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tv   Mad Money  CNBC  October 2, 2015 6:00pm-7:01pm EDT

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box." you have don't want to miss that. and it looks like our time has expired. i'm melissa lee. check out the website, "options action" at cnbc.com. see my mission is simple. to make you money. i'm here to level the playing field for all investors. there's always a bull market somewhere and i promise to help you find it. "mad money" starts now. hey, i'm cramer. welcome to "mad money." welcome to cramerica. other people want to make friends. i'm just trying to save you money. my job isn't just to entertain you but to educate you and coach and teach you. call me at 1-800-743-cnbc. or tweet me @jimcramer. get ready to set your alarm clock for 2:45 a.m. to get up with me. that's because earnings season
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starts next week. despite the propensity of everyone to believe that the only thing that matters is the fed, i have news for you. next week is earnings week and sales and earnings are individual companies are a lot more important than you think during this one period. yes. isolation give a number here, strong nike report, good home depot quarter. it can move a stock. they may not get in this market any pin action though. but 12 weeks a year the three weeks each quarter that i regard as official earnings seasons they can matter to the entire market. i want you to consider them the playoffs and all the rest are just regular season games. i have to give the macro data its due. just like the employment report. so on monday we get the nonmanufacturing number. this is the lone number left that i think is still strong. i say that to all the fed people who want rate hikes so badly. this is it.
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only one. so you better get this right. we're a service economy, if we see that slow down, but the fed will be nuts to raise. that doesn't bother them. you know my view. the fed has to fish or cut bait. either raise rates this month or shut up about them next year. anything else is torture. stop torturing us. that's a one companies that's the biggest disappointments out there and maybe the container store will pull a ran bit out of the hat. it comes under the category of going so low that maybe, maybe itsy teeny something is positive. stocks do bottom if they beat even all already slashed estimates so why don't we use the container store as a metaphor a model of what can happen if numbers are better than anything already cut. that's the continued theme during the earnings season.
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i'm excited about tuesday. first pepsico reports. this is a miraculous time for this company. even as its stock has done nothing. maybe that can change when we see how well the company doing in the amazingly low cost commodity environment. when you make all the right moves as they have under the ceo, it's been the best organic grower in the group. eventually something good will happen. maybe it will be tuesday. then we hear from yum! brands. here's another company that's doing well. but if stock has suffered from activist fatigue where the owners, bedraggled shareholders are worried about their franchises and keep selling for not anything to do with the company. just has to do with their own internal money management problems. yum! stock will be a bargain, why? as much as we denigrate china, the chinese consumer is still spending. we have heard from apple, nike,
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so isn't it time for kfc to get the mojo back? either way the stock is cheap. i would buy it if it gets hammered today, i would buy it for the earnings on tuesday. you know what might be the best thing that happens tuesday? analyst meeting for adobe which is successfully navigated the waters to become a subscription company like red hat or salesforce.com. i want to own it ahead of the meeting because i think the story is going to be terrific and we reported that monster good quarter. we have some macro news out of germany this time. the industrial production number. we're at a a point that europe's economy rebounds. if we don't get it we're stuck with that dollar that will keep going higher and higher and that's plain bad for all of the internationally oriented companies. i'm paying especially close attention to this number and to the trade bounce figures that comp out on thursday. 70% of the business is related to cars and the exporting and the world's largest auto company, volkswagen, has i don't know, what would you call it? a problem. all right.
