Investing well isn't easy, but it is possible. My goal in life is to make it easier for you to make money. I want to help out regular people with paying a mortgage, or college tuition, or hey, if we really do well, maybe buying a boat. Picking the right stocks is one of the hardest parts of investing, and every night on Mad Money, I try to take some of that burden off your shoulders. If you watch the show, I can give you good stocks. I can help you understand where the market's going. My last book, Jim Cramer's Real Money: Sane Investing in an Insane World, gave you the disciplines and insights I had developed over the course of my long career as a money manager. Since I wrote Real Money, it's gotten harder to be a regular investor. We live in a more dynamic, more economically integrated world, and that means it takes more effort to know all the facts you need to invest wisely. In this book, I'll show you how you can best use Mad Money to make money in this new, more complex global economy, and I'll also teach you the many new lessons about investing that I've learned from putting the show together every weekday for more than a year. I hope Mad Money, and this Mad Money book, can give you a life that's richer in wealth if not necessarily in spirit.
But if you think just watching Mad Money alone can make you rich, you're dead wrong. If you think that watching the show and maybe doing a little research on the side can make you money, I'd bet you're off the mark there too. It's not enough just to process what I say on the show. You need to know what to do with it. And that, my friends, is what this book is all about.
I want to help you take the advice I give out on Mad Money and show you how you can turn that advice into money in your pocket. That's what I'm all about: helping everybody get rich. There's a method you need to use, there are protocols to follow. Sometimes you'll need a translator to understand what I'm saying on the show, because I get a little caught up with the idea of being on TV and start making lots of incomprehensible references to things only a few hundred people have ever heard of. But if you watch the show, and if you use this book to turn my advice on the show into real investment strategies, I think you'll be able to make yourself some serious dough. I don't want to knock the show -- it's fun to watch -- but there's more to investing than I can convey in an hour a night of TV, especially when I have to keep from being too didactic in order to hold everybody's attention.
This book is about maximizing what you can do with the market advice I freely distribute on the show -- advice that comes out of two decades of experience playing the market, and playing to win. This book is the necessary complement to Mad Money, and the even more necessary sequel to Jim Cramer's Real Money: Sane Investing in an Insane World. In Real Money I wanted to help individual investors make money in the stock market. I wrote that book before I had Mad Money, and in the last year and a half, things have changed. I learned more in the first year of making my show than I learned in any five years I spent running my hedge fund. Now I've got a new approach to stocks. It's pretty simple: there's no such thing as the market. Whenever people talk about "the market," they're really talking about a very small group of large institutions: hedge funds and mutual funds. Because these funds control so much of the money in the market, they're the ones who determine stock prices. A stock is only worth what the big institutions are willing to pay for it. Mad Money and this book are both meant to help you, the individual investor, understand what these big players are doing and to help you try to beat them at their own game. In this book, I'll tell you how to make the best use of my show in light of my new philosophy, and I'll teach you the important new lessons I've learned since I wrote Real Money. The market's changed; my new rules will help you capitalize on my most recent experience with stocks, and they'll help you deal with a stock market that's gotten harder.
Now, sometimes I've got to toot my own horn just so you guys will listen to me. I have a few talents: I am a pretty good stock picker and a successful investor. Just so you don't think I'm conceited, I'm also not the most considerate guy on earth, and I'm a bad sport when playing Monopoly. The point is, I know how to make money in the market, and I want to help you make as much money as possible. I'm not doing it to be famous, and I'm not doing it for the pay, because I've already got more money than I feel comfortable having, and I say that as an incredibly greedy capitalist. I need to make you rich. I don't know why, maybe it's out of a pervasive sense of guilt, maybe I'm a nice guy -- it doesn't matter. You will need more than just Mad Money if you're going to make the money I want you to make.
Originally, back at the end of 2004 when we first started throwing ideas together to make the show, I had a plan. There are a lot of people out there who need reliable, honest advice about stocks. You can't be sure about research from this or that brokerage house. They've all been tarnished; they've been tarred and feathered and ridden out of town on a rail for colluding with their clients. And business journalism has the same problem as every other kind of journalism. Nobody ever takes a side, expresses an opinion, or even evaluates the validity of the press releases they get. No one ever puts his neck in doctor guillotine. Instead, they present these bland pseudo-analyses that in the end tell you nothing. Reporters want to tell you the news. You can't make a dime off the news unless you know what to do with it, and that's why Mad Money was born. I wanted to do something different and more helpful.
My goal is to create hundreds of thousands, maybe millions of people who diligently invest their money in stocks and come out of it with some mad money. I happen to think my TV show is great. I think it's the best thing on TV short of 24, The Shield, and most of what's on HBO. Good as I think it is, you need more. You need a supplement, you need something that lets you convert what I give you on the show into money in your pocket, and that's why you need this book.
Here's how it all comes together. I may play a total madman on TV, but I'm really just a very unbalanced guy at home. However, when it comes to stocks, I believe in being rigorous and methodical, not crazy. There's no madness to my method. If you want to watch Mad Money and then turn around and make yourself a fortune, you have to understand that method. You have to know what to watch for -- which observations are significant and which ones aren't.
