Everything from the look and feel of the show to the research. And we have a head writer who is really our only writer, been the only writer since inception when he was a freshman in high school, cliff mason, my sister and her husbands son, my nephew. Im going to change tonight. I want to talk to you about the show, its evolution and how you can best use it, or worse, misuse it. Theres so much we throw at you that you may not be able to use it as effectively as we would like. I know this, because i talk with enough people that i have a pretty good idea why you come here and what you really want. Since when we started. The show was an outgrowth of a radio show called real money which is where you first heard booyah, by the way, then it was the street, real money. When we started the show, people thirsting for specific ideas. But the stock market changed over time, we got hit with the Great Recession. Stocks were seen as a way to save and make money of we had many Big Companies destroyed by the down turn, mostly because they had lent a lot of money. There was a credit crisis. I am proud of the fact if you watch me you might have avoided a lot of down turn, because i said that the fed was nuts, they i find it a tad ironic while even when the fed acknowledged in its minutes, i was the only guy falling apart, i was the only guy vilified for telling people not to sell. Damned if you to, damned if you dont. That changed me. I added some language at the top of the show meant to describe the new man fess toe, a new reason for being. I say that the show is meant to entertain, to educate and teach of its very important and different from the original show, a total break in a lot of ways. I think its just not enough to give you stock ideas. Weve minimized them over the last decade. We want for you to be able to understand the process and pick them for yourself, or more important we want you to understand the stock market enough for you to make a judgment whether you can do it now me, i love individual stocks, have for years and years and years. I think they can be tremendous vehicles that can lead to great wealth. Our shows on stocks like apple, pepsico and bristolmyers, we have tried to give you themes that allow you to invest in more fertile sectors versus others, themes that i hope i can make come alive with analogy, sports, movies, whatever, so you can do the homework on them, things like post the Great Recession or living longer through Healthy Eating habits. Ive written many books over time. I know the confessions of the street addict is a favorite. But this is the shows new companion. If youre having trouble, get im cognizant that the market is hard. Youve got time burdens, youve got demands. I am not just okay with index funds. I insist that you use them. I would not own a single stock until i put at least 10,000 away in an index fund through your ira or 401 k . I have not warned you of individual sto i would prefer you invest in index funds versus mutual funds. Now there are always individual cases where individual managers do acquit themselves, but managers move and records can change and past performance is no guarantee, all that. Which brings me to point number one of this show, i am not a shill or Snake Oil Salesman for individual stocks. Class of stocks as a way to save money for retirement, vacations, education, whatever your heart desires. I try mightily to convince you that it is worth it to do so. Because stocks have indeed created so much wealth over time. If you dont believe me, read Warren Buffetts report. Why do they work . They represent the sum progress of business going forward. They represent the wealth the companies create in aggregate and the sharing of that wealth is shareholders. You get to be along for the ride, and i want you to be along for the ride in a responsible way. Im partial to the s p 500, but i also like a fund that gives you a total return and offering that is found among various fund houses. Once again, for those who dont the show has changed over time from where we pick stocks for you to where we educate you about stocks where you understand why an index fund might be worth investing. After we have professed such undying love for index funds as the first way to go. Larry . Caller i want to tell you how much your nightly focus lessons remind me of roosevelts fireside chats. Well, president roosevelt was a great man. Thank you. Sometimes my mom says just say thank you. Caller when does an investment turn into a trade . We dont accumulate too many stocks to have to monitor. At what position do we unload a control. I like to take off now my rules have evolved. When youre up 50 , you take off 25, and when youre up 100 , you take off, yes, all of your initial investment, then you play with the houses moan got a good gain. Investment into trade, we dont do that. If somethings an investment and its labeled investment, it is an investment. If you didnt get enough in, you can kick that out for a trade. An investment becomes a trade when you dont get the whole investment in. Greg . Caller ive got a quick question, me and my friends are young investors. Do you think its worth taking and you dont have enough money to put more money on the line and try to seek the higher profits . Listen to me, greg. Yeah. I didnt start with much money. But i took big risks, because i had my whole life ahead of me. Youve got your whole life ahead. You buy some stocks and they go down big, youve got that paycheck coming. Its only older people who are further down the line who dont have enough paychecks left, you take that big risk. Thats what i wa chris . Caller yes, jim, thank you for taking my question and thank you very much for all the great advice youve given me. Every position in my portfolio is captain cramer approved and doing very nicely. How can i help . Caller i have an ira equity portfolio that i dont plan to draw on for about five more my question is about dividends. Does it matter whether you reinvest those dividends back into the stock that generated them or just reinvest them in the fund in general . Anytime you can reinvest dividend, reinvest dividend. The power of compounding, one of the greatest single things that can happen to your money is to compound dividends. Okay, teach