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wednesday we get results from one of i many absolute favorite companies with a stock nothing short of miraculous. that's constellation brands. they have a hammer lock on the two major brands of beer, what dell low and corona. and i can tell you from my other hat, as the owner where i proudly hosted a fund-raiser for the navy s.e.a.l.s on sunday, this is pure gold. constellation had an amazing year. the last time it reported the stock got hit bad, right after it reported. e, is though it was -- even though it was a beautiful quarter. i wandered the wilderness before igniting again. i think we have to bet this is going do the same thing. don't buy it ahead of time. what we'll do, the -- well, small if you want to it. here's one that's down on the luck. monsanto. i keep hearing there will be
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more number cuts from the company because it's linked to the price of grapes write is going down. r riyal is called a currency. is this where the anti-gmo people have hurt critical mass and hurt the stock? you know they'll say there's a genetically modified rebellion going on. i don't know if it's this quarter or this year but the stock is off very big already. and you know what? if it goes up at all, if it shows any strength i would exit skeedaddy. thursday, domino's. when i talked to managers about the stock, money money manager never find anyone who loves their pizza. i love their pizza. domino's under ceo patty doyle has been nothing short of a nightmare for anyone who bets against them. it's a technology stock and pizza drag. that's been the secret behind the fabulous growth. they're a remarkable worldwide
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franchise. the one in mexico is dynamite. this stock like constellation brands have sold off after good numbers almost every time. i suggest you wait until after the quarter if you want to own it. i think you should. doyle as i say in "get rich carefully" is bankable. after the close, thursday comes oh, boy. here's controversy. alcoa. by the way the bonds were updated this week. i think that alcoa is not getting its due for the amazing breakup into the two companies. a higher value added products play and a low cost commodity maker. this is what people have been waiting for. and i think that the two pieces are going to produce terrific returns maybe even both of them will go up. although obviously i like the value added business more. that's one point at the downside of alcoa and four points up. i caution, you may get that point down first. finally, friday is a white day. but we'll get a shareholder meeting. one of the most disappointing stocks this whole year, the 3-d printer company. i wanted to put this in front of you because 3-d was a craze, a
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cult. people used to show me how 3-d printing worked and it ended with a bang. that is exactly what can happen when cold stocks -- check your portfolio, hit the wall. it's what this market has become. for so many high fliers. so here's the bottom line. brace yourself, we are plunging into the earnings playoff. they will matter. they always do. patrick in texas. patrick! >> caller: hey, jim, how you doing? >> good. >> caller: i'm long alibaba, where do you see it? >> i see you to pick up something, i'm not a fan of alibaba. when they go higher, sell sell sell sell. let's go to ken in new york. ken? >> caller: thank you for taking
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my call. i'm in the house of pain with t.h. >> oh, boy. >> caller: i had it for a long time, in the retirement account. i don't need to need it for at least five years but the recent losses have been substantial. should i stay in or cut -- >> you know, these stocks that are -- that have been down around 25% i can't tell you to sell them. i can't. it's an international industrial company, those are the worst things to own right now. being lumped in with caterpillar. i think it's doing a lot of things right. i can't tell you to sell it. but i can't tell you to buy it. no-man's-land. eric in new york, eric? >> caller: hey, jim. big booyah to you. >> thank you. >> caller: i wanted to thank you for taking my call. and also for all of the years of great investing advice. >> appreciate it. >> caller: more specifically, i was wondering how you felt about the bank of america stock and the overall big bank stock -- >> okay. i'm glad you asked.
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here's the story with bank of america and wells fargo, huge problems for action alerts.com. that's my charitable trust. we send out bulletins. these are two companies uniquely levered to the feds raising rates. you need something in your portfolio that works when the fed starts raising rates. i think the bank of america is going to work better than any other bank. is it the the best in america? no. will it do the best if the fed raises rates? i actually think yes. >> announcer: don't miss a second of "mad money." follow @jimcramer on twitter. have a question? tweet cramer, #madtweets. send jim an e-mail to madmoney@cnbc.com or give us a call at 1-800-743-cnbc. miss something? head to madmoney.cnbc.com.
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tonight i'm letting you on something real big. the method of my madness. come on, i know this is the craziest and most random thing not only on tv but in business in general. think about it, a show about business? i know you won't find investing advice this good anywhere else. you know that too or you wouldn't be watching. unless you tune in to see if tonight is the night that i actually do the walk around. which after multiple years of airing there's a possibility of that any given night. sorry. there's a tape delay. keep wishing. i do my best so it doesn't. this show is about the method or methods to break from strictly quoting the bard to my madness.
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how do i pick the stocks? what gets on the show? why do i tell you some stocks are worth buying you or on the dip or instead of hey, how about tomorrow? tonight i'll give you pieces of the answer. one of the easiest ways i identify potential cramer names the stocks that can't or won't necessarily end up on the show, is by watching my favorite list from when i was frankly a little boy. in fifth grade. i used to look at the new high list. i thought it was like the guys who were hitting better than .300 in baseball. stocks on that list, the highest of the high, obviously have something going for them. that's 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. what does it tell you? it's either part of a genuine bull market or there's sales momentum or maybe its sector does which is so often
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responsible for stock's increase. many stocks on the new high list keep going higher because it's really a list of a-students that are worth investing in. they tend to repeat themselves every quarter. just like the smart kids in school. in a great bull market from the bottom of 2009, and any market by the way that doubles from the bottom has to be considered a great bull market. even as i know many resist such labels. we saw the new high list over and over again. the same stock that hit new high after new high and following them was a great way to make money even as the bears claim endlessly that the bull market was false and couldn't be trusted. listening to the bears caused you to miss out on the greatest rallies in history. obviously the rally is more like the exception than the rule over time. all the years i followed the, what. by generally speaking things have worked well, will continue to work. because these stocks typically represent companies that are best of breed. always remember that phrase because it's integral to "mad money."