That's the way this book will make you money. The great thing about Mad Money is that it's an up-to-the-minute show. Real Money, my last book, has great general advice about the strategies you should be using to make money in the market, but it has no up-to-the-minute, immediate component. What you're getting in this book is a way to take the detailed, immediate recommendations and observations from the show and turn them into money in your pocket.
I want this book to guide you through the nitty-gritty details of researching the stocks I recommend every single night on the show. I don't just hand you money on a silver platter. I wish I could. I wish it grew on trees, but it takes hard work to make money. I think I'm giving great advice on the show, but you still have to do your homework if you're going to turn that advice into the one thing we're after: money. So in this book, I'll tell you how to do the homework and how to decide which stocks are for you and which stocks you should stay away from, given your age or your personality. I want to guide you through the process of purchasing the stocks you like and then deciding when, where, and how to sell those stocks. I never have time to get into this sort of thing on the show, but it's just as important to know how to buy and sell the right stocks as it is to know how to pick them. I want to take some of the more complicated concepts and ideas that I use on the show and break them down for you, because knowing how to decode genuine Wall Street gibberish, and genuine Cramer gibberish, will improve your game.
I'm writing this book because I want you to feel like you've got me sitting right next to you, guiding you every step of the way when you buy and sell the stocks I pick on the show, or when you just try to implement my more general advice. But I want to do more with this handbook than just teach you how to follow my marching orders. Just as I do on the show, I want to educate you. Making Mad Money has been an education for me, and I have twenty new rules for investing, rules that I've formulated by rigorously analyzing my successes and failures. These rules explain how to invest in a market where the big hedge funds and mutual funds run the show. They're new disciplines that will let you anticipate the behavior of the big institutions. If you can do that, you can get rich. I'm not repudiating my rules in Real Money -- they're still valid -- but the world has changed. My twenty new rules are a supplement to my Real Money rules, not a substitute for them.
That's not all. If you want to get the most out of Mad Money, you need to understand how I operate. Every night I take dozens of calls in the "Lightning Round," a segment where callers ask me what I think about their stocks. I don't know what the stocks will be beforehand, but I still manage to give out decent advice. In this book, I'll show you exactly how I can tell people whether to buy or sell something with only five or ten seconds to think about the stock. I'm revealing all the secrets of the "Lightning Round" and all the tricks I use to pull it off every night. Not only that, I'll even show you how to do your own Lightning Round -- not in order to impress your friends, but because the preparation necessary for a good Lightning Round may be the best way for you to sharpen your stock-picking and investment skills. It's stock market strength training.
Almost every night, I interview a different CEO or CFO on the show. A lot of people tune out for those interviews because they don't think they can get anything out of them. In this book, I'll tell you exactly how to watch my CEO interviews because they're an incredibly useful asset -- but they're an asset you have to learn how to exploit.
I know that many people want to game the show. You want to be able to figure out what I'm going to say before I say it, because the show moves stocks. You want a trick that will let you read my mind so you can buy stocks before I recommend them. I'll tell you straight out: there is no trick. There's no real way to game the show. But you can learn how to think like me. I'll tell you some of the ways I pick stocks for the show. You'll get a glimpse of my thought process as I try to put together good picks that I think will make you money. If you know how I pick stocks for the show, you probably still won't be able to anticipate Mad Money's recommendations. But you will learn how I decide which stocks to feature, and that's not a bad thing to know.
I may be a good stock picker, but I'll admit that I'm not the most polished broadcaster on earth, and sometimes I can be, let's say, incomprehensible. That's why I'm giving you a guide to all the weird terms I use and some of the esoteric, even obnoxious cultural references I make. Can this stuff make you money? If you think hard enough, probably. But the real point is that it makes watching the show more fun, and if watching the show is fun, then investing will be fun. As long as you enjoy investing, you'll be willing to do the homework and stay in the game. That's why I try to make the show so entertaining, because if you aren't interested, you'll either miss the opportunity to make money in the market or not pay enough attention and end up losing your shirt.
And in the interest of keeping things fun -- because again, where there's no fun, there's won't be any money (hey, the reverse is true too) -- I've got a glossary that explains all my props and, even better, my sound effects and what they're supposed to mean. I want you to know what you should do when I push a given button. It's a science: it's Cramerology.
At the end of the book, I give you a stock worksheet that will help you keep track of all the steps you need to take if you want to own a stock. The worksheet is a template, a way to organize your thoughts so that you can follow the instructions I lay out in the first part of this book for buying and selling stocks. You don't have to use the worksheet, but if it helps even just a little bit, then why not?
I'll try anything to help make you wealthier than you are -- you know that if you've ever seen the show. I just can't stop myself; I'm addicted to making you money. I should be spending all day in a country club or never getting out of my pajamas like Hugh Hefner. But here I am, writing this Mad Money book, because I have a categorical imperative to help you get rich, and the show is not enough. I hope you enjoy it, and I hope it helps you get that house or that car. Or, let's get really ambitious and try for the yacht.
Copyright © 2006 by J. J. Cramer & Co.