she's with camel. facebook, fb that will get you done. >> thanks for watching. see you back here tomorrow at 5:00. "mad money" with jim kranler starts right now. my mission is simple, to make you money. i'm here to level the playing field for all investors. and i promise to help you find it. "mad money" starts now. hey, i'm cramer. welcome to "mad money." people are trying to make friends, i'm just trying to make you money. call me at 1-800-743-cnbc eor tweet me @jimcramer. garden variety days in this market we must always guard against our own human emotions. which often get the better of us
when everything is going well in the stock market and when things are going badly they seem to grip us totally. when things are too good we tend to take too much risk and when things are going terribly we despair and leave the stock market entirely. it's a fact of life and even over the years even as stocks have climbed and climbed there have been swoons, real swoons that drove people out. they simply went to securities to give you little or no return. then they watched the big gains from the sidelines. i totally understand the version of stocks that people had these days. many reasons to be disenchantened. there is stocks when they were cut in half from 2007 to 2009. there's debacles like flash crash or the facebook ipo. and then there's the insider trading cases and the obvious situations where stock years went down and down and then down some more and it's clear that
someone knew nothing and you didn't. i validate all these feelings right now, right here. but the fact is stocks remain the only game in town. maybe one day when the economy gets strong enough interest rates will go eback to more normal levels and we can on this matter stocks as well as some good certificates of deposits and bonds and the fixed income markets. but that's not occurred yet. until it does we need to have our money work for us. we are like the old avis ad here on "mad money." we have to work harder to make our money grow. that's what tonight's special show is about. how to make your money work harder in a responsible way. we're using different types of stocks to demonstrate how we can do that responsibly and carefully. that's like get rich carefully. because, look for years and years is the notion of prudent personal investing. yep, we call the shows, episodes here. why? because each one is actually written and thought about as a different entity on its own and i recognize that because it is
something we meaning me are fabulous staff at "mad money" are very proud about. this is an episode about better investing for you. now, this show is about managing your own money or being a better client, if you have a full service broker helping you. if you don't want to manage your own money, over the years i've come around to this view. i have become pernectly happy with you buying an index fund. or even a couple index funds. say one that represents the entire s&p 500 and then another a total return fund. i have become a little jaundice over time about mutual funds in part because so often i find that they're about raising money rather than doing well for you and so few have beat on the stock market. i arrived at this juncture that says, what is the point? i bless throwing your hands up and buying a fund of the index variety. that same time though i know that many of you tune in because you want to own individual stocks and i'm not going to talk you out of that. i'm just going to make you
better at it. it's something you've decided is good for you. maybe it's companion to an index fund. a way to grow wealth because you can do better than an index fund. simply in the many years we've been doing this show thousands and i mean thousands of people have told me or called me or e-mailed me that they've done better than the market using the show and their own knowledge. they meld the two. the rise of twitter validated this. we're not going to debate it any more. what we are doing tonight, though, is giving you directions about how you can pick your own stocks and still might not take one too much risk. normally we just say, hey, the way to do that is be diversified. i start to see many portfolios where everything would trade together in unison and usually in a way that could easy be derailed in a downturn. >> sell sell sell. >> now, you know that i can't cover all the stocks in the world. i mean sometimes i think people think i try, but i can't.
