Mad Money w/ Jim Cramer 7/26/24
Digest
Jim Kramer, host of the "Man of Money" podcast, outlines his mission to help investors make money and level the playing field. He emphasizes the importance of discipline in investing, advocating for buying "best-of-breed" companies even if it means paying a premium. Kramer stresses the importance of monitoring the bond market as a key indicator of the stock market's direction and highlights the need to be cautious when long-term interest rates rise. He shares his rule of thumb for identifying potential red flags in individual companies: unexplained resignations by key executives, particularly CEOs and CFOs, are a strong signal to sell. Kramer emphasizes the importance of being realistic about the stock market and accepting the inevitability of corrections. He encourages investors to prepare for pullbacks by having cash on the sidelines and using tools like the market-edge oscillator to identify potential overbought or oversold conditions. Kramer warns against making investment decisions based on hope, arguing that it's a dangerous emotion in the stock market. He emphasizes the importance of having a clear investment thesis for every stock in your portfolio, based on sound reasoning and analysis, not wishful thinking. Kramer highlights the importance of being able to articulate your investment thesis to another person as a way to ensure you've done your homework and understand the stock you're buying. He warns against blindly following Wall Street hype and emphasizes the need for skepticism, especially when it comes to online information. Kramer discusses the importance of handling losses effectively, emphasizing that the difference between good and bad investors lies in how they manage their losers. He advises against selling winners to subsidize losers, arguing that it creates a vicious cycle of underperformance. Kramer warns against speculating on takeovers of companies with bad fundamentals, arguing that the odds of success are low. He emphasizes the importance of investing in well-run companies with strong fundamentals, as they have other ways to win even if a takeover doesn't materialize. Kramer and his investing partner, Jeff Marx, answer viewer questions about taking profits, battling stocks, and investing for young children. They discuss strategies for managing winning positions, identifying broken stocks versus broken companies, and choosing stocks that align with the interests and values of younger investors.
Outlines
![](https://s3.castbox.fm/webstatic/images/book.5d108c35.png)
Investing Strategies for Success
Jim Kramer introduces his podcast, "Man of Money," and outlines his mission to help investors make money and level the playing field. He emphasizes the importance of discipline in investing, advocating for buying "best-of-breed" companies even if it means paying a premium.
![](https://s3.castbox.fm/webstatic/images/book.5d108c35.png)
Identifying Best-of-Breed Companies
Kramer stresses the importance of discipline in investing, advocating for buying "best-of-breed" companies even if it means paying a premium. He uses the analogy of buying a car to illustrate why quality matters and why chasing cheap stocks can be risky.
![](https://s3.castbox.fm/webstatic/images/book.5d108c35.png)
Market Indicators and Strategies for Handling Pullbacks
Kramer discusses the importance of monitoring the bond market as a key indicator of the stock market's direction. He emphasizes the need to be cautious when long-term interest rates rise and highlights the importance of understanding the yield curve.
![](https://s3.castbox.fm/webstatic/images/book.5d108c35.png)
Identifying Red Flags in Individual Companies
Kramer shares his rule of thumb for identifying potential red flags in individual companies: unexplained resignations by key executives, particularly CEOs and CFOs, are a strong signal to sell. He argues that these resignations often indicate underlying problems within the company.
![](https://s3.castbox.fm/webstatic/images/book.5d108c35.png)
The Inevitability of Corrections and the Importance of Realism
Kramer emphasizes the importance of being realistic about the stock market and accepting the inevitability of corrections. He encourages investors to prepare for pullbacks by having cash on the sidelines and using tools like the market-edge oscillator to identify potential overbought or oversold conditions.
Keywords
Best-of-Breed Companies
Companies that are considered leaders in their respective industries, known for their strong management, high quality products or services, and solid financial performance.
Yield Curve
A graphical representation of the relationship between interest rates and maturities of debt securities. It shows how interest rates change as the time to maturity increases.
Market-Edge Oscillator
A proprietary technical indicator used to identify overbought or oversold conditions in the market. It helps investors make informed decisions about buying or selling stocks based on market momentum.
Investment Thesis
A clear and concise explanation of why an investor believes a particular stock will perform well. It should be based on sound reasoning and analysis, not just hope or speculation.
Wall Street Promotion Machine
The network of investment banks, analysts, and media outlets that promote stocks to investors. It can be a powerful force in driving stock prices higher, but it's important to be skeptical of hype and do your own research.
Subsidizing Losers
Selling winning stocks to cover losses on underperforming stocks. This is a common mistake that can lead to a vicious cycle of underperformance and can be particularly damaging for hedge funds.
Takeover
The acquisition of one company by another. Takeovers can be a source of significant gains for investors, but it's important to be selective and avoid speculating on takeovers of companies with bad fundamentals.
Q&A
How do you determine when to take profits on stocks that have already exceeded their cost basis?
Jeff suggests taking profits in increments, such as every 20% increase, to avoid missing out on a big move while also ensuring you don't give back all your gains.
What does it mean to "battle" a stock that is down?
Battling a stock involves buying more shares to lower your cost basis while also scaling out of the position if it starts to rise rapidly. It's a strategy for managing stocks that are down but still have potential.
What are some good stocks to invest in for young children?
Kramer and Jeff recommend stocks of companies that young children use every day, such as Apple, Amazon, and Alphabet. These companies are likely to be familiar to children and can help them learn about investing.
Show Notes
Listen to Jim Cramer’s personal guide through the confusing jungle of Wall Street investing, navigating through opportunities and pitfalls with one goal in mind - to help you make money.