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i am not saying that just so you can chase stock that are hitting the new highs because they'll keep going higher. that would be the ultimate foolishness. i'm saying that if you want to i'd if i stocks that are winners in the future unless there's a big sea change in the market caused by a gigantic political shift or shift in the interest rates looking at the biggest winners of the present is a good place to figure out the future. let this list do it for you. it's already been scrutinized and scrubbed. that's the thing about the market. not always that hard to play once you understand that there's often more continuity than change. things pretty much go -- keep going the way they're going. until something major shifts. and then you do have to alter course. those course changes can be pretty radical though. that's why you have to be reevaluating your ideas and should never dig in your ideas when the facts change. something we emphasize over and over. and all of my books that i have
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written save my autobiography. settling scores with myself of course. hey, it isn't can called "mad money" for nothing. you know what? when you're looking for stocks to invest in, when hunting for the bull market like i do here, looking at the any high list is a terrific way to begin. i am many things a lot of them negative. but laziness and irresponsible, i don't know. anyone who sees my insane tweets at 5:04 yes, that's me tweeting. is that someone else getweeting for you, who else would tweet that early? and then do you ever sleep? well, no. i apply the same rigors to this show as in the hedge funds. i'll talk about the special
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circumstances later on the show. wait for the fabled pull back from the new high list because that is the best place to put money. the pull back and there i'm thinking of something that could be 2 or 3 or 5%, it gives you a good entry on the list. remember, i'm not telling you to chase momentum. you should be conscious of price and therefore try to buy on weakness. like you want to sell into strength. most can't pull the tricker when the stock -- trigger when stock is going down. i'm throwing these caveats in though because i don't want you to look at the new high list as the shopping list. big mistake. it's a jumping off point. albeit an important one for those trying to get started. pouring over the new high list is fabulous way to identify potential, i stress that word, potential stocks to buy. you'll only buy if you are confident they'll make a comeback, having nothing to do with the market. do the same homework. it's not -- you don't get a pass
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there. you absolutely must have conviction even if it's a cynical conviction that the stock is going higher. i do that for the ipo's where i'm saying that the buyers go crazy about it. i accept they're pieces of paper. you know the big boys can't resist growth stocks and will come to the support on down days. the biggest caveat of all when shopping for stocks that pull back from the new highs, make sure they haven't pulled back for a reason. don't go buying a home builder that's down if interest rates flew up because they could initially get hurt for the quarter. by the way, don't buy a big independent oil stock when oil goes down for three straight days because that doesn't belong on the new high list anymore. you're looking for a stock that has bristol-myers like strength. be certain you're dealing with a damaged stock and not a troubled company going down down down. how do you tell the difference? if the fundamentals haven't changed, the stock probability
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hasn't fall -- probably hasn't fallen from grace. now more than ever, thanks to the fact that stocks are traded by commodities, causing huge sell-offs that make no sense of anything or double and triple the related etfs that are more powerful than the stock themselves you see the good companies pull back from the highs for nothing that happened to do at the company. nothing to do with the company or the strength of the underlying businesses. those are the buys. >> buy buy buy! >> but if the picture changes, then that stock is no longer a candidate. >> sell sell sell. >> the story has to be intact or this method will let you down. while it isn't a hard and fast rule, i tend to like stocks that pull back, just enough, but not too much. all right? i have to tell you, 8% is the historical optimal level that i made a lot of money in. less than that you're early for some of them. more than that, maybe something
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is indeed wrong with the stock. you don't know. 3, 5, 8, those are all important level. 8%, i made a killing. bottom line, that's the first method of cramer's madness watch for the stocks that pull back from the high list. some of the best picks have come out of this process. it's my getting to workshoping list. hopefully some of yours can too. why don't we start with arzella in ohio. >> caller: hi, jim, booyah to you. >> booyah right back. >> caller: i'm trying to get a better insight on mutual funds and i'd like to know are they a good way to diversify? >>io you know what, here's the problem. a lot of people have 401(k)s an you have to have mutual funds and you can't pick individual stocks and for that they are. i'm older, 50% growth, the rest will be a balanced situation, maybe a fund that has some
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bonds. you have to depend on your outlook and age and yes, the mutual funds are good. stewart in georgia? >> caller: what's the best time to use stop orders after purchasing a position? >> we don't do that. we have to pay attention to it, and if we're not going to trade we'll invest. we don't need stop orders because what could happen? the market could be down 10% in a down day. we invest on "mad money." we aer not trade -- we're not traders we invest. there's a method to the madness. the first method look for stocks that pull back from new highs especially because of a broader market sell-off having nothing to do with the individual stock. that you want to pull the triggeren o. stay with cramer. mr. cramer, absolutely love the show. >> we really appreciate you out there, man. >> booyah to my kids, in elementary school learning so much from you.