that's why often you short handed tell the story. do i want you to own five stocks? no it would be better if you had ten stocks, no more than 15 because you can't keep track of them and do the homework i advised. we have done many shows of what homework entails. knowing what the company does what you are looking for, what the analysts are looking for and what it is doing. homework is time consuming. that is not the purpose of tonight's show. give you some ideas to help you explain that there are classes of stocks within the stock market that aren't just by sector. in other words, i am offering tonight a new kind of diversification that can help you guide you toward what kind of stocks i want you to have if you're going to manage your money yourself like so many are, you wouldn't be tuning in. first, though, let's go over your mindset. if you're going to manage your own money, you have to recognize the value of humility. so, please repeat after me. sometimes i'm going to be wrong. come on say it. sometimes i'm going to be
surprised and not in a positive way. and one more sometimes my stock picks won't work out despite my disciplines. look, i hope people understand that humility doesn't come naturally to everyone. but staying humble is important. why? because other than greed nothing has cost people more money than arrogance. if you own stocks you have to accept that you're going to be wrong, perhaps even often. as the past few years have taught you, your portfolio will get hit with things that you never saw coming yet alone possible. that's where i'm coming from when i talk about this new diverseification diversification. diversifying among sectors isn't enough any more. you need to work harder a drug stock, a financial or a techy. my new diversification recognizes that to be a little new age, we are at one with the world. stocks are on the globe in trade. trade together these days including bad times and that's impacting our stocks in different ways. plus electronic traded funds,
etfs link different sectors together than i never dreamed of. you need a portfolio that works in all kind of markets, including one with the errors and pitfalls of geopolitical events to our shores because these matter much more than they used to. again, i've had to change to a justice. i never used to care about washington. it really impacted stocks. they were side show. a great recession and we had elections that brought leaders that directly intervene in the markets and with the worldwide linkage, not just our politicians and bureaucrats that we care about. think about it. we started the show who would have thought that we needed to know what the european central bank was. what it was going to do. yet alone the person's name who runs it. i didn't used to know that stuff. who would have thought we would have to gain the strength or the weakness of the chinese economy on a week-to-week basis or even daily. all strength for three decades. who would have thought a cold war back on the agenda or always
be a hot war in the middle east. we need to protect ourselves against these new intrusions that we didn't concern ourselves with when we started the show. tonight's show is an homage to a changed world and how to pick stocks responsibly in that world. the new diverseification is about owning the right kind of stocks. more exploring this tonight. five different areas that you need covered for maximum protection. you need some goal. a complete dog. i've been there. we'll talk about that too. this is diversification because it can function as insurance if the world can really go bonkers and inflation comes back roaring as all the smart henl funds and you need a growth stock and need something specular. cover all five bases and you can have a portfolio ewhichwhich can win in any market. which makes all five areas so essential. analyze stocks at each one so you can fill every position with the best possible names. the bottom line a good investor in this new world knows to always expect the unexpected.
that means keeping your portfolio diversified with only 20% of your holdings in any one sector. remember, you need gold high yielder, growth stock and stick with cramer and i'll tell you to pick each place. start the calls with sean in florida. >> caller: jim thanks for having me on the show. >> thrilled your. >> ron: >> caller: i would like to thank you and i want to get you am opinion on investment strategies for your 20s. >> first of all, go noles. my first job out of school was to cover florida and i love tallahassee. the people in their 20s must take risk. i say that because everyone is so darn risk averse in life that they don't understand. you need to own some stocks that are just growth stocks. that would be the mix of
diversification, if i were back in my 20s. and, by the way, let me just say, in my 20s when i spent all my money at a big daddy's the drinks started at a nickel. i should have put the money in the oil stocks. how about helen in illinois please helen. >> caller: hi. this is helen and i'm a retired lady and i wanted to know would you make money in the stock market, is it better to take some out and put it somewhere else or lose it? >> okay i think that's a great question because my mother when i used to go gambling with her. let's take the winnings off the table and go buy a nice cashmere sweater. you should take some winnings off the table and some describe how big a move and our goal in life is to play it well. many goals in life but the goals in the financial life is to play with the house's money. that should be your absolute goal at a minimum, if you can do it it would be fantastic.
diversification is a spice of life. a spec stock and a geographically safe stock. i'll held you find the best of each on tonight's special show. stay with cramer. don't miss a second of "mad money." follow @jimcramer on twitter. # #madtweets. send jim an e-mail to or give us a call at 1-800-743-cnbc. miss something? head to email@example.com.
