. All right. You got to know when to hold them. When to fold them. Kenny roger couldnt have been more right. Key to know when to buy and when to sale. Ill help you out. Ill dish on the many fact yoofrs that could push a stock higher. Then you drafted an allstar player, should you ever get it the boot. Dont miss my take. Plus ill take your tweets just ahead. Stick with cramer. under loud music this is the place. Their beard salve is made from sustainable tea tree oil and kale. You, my friend, recognize when a trend has reached critical mass. Yes, when others focus on one thing you see whats coming next. You see opportunity. Thats what a type e does. And so it begins. With e trades investing insights center, you can spot trends before they become trendy. E trade. Opportunity is everywhere. A huge part of this business can be boiled down to figuring out where a given stock is headed. Of course that isnt always easy. Sometimes a lot less obvious than other times. Most stocks trade on earnings per share and when earnings head lower so does the stock when it goes higher, the stock rallies too. Figuring out the trajectory of the earnings takes some serious homework. You need to be aware for some industries the earnings are no the the most important metric. You could get clobbered or miss fabulous opportunities. Thats why you need to keep track of the key metric for everything you own by sector. Production growth key when it comes to oil, which is why i favor independent oil. I shy away from exxon. For many tech stocks asp, in these sectors those sectors are more important than anything related to beating earnings. Let me give you a case where repeatedly beat estimates, trumped it but Production Growth disappointed. Not producing new oil. Even though it beat wall street estimates the stock went down because of production shortfalls. The earnings per share number didnt matter. In fact i often wonder if devan reported lower earnings and higher Production Growth i think the stock would have rallied. I know that because chevrons stock advanced because it had superior Production Growth versus its peers. No wonder devan was one of the best in the entire oil patch until they reconfigured its assets it had been misman annualed for years. Another example, i missed the bottom in micron symbol mu back in 2012 why i wasnt paying close to the key metric with this company. When the Company Reported one more terrible earning i thought it will go down again, but it jumped higher. What did i miss . Dynamic access memory chips, and microns bread and butter had a nice bump up it happened because the business had been so horrible so long that Many Companies through their hands up and gave up. So supply had become constrained, a real rarity. So they went on to buy a failing competitor taking out more capacity and geez it tripled from its bottom all because suppose had been taken out and erjt average saling prices increased. One more situation where metric might not seem important with you it matters. When a company is based in United States and all we care about is how three doing in an emerging market, particularly china. Ive made some mistakes one of my best buys was made picking up young brand, parent of kfc and pizza hut, and there was a tainted chicken scandal. Scott went down. Yum is worldwide with locations everywhere but growth isnt in the United States its in china. So when chinese kfc division had a shortfall even though all of the rest of the world was doing well the stock got clocked anyway. Soon afterwards heavy spending promote kfc, now young let it be known that answeringearnings would be slashed to recover that share. No matter you had to buy the stock on that shortfall. Not long after yums Chinese Business began to turn again and the stock headed right back up to its 52week high because kfcs sales growth in china is more important to yums stock than the earnings of the entire chain. Once again though china had another scare and more tainted food was come from kfc and the stock went all the way back down. You see, all that mattered was the problem with kfc in china. The rest of the business was holding in. It didnt matter. For better or worse China Remains in control of the direction of yum. In short as much as we would like to keep it simple and focus on the earnings per share, smiles the metric could allude us if we dont keep our eyes on the ball. Most stocks earnings measure is key. A lot with bottom line numbers, with no Revenue Growth sales. It turned out to be wrong and is still absurd. If you wait for Revenue Growth to kick in miss the greatest move of the lifetime. These moves are wreckless and kept you out of some of the best stocks. Bottom line, the earnings are not always so important. In some sectors, there are key metrics that matters more than earnings and those are the metrics you should watch. For the bulk of the market nothing is more important than good old earnings per share. Much more mad money ahead. Ill tell you how to manage your core stock when it is struggling to put numbers on the board. Plus my twitter account is on fire. All this typing is going to give me carpel tunnel. Al. Tunnel. If theres one lesson ive learned from reviewing all the trades my Childhood Trust has made over the last five years, theres 14 in get rich carefully my recent book but the one i want to leave you with is this when you have a core holding thats a high quality stock with terrific prospects that you want to own for the long haul dont sell at the first gain or first sign of turbulence if you really have conviction in a stock you need to let that stock ride. Let me put it in sports terms. When a Football Team wants to keep the flair no matter what they name him franchise player meaning he cant be traded to another team. I cant tell you how many times i wish i had that designation from when we own a great stock from my Charitable Trust instead