a man to fish, your fish evolves. To make you better no matter what you invest in, im in your corner. Plenty of mad money ahead, including how to plug in to one of the markets biggest sources of wealth over the last few decades. Plus, it can be a huge way to win but also a massive catastrophe if youre not careful. Mad money will be back after the break. Dont miss a second of mad money. Tweet cramer mad tweets. Send jim an email at cnbc. Com. Or give us a call at 1800743cnbc. Miss something . Head to madmoney. Cnbc. Com. Whats better than mad money . How about more mad money . Follow mad money on facebook, twitter and instagram to go one on one with cramer. Have in ah, i always tell people youve got to start with an index fund, because i need you to be diversified. Get more with guests. And go behind the scenes with the most interactive show on television. If you cant explain in three bullets why youre buying a certain stock, dont buy weve started the show explaning why we teach what we teach and why you want to own index funds to capture the profits and opportunities to stocks in aggregate. For those of you who come away from the show who say we tout index stocks every night and think individual stocks are a why do we even bother to do the show other than i like to be compensated for doing something if i like index funds that much . You know what . Its a terrific question actually. Surely i could have retired by now. I was a hedge fund manager. Had one of the largest returns after 24 . I will come back to that number, so hold onto it. But i mention it now, because i am lucky enough to be able to do what i want to do at this stage in my life. Every now and then im tempted to thinking maybe i should go back to be being a hedge fund manager, but my late father thought i was much happier doing what i am doing now, and he thought it would be a mistake going back to that old life because he thought it was too hard, plus he thought the show was terrific and was my biggest backer in what i was trying to so why do i ever talk about individual stocks then . Someone must want the information or we wouldnt have lasted as long as we have. In the end, this is a commercial product. And the market would have deemed its worth something. This is history. National video, american agronomics. St technologies, Standard Press steel, giant foods, heinz, gantis. Remember index funds are preferable for the vast majority of you. I know youre going to want to buy individual stocks anyway or you wouldnt be watching mad money, which brings me to six stocks. National video. And that brokers name was jack. Met jack once. My father worked at gimbles, selling slacks, gabardines. And then he sold boxes and bags, gift boxes to retailers. Those who have heard my fathers eulogy delivered the day after he died, november of 2014 know that my dad had a really hard business life. He and his brother started the National Gift wrap and box company to supply merchants with everything they needed to box, wrap and bag whatever they sold to their customers. Well, he never had much competition. His customers were always going under and he was on the road quite a bit trying to find the new ones. I remember endless days of discouragement. Those were the day when is my mom would tell me, go to your room before pop got home. He had a hard day. It was tougher to save. He had money in a banking account and savings and loan, but it didnt pay much interest, and i know he was always deathly afraid he couldnt pay the bills. So one day pop said he knew what he was going to do. He was going to buy the stock of National Video, because pops brother had heard from jack, the guy with the good backhand who was a broker, that it was the next big thing, the stock of the millennium. At first stock went up dramatically, and pop was elated and he bought more and more of it because it was going higher. In fact, that was really about all pop knew about National Video. He either found out how it was doing by reading the five star evening bulletin which came out at the close of the market, or prices on the station he put on. And hed cheer, hed encourage me to follow it. Ive told you in the past how i kept a journal of stocks that i followed in the fourth grade. I didnt know more beyond what pop knew about National Video, but i wasnt playing with real money, he was. Sure enough, after pop had put a sizable amount of his life savings in, it started going down. Pop didnt know what to do, so brother who checked in with jack who told pop that all was well and he should keep buying National Video, which he did. All i can say is im glad for two things. One is that pop never borrowed money to buy National Video, and two, stocks blessedly stopped at zero on the way down. Pop lost everything. Everything. We didnt take much vacations and we sure didnt stay at the ritzcarlton or four seasons made with crackers. There was an important take away that suffuses the very fundamental of this show. People are going to be tempted to own individual stocks. One of the precepts is to know how to invest in individual stock if youre going to do so. Think of the mistakes my dad made with National Video. First he didnt know anything about it. So he had no idea how the company was doing, how risky it was, how it could go down as well as up and how it could go under of he relied on a stockbroker friend of his brother. He had done no work on it at all. So he was at the mercy of the movement of the stock and only knew to buy rather than cut his losses. Thats right, he had a tip. He bought the tip up and down substantial chunk of his life savings. So let me give you the bottom line of here are the many take aways. Tips, as i like to say, are for waiters. Two, you must do homework if youre going to own individual stocks. Three, if you cant do homework, own an index fund, and four, if you fear losing money, dont own stocks at all. I still dont know what National Video does. I can google it, but thats for another chapter in tonights story. After the break, ill try to make you more money. Cr you are super. You are awesome of. Im a firsttime investor. Youve inspired my. Marco. polo marco. polo marco. polo marco. polo marco. s . . Polo marco. polo scusa . Ma io sono marco polo, ma. Marco. surprising. Ragazzini, io