tonight a novel, a novel way to fill those five slots in your portfolio that i always talk about. the five types of stocks that now represent what i call the new diversification, not just by sector, but also by style and strategy. so that if ecuted correctly, you'll always own something that works and holds your interest keeping you in the game even when it feels so excruciating that you don't want to continue playing. well, at the same time making sure that you have some
positions that go higher when times are good. what is the most important category? i have a question about this. in a world where central bankers raise rates from such low levels you can't get enough from bonds or certificates of deposits to live on. you need a stock that gives you a good yield. by the way, this isn't a fuddy, duddy way to approach this. you need to own a stock with a big, high-paying dividend. owning two or three, yeah high yielders, but no more than that. it can actually be a good thing. they're not the same. i wouldn't go in on five high-dividend stocks because then you would be extremely vulnerable if the long-term treasury bonds and high yielders ever spiked in a big way. you can get hurt. "mad money" we expect and if we don't, imprudent investors and if interest rates rise your dividend related stocks will get smashed no matter what the industry they night be in. in the new diversification a
telephone utility like verizon could trade with a company like pract proctor and oil like conoco phillips because they have high dividends' after a period of time volatile ones could all three stocks at the exact same time. we must always be concerned, too, that the favorable tax rate on dividends, that it could go away and therefore it would make the most competitive to bonds and give the fixed income equivalents as we call them a real whacking. as it did, by the way, in the spring of 2013. but if you own one stock with a really large yield and then one or two of the other names in your portfolio support decent dividends. i know dividend-paying stocks may not be what most people consider sexy. but you know what dividends make you money, for heaven sake. to me, that is the definition of sex appeal. i have a pretty warped social life. the fact remains buy high
yielders and then reinvesting your dividends back into the stocks is one of the greatest most reliable ways to make money out there plain and simple because it allows your investment to compound. that's the key word compound over time. in other words, over time the money from your past dividends pays dividends going and giving you these compounding returns, provided you keep reinvesting. now, there is a huge misconception out there about dividends. they're like 2% 3%. how can they add up? people think high yielders is only about safety and generating income in your retirement. let's do a little history here. if you go back to january of 1946. do 40 per of the s&p 500 have come from the reinvested dividends and the last decade the percentage is even higher. that's how essential dividends are to capital appreciation. wall street gibberish for growing your money. i run a charitable trust called actionordersplus.com. give my dividends away and the inability to compound has truly
hurt me over time. hurt the fund. i don't get the money. charity does. dividend stocks aren't a place to hide when the market gets rough. they do represent a safe haven in difficult times. they're not just for retirees who only care about but they do a terrific job on that front. first and foremost one of the best strategies out there for making money, period. also one of the safest since dividend stocks have a cushion. they call it yield support. they help hang in when everything is getting annihilated. the yield increases and eventually gets to a level where it's too attractive for most investors to ignore. that cushion is the reason why i like to talk about accidental high yielders. ahys. they yield north of 4%. not because of dividend boosts and their share prices fall causing the yield to sky rocket. time and again we stocks bottom at this crucial 4% level.
it happened during the financial crisis and we've seen it happen in big industrial stocks emerging market downturns and, yes, a debilitated china. at least relatively speaking. still dproe grows faster than most of the world. these stocks have a way of stopping their downturn and turn out to be fabulous long-term bargains. i like the stocks of companies that raise their dividend. one of the clearest signals that management can send. a company that can raise its dividend and steady reliable growth. and equally important a company that is pretty darn sure not cut in that dividend any time soon. you cut it after you raise it. that's too embarrassing. it can cost a ceo his neck. so dividend increases are serious business not easily repealed. even better are the outfits put through dividend increases through 2013 more consecutive years. now, that's stability which is
why i always emphasize my life for what we call a dividend. companies like 3m procter & gamble johnson & johnson long history of dividend raises. but other than accidental high yields and dividend boosts how do you analyze a divstock. a very high yield can often be a signal with the dividend is unsustainable and will have to be cut. you'll see me throw the red flag around here. and that, you know, it takes away let's put it this way. you need a rigorous safety inspection. if the dividend is sound. maybe the company can raise it too. if it seems endangered, no. it ain't worth it people. you have to stay awai. consider the cautionary tales of what we call these bond arb trauj funds and these monster yielders that were based on strategies buying gigantic