we will hold core holding through thick and thin. Instead we dont folignolow through. It can take every fiber of your being to ride against it because you never want to let a gain turn into a loss. When i first penned that gain to loss rule i was talking trading wins not investing gains. If you own a stock and think you can go over the next few years, not months or days then do your best to make it a franchise player or stick a nontrade label on it. You wont regret it as long as the fundamentals stay positive. Of course all bets are off if the business starts to deteriorate. If that is the case you need to sell it or it will be your fault, will you be to blame if you give up those gains. Thats the only case you should rid yourself of a core holding, or leave the money on the table. Once franchise dubbed franchise player stop giving away, and comes down to stock basis, buy more. When we own a stock that i think is materially undervalued versus the underlying enterprise i have to do everything i cannot to take the gain and eliminate it. Sure im always willing to part with some of my position in a stock thats called trading around a core position, but it is vital to keep enough left so it will still be meaningful if the stock continues to advance. What makes me so sure of this rule because we rate stocks every week from one to four and ones are by and large meant to be core positions where we want as many shares as we can getet. As i look over the bulletins over five years it is unnerving to see how many ones we sold because of a shortterm market turbulence only for the stocks to continue to roar ahead without u us after all that darn homework. Core position is what it is, something integral to your portfolio, to your core, should not be so easily dislodged. I knew we could have donated more to charity than the more than 2 Million Dollars weve e been given since i started this bizarre but thoughtful and educational project. Resist the urge to sell your franchise players no matter how tempting it might be. Only pull out if the fundamentals take a nose dive, aside from that let it ride only trimming your position some what to keep it from getting too oversized. All right, we got to get to some of the tweets youve been excepted sending me. So here we go. Name three of your favorite foods. First is beebs buffalo chicago wings, chicken wings and home grown tomatoes and short ribs. And now a another tweet. Who are the best success day traders. We have terrific ones on optionaction. To me the great day trader is someone who uses an option to create a stock that is a highdollar amount and trades around that option by selling common against it and then bringing the common back in. Constantly using that call as an aknewity stream. Annuity stream. I have 100 pages on it its called stock replacement. I pioneered it, and you ought to look at. Next up just want to throw out you rock. Thank you. These are the kind of tweets i need. Not that im insecure but i do get way down by the number of people who blame me for making silly mistakes when they should be thinking about what they do. In the end, but it is just a tv show. Im doing my darned best. Lets take a tweet from bcozzz 51 bcozzz 51 uniform gift to minors come on get it started. Everyone needs to do a uniform gift to minors. Im embarrassed how well we invested, very methodical about it, it now belongs to the kids which makes it a little bit different story. Always put the money away. I always. Test test blue chip. Lets take our next tweet. This tweeter asked me. Best at breed getaplan. I got best of breed in the book getting back to even i have a bunch of best of breed ideas but have to be constantly updated. For things change so fast. I do say, buy and homework, stick with cramer. Jim cramer your one of my heroes. I look forward to your show every week night. Thank you so much for helping investors like me. When you talk about the market i just believe youre spot on. Oh, i love it thank you so much. Every night we watch you. I have learned and earned. Gement. Every day, our teams collaborate around the world to actively uncover, discuss and debate investment opportunities. Which leads to better decisions for our clients. Its a uniquely collaborative approach you wont find anywhere else. Put our global active management expertise to work for you. Mfs. There is no expertise without collaboration. Attention investors vectorvest mobile is here and its free make faster, smarter better trading decisions with vectorvest mobile. The most powerful app or managing your portfolio from the palm of your hand. Only vectorvest mobile analyzes ranks and graphs. Over 16,000 stocks worldwide, everyday,. And gives you clear buy, sell, hold recommendations. On every stock; anytime, anywhere. Vectorvest mobile comes free with your vectorvest trial. Get it now visit vectorvest. Com mobile to get started so, how do you feel about cash back . I would not say im into it. But lets see where this goes. [ buzzer ] do you like to travel . Im all about free travel, babe. Thats what i do. [ buzzer ] balance transfers you up for that . Well unh. Too soon . [ female announcer ] fortunately, theres an easier way, with creditcards. Com. Compare hundreds of cards from every major bank and find the one thats right for you. Creditcards. Com. Its simple. Search, compare, and apply. [ ice rattles ] ttlwhun ]wual4m3qj w . 5 [ x4c8q6hcy 76luu , h tt ff muyi1;huikp 3uzu thanks for letting me teach tonight. Id like to say theres always a bull market someone where and i always try to find it right here on mad money. Im jim cramer see you next time. Score intercepted at the goal line the following is a presentation of nbc sports. Chris welcome to montreal where the fierce senator canadien rival on full boil. P. K. Subban with a vicious slash against mark stone who mr. Play tonight despite a micro fracture in his right wrist and looking