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>> booyah, mr. cramer. >> i know you hear this all the time, jim, but thank you thank you thank you so much. >> this has been my best year by far and away in the market. >> i want to thank you for looking out for the regular guys out there. >> i am trying to teach people to be better investors and i'm doing my darn best. that's the goal here. >> great to hear your voice and know that you're here for us. (vo) me? i don't just wait for a moment. i watch for the perfect moment. the one nobody else sees.
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welcome back to tonight's methods to madness special. where i'm revealing some of the best tricks for buying and selling stocks, truly timeless investing wisdom for the ages i hope. next up, how do you find stocks 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 the stock that's been a proven winner. you don't want to buy names because you're paying too much for them. usually get a better deal if you're patient and wait for a weakness. given how volatile the market has become, there are few occasions when buying off the new high list or that close to it is justified. but sometimes the stock is so hot, you have to buy it whenever you can. as soon as you can. because it may not be going lower any time soon. you won't find these often, but you have to remember not to buy all at once if you want to buy 100 shares of stock, you think it's got so much mojo that it won't get a pull back from the
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high. then go ahead and buy 25 shares. it goes higher, you don't get to buy more and you grab a quick profit and find another stock. believe me, that's always another -- there's always another stock to find. now i have an exception where it's okay to buy a stock right around its high. if you see insiders buying the stock when stocks are up a lot already i'm giving you a total buy buy buy green light. now it's a rare thing to see it happen, but in my experience it's rare still that this method of picking stock, doesn't work out. see, i love it when insiders buy after a decent run. because that's a great sign of confidence they think the run is just beginning or there's a big runway ahead and they're sure that it's long lasting. you can't flip a stock immediately if you're an insider buyer. you have to wait six months. the government takes away the gains otherwise, it's the law. so they're seeing things that won't disappear in six months time. normally insider buying is meaningless to a small but on
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its own insufficient reason to buy a stock. i don't care if you catch the insiders buying their stock, they want to give the impression of confidence. and insiders aren't stupid. they know if they're seen buying their open stocks even small amounts the market will smile on them. they play system, and that's fair. but that means we ignore most tiny insider buying because it can be flim-flam. we used to call it painting the tape. makes it look better than it is. that said, when you get truly colossal insider buying even not at the high, take another look at the stock in question. when the insiders buy a whole lot of stock, it's really the volume of the insider buying that declares the sincerity. but we are focused on one sort of insider buying, stocks that aren't being perceived as cheap. there's nothing more arrogant or telling than when an insider backs up the truck for his own
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stock when it's rolling along at a good clip. yeah, we know we rock. our stock has been en fuego and we're not waiting for a pull back, no we're buying right here. arrogant sure, but this is bankable hubris. the corporate insiders aren't fools, with an exception. let's assume they're buying they do know something. not everyone deserves the benefit of the doubt in this business. and after the market melt down in 2008 i know a lot of people think that all ceos and executives for that matter are a bunch of crooks. frauds. >> boo! >> and especially those who got burned owning the fannie mae or the lehman brothers. healthy skepticism is one thing, but a totally unwillingness to believe in something totally positive is something else entirely. you need to extend a measure of
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trust to the people who run the companies of tshares you own. we have seen it in airlines and entertainment, perhaps they're buying stock and they hear the foot stops. maybe they have been contacted by another company, spurned overtures happen all the time. it could be a healthy and honest reason to buy. they have to disclose a serious bid, but a lot of times they get a phone call, say no, buy. then they do that because the company is worth more than they thought. maybe they think the company could be broken up. like the old tyco, fortune brands. main you see the building value and they want in on it themselves. they don't think the run is over because they recognize how much better the company will be when it is divvied up. for us buying after a big run is reckless and lazy. most investors are smart enough to wait for a pull back. insider trading tells me they
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don't think there will be a pull back and there's nothing more bullish than that. sure it went away for a pull back after they bought, but that's the best of all possible worlds. you don't get that scenario. bottom line, one more method of the madness. when you see a solid run, well, you want to be buying to. bob in new york. >> caller: jim, a steeler booyah to you. >> steelers from new york, why not? what's up? >> caller: jim, i have a question about interest rates. when the fed raises interest rates, good companies with attractive dividend yields and growth prospects suddenly go out of favor. can you add some clarity to why? >> well, because people extrapolate there, bob. once they see rates start to go up they figure they'll go up for a while. if they want a case to get out of, a stock yield and going into what's a certainty. which is a bond yield. so it's all relative basis.