amounts of bonds with borrowed money. when rates jump these variable yields were crushed. that's why against them don't take the bate. there in each case the yield was a large red flag sending a signal that the payout will be reduced in a short period of time. not worth risking. don't risk holding on that to capture a juicy dividend. hey, by the way, we saw that happen a couple years ago with the men at radio shack and supermarket chain super value. huge dividends. super value was able to bounce back. by management. when i interviewed them. so given that i am biassed against what seems to be too good to be true high yielders what do you look for if the dividend is secure? first above and beyond we look at the earnings per share. the eps. my rule of thumb is that company is earnings that is twice its dividend payout we know it can
sustain a dividend even in lean times when you think the earnings are going to shrink. in that case i see you're home free. the dividend is secure. if not, you have to go to step two. look at the cash flow. especially dealing with companies that have a lot of machinery. heavy capital company investments which cause them to report what is known as high depreciation and amortization costs. verizon, at&t and communication networks don't come cheaply. they can't afford that yield. wait a second these depreciation and amortization cost don't come out of a company's actual cash. they skew the earnings lower. give you a better idea of the health of the dividend. i know jim cramer on twitter how i can recommend these stocks and when earnings barely cover the dividends. because of the cash flow of the telcos that i like them. you can't understand the concept of cash flow get back to even. where i go over the drill to find out what the company's cash
flow is. maybe stick to earnings per share. finally, have to look at the balance sheet to make sure there is not a lot of debt coming due. maybe they're too close. money coming to the near future and the company can't raise it with the bank or public may necessitate a dividend cut. you need to know how to collect the dividend. the record date on "mad money" we care with one date of dividends. i call it the must-own date. the last day buy a stock. the must-own date is always the date before the x date and that's all you need to know. bottom line if you want to embrace the new diversification on top of the sector kind that we preach be prepared for every kind of market out there, must own one high yielding stock. dividends protect your stocks and also a terrific way to make money. what's not to like? ralph in missouri ralph? >> caller: hello, mr. cramer. >> yeah.
>> caller: thank you very much for all you do and your charitable trust. >> you're really kind. thank you. >> caller: i know that. i have a son, 35 years old. he has a roth i.r.a. all with the s&p 500. my question is do you think it might be a good time to sell and go to a cash position, buy it back on a dip or go to a fund with dividends and, if seo, what category would you suggest? his age. i want him to stay. don't want him going in and out. what happens if that is the one month where the market really takes off. peter lynch taught us that. describes how you get in and get out like that when you're younger, personally you may miss the one window where all the growth happens that year. dividend and conqur. if you want to be prepared for every market out there, make sure you own one high-yielding stock and, of course stick with cramer.
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of watching everything get run over by a truck. next, a good old-fashioned growth name. specifically a secular growth stock. secular has nothing to do with public versus parochial schools. on wall street when a company has secular growth it means unlike cyclical smoke stack growers ones that need a strong economy here and abroad to beat the estimates so critical stocks going higher the earnings aren't haasage to the health of the economy and they'll keep on expanding even during a slow down. when you get your hands on a strong secular grower that stock can keep lifting higher and higher. jackie wilson. going on the new high after new high for as long as the growth lasts. i want you to think about stocks like apple, google facebook or some of the high-growth natural and organic food growth or biotech names and cell gene.
companies that are growing like the drug companies of old back when big farmer was synonymous with growth. so, how do you analyze growth? how do you judge it or find out what is grown well? remember when we buy a stock we're paying for future earnings per share. we have to learn the basic evaluation algebra. the way we arrive at the real cost of a stock, not just the dollar cost of it. we know we need to understand this because we need to compare stocks on an apples to apples basis, not just in a pepsico worth 90 bucks or coca-cola is worth 40. therefore, pepsico is $50 and then coca-cola. not. apple is not worth less after seven for one split, is it? let's go over what a stock price really means. here's the simple algebra. the share price often known as the p, as in the p/e ratio. shorthand for how we value stocks. the p equals theey times what is known as the multiple or m.