sono marco polo. S . , sono qui. Whats not surprising . How much money amanda and keith saved by switching to geico. Ahhh. Polo. Marco. polo fifteen minutes could save you fifteen percent or more. Polo these days. You are buying finish these days. I got a new dishwasher and they recommend finish. Really . You should try it. Unlike cascade gel, finish has active cleaning enzymes. Its unique powerball takes on anything. Choose finish. Anything meant to stand a body without proper foot support can mean pain. The dr. Scholls kiosk maps your feet back, knee or foot pain from being on your feet. Find your nearest kiosk at drscholls. Com. Also available from dr. Scholls heavy duty support for lower back pain, lightens the impact of every step. Welcome back to a real this show is about, and why i do it to begin with. First, we covered that i dont even want to buy an individual stock if you own a diversified index fund and own enough to make it so its always the biggest part of your savings, never stocks. We dont call the show mad money for nothing. Were using mad money only to buy stocks. Learning how not to invest, owning National Video through a tip through a brother, and then ridit the way down. That wouldnt happen with an index fund, but we respect the right everyone has to try to invest in individual stocks. Even as we recognize that my father, had he diversified would have had a lot more to show for it. Which brings me to the second stock lesson, american agronomics. Initially, when i got out of reporter, i made about 153 a week. Then homicide in l. A. I didnt make much money there, but i knew enough to open an ira. My dad told me to do it. So whatever i had automatically went to the fidelity magellan fund, but i was determined to try to augment that mutual fund by buying individual stocks. The right way by researching the stocks, getting eds through the research, not through the brother or the broker. Where was i going to get that edge . I figured start reading the periodicals. And because of a kind sister who let me crash in her apartment in the village, i was able to save some money. In fact, i saved more than 200 beyond my contributions to my the stock of american agronomics. Why . Because i read an article that said that this orange grower was doing incredibly well, and id be on the ground floor if i bought it. So i picked up 10 shares of this 9 stock. I was in on the ground floor, i was in on the cheap linoleum ground floor that i ended up sipping that cutty sark on. I should have given up right there. I just changed my m. O. What i did give up on was buying stock on a wellresearched article and letting it ride. It didnt hit me about a better way to do it until i got a call from an old friend of mine, a high school friend, which said that a local steel mill, sps at that point, was hiring. For extra money and that i might want another job. Those calls in the middle of a recession for a job, they can be like gold. I said nah, i was happy where i was, but i decided why not look into sps and see how it was doing as a company, as a stock. So i went to the midtown library in new york where they had the periodicals and read up on everything that was sps which then changed to sp technologies. Everything at that library, wall Street Research, you name it. And heres what i discovered. It first, there wasnt much known or written about sps, and second, what was written was pretty down negative. My first thought was to say ah well, its not doing that well, bummer. Hold it, my information is the most current possible. I got a guy telling me they cant handle the business they have, and they need to add additional shifts of unskilled labor like me. And the periodicals all read in other words, i had insight nobody else had. Everybody pretty much knows everything at once. Interpretations of news and events can augment those edges. I took everything i had, everything, everything i had saved and i made a ton of money as the sps story unfolded. Enough money that i decided to look around the office for more areas where i had an edge. It was pretty clear that the hot field for m a was all about oil and gas. I thought, geez, why dont i find one that hasnt been gobbled up. Back to that library. I found a Company Called natomis. We were talking about 300 and bought that stock. I dont think i had to wait very long before i caught another takeover bid. At that point i was hooked. It changed everything for me, i put money in my mutual fund, but anything left went into individual stock. I know there are people out there who will say none of this is possible today, first, the research that is so scanty back then is available on the web. Would you have known that sps was hiring, doing well. Make it so its hard to get any kind of edge because companies have to give full disclosure. Some would say you cant possibly gain stocks at all, and you might as well buy an index fund, you know im not against that. I was investing in individual stocks right alongside a much bigger percentage of my savings. You can pick stocks that might be doing much better than the average stock and can augment your savings. On the company. Heres the bottom line. Remember american agronomics and sps, if you only know what one person says in the media, me or the writer of forbes. Im telling you, thats not good enough. Its a start, better to have genuine insight others might not have, especially if its against the grain of the consensus, it is in the end about the odds, and any hard work you can do to increase your odds will make it more likely than not that you will succeed as an individual should be the reason you watch this show. Joe in new york. Joe. Caller this is joe from kings park, new york. Thank you for taking myle call. Of course. Caller thank you for sharing your wisdom with your viewers. I got a great staff that helps me. Thank you. Caller if i want to diversify and add three or four diversifying i would only buy two or three shares of each company or would it be better to buy ten shares of one of them, what is the least amount you would invest . Ive done ten shares, ive done two or three times at various times. But i do favor index fund for your First Investments and only after youve maxed out on index funds would