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rick in california, rick. >> caller: booyah, jim. >> booyah, rick. >> caller: how do i add to position if my stock hasn't gone down to the average list price? >> you can't. i would say the vast majority, not just the majority, but the vast majority of times we pay up above our basis. well i have to tell you -- sell sell sell sell. you've got the picture. here's another med this of the madness when you see insider buying of a stock with a big run, think i might want to be buying too. after the break, i'll make you more money. cramer! you are super. you are awesome. >> i'm a first time investor. >> thank you for inspiring me to get into the game. >> your show is the best. >> i want you to know that you have transformed me. thank you, cramer.
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i know the rap on me. at least among my critics. it's that i'm all about trading. buy buy buy, sell sell sell. that i don't have any advice worthwhile for regular investors. that's untrue. this show has adjusted over time. it's morphed so to speak. it's about longer term investing
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and not trading. if you watched it in the last five years know that. trading arounded the core position is one of the most useful disciplines out there. many people have asked me on twitter about that. there are periodic swoons after the bottom in 2009. it does help to trade around. what's it mean to trade around in the core position? let's go through it step by step. first you need a stock. you have an opinion on, one that you really want to buy as it goes down. finding a stock that you believe will be going higher over the long term is what matters even as you accept the fact that it could go down in the near term. what you're really looking for the a great company with a stock that could get tossed around by market volatility. buying into increments because we know that buying all at once is arrogance and that's not going to be allowed in "mad
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money." why don't we use google as an example because i like that stock very much. although only over the long term will i tell you that i like it because it's volatile short term. and given to quick pit falls and declines. let's say you want to own a hundred shares of google over time. buy 25 shares four times over a per idea of weeks or even months. that would be your core position as an investor. let's say you want to trade. i know many of you want to, but you feel discouraged because you remember all that amateur day traders, remember they got blown out when the tech bubble burst. key word is amateur. you home gamers can make money if you do it right, like a professional. in the old day when commissions was higher that wasn't true. it wasn't worthwhile to trade, but that hasn't been the case for ages. let's come back to the core long term position strategy. we own 100 shares of google and open it long term. every time the stock jumps 25
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points or 5% if you want to trade around position to preserve capital, you might want to sell 25. you shave a little off to bring in profits. you would own 75 shares, you keep scaling out the same way. always i love the stock, i like to keep that last 25 shares. then wait until something happens to knock it down to where you bought it, as long as the news isn't specific to google. thereby damaging google's prospects. shouldn't be unreasonable, we're in a war where stocks can get crushed that has nothing to do with the fundamentals. you buy it back in increments. let's keep using increments of 25 to buy it back. if google comes back from let's say to 500 from 575, buy 25 shares. that is if you sold at 50, not just 25 on the way up. you could take your winnings and help buy 25 more if it keeps going lower and you have 25 before the swoon. this might appear to be small potatoes up 5% to buy 25 shares
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and over time your profits can add up. you don't have to do anything. you don't have to do anything. hold it. that's fine with me. people the about trading around the core position, that's what it is. trading is incredibly exciting and if you're good at trading around a core position it's right to be bored. there's nothing exciting about the plan i laid out. watch the stock move, trimming up or adding to your position. the trading is reckless and irresponsible, trading around a core position is the height of prudent portfolio adjustment. exciting, save it. of course the whole trading around the core position works with stocks at lower prices where you can have more room to buy. it can work with google with the $500 stock. again, if you own a stock and you like it, you don't need to do anything. this is in response to many questions on twitter and in my career. about how i used to trade when i was at my hedge fund. trading around the core. obviously you can scale the
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numbers but avoid putting yourself in a spot where you have too much on the table in case the stock gets swatted down or too little to take advantage of any upside that comes your way. trading around the core position is an important basic trading strategy that you can use even those of you who find the notion of trading as opposed to investing to be abhorrent. if you want to go to the next level, two chapters in getting back to even in the old hedge fund, i used to think before options action that some of the material was too sophisticated for tv. i no longer think that and you have to be willing to put in extra homework. it's more than worth the effort, the stock i used to demonstrated it happens to be google you can see how the stock replacement works better with options. than with the common stock. it's kind of like a cheaper and less risky way to what i call creating a google at a more reasonable dollar amount price