e times m equals p. we try to solve for m what we're going to pay for the earnings fee. what is the multiple we're going to pay. the priced turning multiple is the key. and the most important determination of that price churning mobile, the vital ingredient that has the most effect on the valuation special sauce is the company's growth rate, which is why i'm constantly talking about growth of sales and earnings. a bigger price for businesses with faster growth because that growth means the earnings will get larger and larger in the years ahead. often you will hear them say this stock is echeap and what they mean is that it is cheaper than the average stock in the s&p 500. the benchmark for all stocks. and yet it grows faster than the average stock or somehow more special than the average stock because of a catalyst that is about to occur. it's cheap versus the s&p. we use the p/e ratio when we
think about a stock being a bargain in "mad money." high octane secular grower that doesn't need the economy to get strong. the stock can trade up to a multiple that is high as twice as the long-term growth rate. the percentage gain of its year-over-year earnings growth before it gets too expensive for the money managers who determine the pricing break, basically. the earnings per share, say a 20% clip. these guys would pay as high as 40 times earnings. that's right. typically a growth stock won't trade down to a multiple of more than one times its growth. unless there is something seriously wrong with the fundmal fundmals that we don't beknow about or find about until later. soured on growth for a moment and even secular growth. that does happen because of a possible sudden spike in interest rates which make the multiples all shrink as the larger earnings in the future become less attractive. get from trash to treasureries.
make growth stocks more attractive and cause their multiples to expand. we pay more for that or perhaps like in the spring of 2014 when so much supply hit the stock market in terms of new offerings and secondary particularly for growth stocks like biotechs and cloud stocks. big gobs of stocks sold all at once to the secondaries that were nasty and the buyers were overwhelmed and what happened is the cloud, internet and biostocks almost all faltered. even more important, when you want a high-growth stock, you need to be sensitive to which direction the earnings estimate are going. these stocks can soar to new high after new high but remain cheap as long as the analysts that covered them keep raising their earnings per share estimate. they have to do it quick. a stock like facebook can double over the course of 12 months we saw that. and the price earnings multiple would be lower than where it started because the earnings estimate increased even faster than the share price did go higher.
this kind of momentum allows the downward gravitational pull of a downward economy. be very very careful because you're playing with earnings momentum. so, therefore, you're playing with fire. for the truly high octane growth stocks out there. if the time comes where the estimates have to come down or it looks like the growth is decelerating and i have to tell you, it looks like what is at the bottom of this it's like driving a nastfast car right into a retaining wall. the stock could fall faster than you could ever imagine. witness the great chipotle dropping more than 100 points in a day. it was a couple days. when in july of 2012 it reported a disappointing quarter that suggested the company might be more vulnerable to economic weakness than anyone thought. we thought it was a great secular grower no matter what. you have been riding it up for years you had gains and if you made out like a bandit when the growth of the earnings returned and then some.
but after a growth name like chipotle loses its mojo the pain could last for years. as the stock goes through a painful process that we joke about of george constanza. i still like seinfeld because a universal language. it could take years as momentum and growth-seeking investors gradually pay less and less for progressively slower earnings growth. all the growth money managers get shaken out entirely and the priced earnings multiples sinks to levels where value-oriented investors become interested and bottom fish. that's been what the long ride down has been for all farm pharmaceuticals like merck or mcdonald's or general mills. when you see multiple compression, don't hang on for the full ride down. just sell sell sell sell. the bottom line. the builder portfolio you need a growth stock that still has lots of runway ahead of it for years
to come. when you're dealing with growth it is worth it to pay for a company that is still accelerating and decelerate very quickly. dump it. it could sink for ages before it bottoms. most people's patients can't hold out that long. mohammad in texas. >> caller: how is it going? >> how are you? what's up? >> caller: i am on my question is i am a new college graduate. i graduated from college for a year now and been in the workforce. trying to invest in my 401(k) and an outside brokage account and was wondering how should i partition my investments in each account and what my investment partitioning should be in bonds and stocks? >> no bonds. all right. in 20s, first, congratulations on graduating. when you're in that age, here's what you do. you got to pay down your loans, obviously. high interest rate. but be in growth growth
growth. you have your whole life ahead if it doesn't work. you can make your money back with your paycheck. the discipline of a new diversified portfolio trumps wherever you believe the market could be headed. you need a fast grower. preferably a secular growth stock. stay with cramer. can it make a dentist appointment when my teeth are ready? ♪ ♪ can it track my crew's performance, and protect their heads? ♪ ♪ can it tell the flight attendant to please not wake me this time? ♪ ♪ at cognizant, we see opportunities for every company. to meet the new digital demands of their customers. can it process my insurance claim? like, right now?