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than it currently sells at. this is hard, but i'm reacting to the request i get all the time @jimcramer on twitter. we can't use options on options action.com. if you don't understand options at all, let alone the strategies i lay out in "getting back to even" what i taught people who went to work at the hedge fund, i have what an option is. bottom line. now you know the basics of how to trade around a core position. yet another method to my madness, you can generate lots of small gains, don't need to do it, but know you know how. stay with cramer.
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i have one more trick to teach you tonight. one more method to my madness and this time i want to talk selling. sell sell sell. which along with when you buy, what price you buy may be the most important and the most undervalued tool in your arsenal. how do you know when to sell a hot stock, how do you get out when the party ends so you don't get stuck cleaning up the mess? this is a question that needs to be answered because there's a lot of money to be made with owning hot stocks with lots of momentum. you have to know when it's time to leave the table. there are always naysayers. and eventually, the naysayers are almost always proven right virtually all hot stocks implode except for ones that over time develop into multiple business streams. this topping process happened big in recent years with stocks
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as diverse as chipotle or the cloud, e commerce, smaller biotech stocks kept blowing up. but occurs later rather than soon and the negative talking heads who kept you out of the stock disguised as prudence cost you a great opportunity to make money. people shy away from stocks because they don't know where they're going to top out. that's understandable. i'd be afraid to buy them too if i didn't have a discipline that let me know when to get out. lucky for you i do have one and you're about to learn it. first, when i'm talking about hot stocks i mean, hot speculative stocks. usually these stocks begin with little research coverage from the major wall street brokerage houses. they can go up for a long time, can catch fire and stay on fire for years without sponsorship. the key to figure out when interest has peaked and time to sell is by watching the analyst coverage being rolled out. you have to use your open judgment here, but a good rule of thumb is once they get discover and then has half a dozen analysts six analysts covering it. then the run will begin to peter
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out not get stronger because it's too big and too well known to continue to go up the way it has. it's the rare stock that doesn't behave this way. you can find out how many guys own a stock by looking at it on the internet. it isn't hard to find out. it was at one time, but not anymore. as far as i can tell, it works because the number of analysts on a stock is a good gauge of how much awareness there is in a name. names don't get hot, followed and pushed by everybody. they get discovered by everybody. hot stocks get tapped out when there's nobody left to be attracted to them. when all the people who are interested in buying them have been bought. they came out of nowhere, attracting more and more attention and backers and eventually everyone who wants a piece of the stock has a piece of it. when that happens the run is over, people, then you must ring the register and go home. let me give you a great example. hanson natural. it was one of the hottest stocks in 2004 and in 2005.
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hottest stock for first half of 2006. hanson went to $18 and change to $200 when it peaked in july of 2006. the whole way up, people were telling you that hanson a beverage company that got its momentum from the monster energy drink was a fad, had to dry up, had to crash. well, it did do that. but as often as is the case it took years for the momentum to run out. not days, not months, not weeks. years, i called the top at hanson back then because i know how the stocks work. it peaked in july of 2006 and the company did a five for one split. even though the splits aren't supposed to do anything this encouraged people who had been in hanson to take something off the table. sell one or two shares but there was another reason i believed it would peak and that was it picked up the forth analyst. may 10th of 2006 when goldman sachs started to cover it. two months to sell between the initiation and the stock's peak. prudence dictated that we sell
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once the analysts -- once the stock had four analysts on it. better to clear out early with your winnings than to wait for them to fade away and hanson as with pretty much all of the other stocks, hot stocks started to cool off once its hit the critical mass of analyst coverage. after hanson fell off the radar screen analyst coverage dwindled again and again, ultimately coca-cola bought a huge stake in its equity, which sent it up further. a stock i still like. it was an amazing renaissance. but again, it was really a testament when they stock following the stock, that the company's earnings start percolating again as was the case with monster, a lazarus like move can happen. and it vanquished the -- and ultimately the biggest one joined it rather than keep fighting it. as analyst coverage gained, so many analysts started to cover it, the stock peaked.
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when they dropped it, stock bottomed. that's how it works. let me give you the bottom line. you must know when to sell. and that moment comes when you see too many analysts jumping on the bandwagon. use four as a good rule of thumb letting you know when to start selling. stay with cramer. huh. the good news is my hypertension is gone. so why would you invest without checking brokercheck? check your broker with brokercheck. the kids went to nana's house... for the whole weekend. zzzquil. the non-habit forming sleep aid that helps you sleep easily, and wake refreshed. because sleep is a beautiful thing.
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we have to get some of the tweets you have been sending me @jimcramer, #mad tweets.
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the first tweet is from @jason who asks, what are some resources for technical analysis and indicators for the novice? i get most of my technical analysis from real money.com. i picked the best technician who explain what these terms mean. and then show you them if action and that's what i did in that book. next, the tweet from @red square 27. #get a plan. if i'm actively trading in the roth, should i have the money in the index fund or stocks or both? stocks my friend. let's be very clear. that's no the case with 401(k) which is like the ira option so much more. next @hall g thaw, jim, i watch you daily for over ten years. daily, you're awesome. you have helped massive amounts of people, thank you. i can't tell you there are some many who apologize that they want to tell me that they like
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the show. excuse me, jim, i don't want to bother you i like the show. when you say excuse me, i think you're saying boom. no, don't excuse yourself. i'm thrilled that you say you like the show. it means the world to me. i sometimes figure what the heck do i come out here every night for other than the fact you like it. @clear baffles tweets -- clear baffles? at obfuscate. tweets the follow, please discuss the balance between adding to a position and the same apply to etfs #get a plan. what i do as the stock goes down, i buy. as the stock goes up i like to sell the higher basis. i run a charitable trust so i don't have to worry about the taxes -- what i'm trying to do is lower my basis as an owner. why do i want to lower my basis? because i don't like chasing and i do like buying. at a discount. and lowering my basis is the equivalent of getting a stock i like of a company at a cheaper
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price than i got it before. that means i'm getting a bargain if the fundamentals are still good. next, the following, @jimcramer has more followers than wyoming has people. i like his stocked a voice too. wyoming has more oil. wyoming wins. i have a long list of research companies that i'd like to invest in but don't have money for all of them. how do i narrow my list, #get a plan. this is very easy. what you have to do is you have to figure out okay which of the best at which levels? if you like them all, try to figure out what level would be the one where you really want to buy something. and then stick by it. because once stock is coming down people run to the levels instead of staying to them. mr. cramer, absolutely love the show. >> we really appreciate you, man. >> booyah to my kids in elementary school learning so much from you. >> booyah, mr. cramer.
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>> i know you hear this all the time, jim, but thank you thank you thank you so much. >> this is my best year in the market. >> i want to thank you for looking out for the regular guys out there. >> i am trying to teach people to be better investors and i'm doing my darn best. that's the goal here. >> great to hear your voice and know that you're there for us. the sudden loss of pasture became a serious problem for a family business. faced with horses that needed feeding and a texas drought that sent hay prices soaring, the owners had to act fast. thankfully, mary miller banks with chase for business. and with greater financial clarity and a relationship built for the unexpected, she could control her cash flow, and keep the ranch running. chase for business. so you can own it.
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i would like to say there's always a bull market somewhere and i promise to find it for you here on "mad money." i'm jim cramer and i'll see you next time.
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>> narrator: in this episode of "american greed"... marcus schrenker. remember this guy? >> the plane crashed in milton, florida, sunday night. >> narrator: he was a stunt pilot... >> basically, it's a very high-g routine that has a lot of gyroscopic precession. >> i've seen him do a few things in the airplane that were, "boy, this guy knows what he's doing." >> narrator: ...and clients say, a con man. >> people trusted him, in some cases, with a million dollars. >> narrator: ...who had the country wondering for days whether he was dead or alive.

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