can it download a track while i'm sampling it? can my keys find me? with the power of digital, analytics and automation now every little "thing" can provide even greater value. ok, so can it tell the doctor how long you have to wear this thing? the answer is yes, it can. so, the question your customers are really asking is can your business deliver?
tonight i'm focusing on different types of stocks and show you a portfolio that is diversified by strategy. work in every market no matter how tough. so far i talked about dividends and growth. how about something to keep you focused. in my view you always want to own something horreticle. even speculation is considered to be the dirtiest word in the business, except of course here in cramerica. orthodoxy. not only okay to own these tempting, risky, broken stocks that trade in the single digits it's a necessity as long as you follow my rules and speculate
wisely. tonic against boardm with a huge amount of upside if things break your way. high-reward stocks are enthralling. to owning something that trade in the single digits although many stocks trade at higher dollar levels. they allow you to stay engaged and allow it easier to keep your head in the game. but i say a port forteo without speculation will not capture your fancy, and one that will have you bored with your money and only care about taking your fees or making it just so frankly that you're not focused enough to do what's right with the rest of your stocks. speculation doesn't just keep you interested when you do it wisely ewith the right rules and disciplines. these stocks can generate enormous gains. unheard of in the stocks of larger, well-liked and well known companies that are often deemed safe. did you know at one point in the 1990s that solid stocks like
home depot and comcast were ultraspeculative stocks. home depot, actually failed the first time around. and the idea of paying for television when you get it with rabbit ears turned out these were brilliant specks. some of my wins came from speculation speculation. you can see some of them i detail them in real money. new researchers who came on to my edgehedge fund in the old days. of course when done wrong, swimming in under $10 waters can also lead to truly gut wrenching losses. understand i'm not glossing over the rirvegs se risks here. two kind of stocks that trade in single-digit territory trouble companies that have been abandoned and left for dead by the big institution money managers. in both cases, you get an enormous edge. the kind that is impossible and household names. simply because so many of the
big boys won't touch any stock that trades under $5. you're benefiting from classic mispricing from overpessimistic, the large institutions the big mutual funds, they don't want to own single-digit stocks. they think these are too dangerous. they're afraid they'll be questioned by their clients about why they own this junk and so many safer stocks out there. these money managers fear the downside of stocks that look broken. i'm talking about stocks like sprint that we saw at 2 bucks. both were panned out and because of the ramifications of owning single-digit stocks. you have no such overlords looking over your shoulders to put pressure on you not to buy these kind of stocks. how do we find them? we examine the bonds of sprint which stopped going down when the bond was at 2 bucks. often an important part of the e equation. and we bet that what these bond
holders saw that trickled down to the common stock. for rite aid we saw the changes in merchandise. remodeled stores were doing better than the older ones and we saw how well doing with private label merchandise and all came together in a success successful spec. when the fundamentals of one of these companies staw so many big boys won't go near them but wake me at 8. deals like these don't come around every day, though. more often we speculate stocks of tiny companies that most people never heard of and with them we're not trying to catch a turn around. we're looking for sectors that can capture the imagination of the crowd. the next hot fad, it's okay we're allowed to look at fads too, that will sweep through the wall street fashion show. genuine earnings power, which is what we saw with all the little companies that make cell phone components in 2009 and 2010. to name some of the biggest
winners of the period we had. we saw it again in the tiny gas companies or with some biotechs that we like that got bids from big pharma companies or fda approvals from new drugs. these speculations have the life cycle of a -- so the trick is first, always remember to lock in your profits when you have them. so, don't get burned when interest wains cut some of it down. second, your losses those you got to cut before they become too large. when a spec wasn't panning out just leave it. when you speculate you are not finding a stock that you can buy and hold forever. disciplined and bring the red shirt, doesn't matter if the stock comes back later. don't take that as companies with bad or deterrierating fundamental
fundamentals. we like a tech and biotech for trades when we did them on speculation fridays. when lightning struck we said take all the gains, please. we never looked back although callers tell me you know listen, jim, you loved it. we said we loved you for trades that's different. the bottom line you need to own something that is speculative. something that will help you policiy allow you to rack up huge gains and lots of spectac spectacular stocks started. it could be a triple waiting to happen. "mad money" is back after the break.
trying to show you how to build a portfolio stock that can work in virtually know and every type of market to a euphoric policeman new diversification. when i originally came up with the idea of the new diversification i said you should always have foreign exposuren your portfolio. given the kind of like ongoing slow down in china and the emerging markets getting crushed repeatedly and frequently, there, i think we got to do a little refining of the concept. what you really need is a stock in a safe geography. at times when the united states is growing more slowly lanthe rest of the world, you need something international. not something that does a lot of business overseas. a company that is based in a foreign country. when the rest of the world seems to be falling apart and the united states looks good by comparison, you need a stock that gives you domestic security. something that is entirely confined within the borders of the country.
down right dangerous. what do i mean by the concept domestic security? anything that is usa all the way. you can own a phone company like a trxt&t and verizon. pick a regional restaurant chain. a little overseas exposure eor dollar store. dollar general dollar tree. home depot pulled back. it's here. how about a real estate investment trust. or the real estate investment to get exposure to the whole group. in times of international turmoil this slot should be filled by something that is all domestic and at times in domestic turmoil where the rest of the world is in much better shape which is where we were after the financial crisis then you do want to own a foreign company. here is the bottom line always own a stock that is from a safe geography. sometimes a foreign company and sometimes that means a domestic security that is all from the outlog. believe me, i think you're going to want to go domestic at least
all night i've been talking about the new diversification. a way to diversify by strategy not necessarily by stock so you can thrive in any market. last but absolutely not least you need some gold because gold has a special property. one that makes this metal precious to any portfolio. i don't want this one it be 20% of your portfolio. it won't work. the 10% is the upper limit because i consider gold as an insurance policy and know worthwhile insurance policy should be 20% of the money you invested. why do i like gold? because gold tends to go up when everything else goes down. your insurance against uncertainty and inflation. all things that could cause most stocks to decline, but also cause the price of gold to rise. before you curse me out because gold has done nuthing for a couple years, remember, you
wouldn't own a home without homeowner's insurance and a car without car insurance. the best asset year over year for the last decade. so, it was a winner for a long time lately it's cool. earning gold is not about the upside, though. it can be considerable. it's just about minimizing your risk to the down side. at any given moment a whole host of factors that are, you know they'll be sectors from international minerals that will outperform gold. but none of them work like in an insurance policy. how should you own gold. the least risky way is through an etf. spyd spydr gold shares. does a terrific job of tracking the price. doesn't always track it it won't always will. i have faith in it. you could call your broker and buy bullion the actual bars of gold.
that makes sense for investors that can afford to buy gold in bulk and store it in a depository bank. if you pick the right company and then outperform the commodity. remember it will not trade in lock step with the commodity and the same things that make gold valuable here. the fact that it's hard to get out of the ground cheaply and not a lot of new mines. plus, gold minors can screw things up in countless different ways. they have dectsbts and fining costs and management teams and can and often make mistakes. virtually every single time i have gotten. hind a gold stock in recent years i have been burnt. higher than expected cash costs and every time things just seem to go wrong and then the stocks get hammered even if gold goes up in value. i finally just gave up in the entire group and simply stick with the physical commodity. the bottom line if you want exposure to gold and you not only want it you need it.
it's your portfolio insurance policy and everybody should have some. then you should just do the easy thing and own gold through the gld. not some gold minors that is loosely connected to the price of the undermining commodity. stick with cramer. it took tennis legend serena williams, fencing champion tim morehouse and the rockettes years to master their craft. but only moments to master paying bills at chase.com. depositing checks at the atm and transferring funds on the mobile app. technology designed for you. so you can easily master the way you bank. the real question that needs to be asked is "what is it that we can do that is impactful?" what the cloud enables is computing to empower cancer researchers. it used to take two weeks to sequence and analyze a genome; with the microsoft cloud we can analyze 100 per day. whatever i can do to help compute
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