Mad Money w/ Jim Cramer – Episode Summary (June 13, 2025)

Host: Jim Cramer
Release Date: June 13, 2025
Description: In this episode of CNBC's "Mad Money," Jim Cramer delves deep into the mechanics of major stock market crashes, offers strategies to navigate and capitalize on market downturns, and engages with callers to provide personalized investment advice.

Understanding Historical Market Crashes

1987 Black Monday

Jim Cramer opened the episode by revisiting one of the most significant market crashes in history, known as Black Monday.

Jim Cramer [02:15]: "On October 19, 1987, the Dow Jones Industrial Average plummeted by over 22% in a single day, marking one of the most severe one-day market declines ever."

Cramer detailed the rapid decline from Dow 2246 to 1738, highlighting the absence of buyers and the psychological impact on investors. He emphasized the role of "portfolio insurance" and dynamic hedging strategies that inadvertently accelerated the sell-off.

Jim Cramer [04:50]: "Portfolio insurance didn't work as intended. Instead of protecting investors, it exacerbated the market decline by flooding the market with selling orders."

He also discussed the Federal Reserve's intervention led by Alan Greenspan, which stabilized the market with a significant rally over two days.

2007-2009 Financial Crisis

Transitioning to the financial crisis of 2007-2009, Cramer contrasted it with Black Monday, noting the prolonged nature and deeper economic roots of the latter.

Jim Cramer [06:30]: "The bear market that began in October 2007 was a different beast altogether, leading to a bottom in March 2009 and not recovering to pre-crash levels until 2013."

He underscored the systemic risks involved, such as massive defaults and the collapse of major financial institutions, which necessitated unprecedented Federal Reserve interventions.

COVID-19 Market Crash

Briefly touching upon the COVID-19 crash, Cramer noted its swift rebound due to immediate economic stimulus measures.

Jim Cramer [08:10]: "Unlike previous crashes, the COVID crash saw a rapid recovery almost overnight, thanks to decisive government intervention."

Analyzing Flash Crashes: 2010 and 2015

Cramer explored the nature of flash crashes, which are sudden, temporary drops in the market caused by mechanical failures rather than economic fundamentals.

2010 Flash Crash

Jim Cramer [09:00]: "The flash crash of 2010 was a clear example of technology-induced market dysfunction, where automated trading overwhelmed the system, leading to a 36-minute plunge."

2015 Flash Crash

Similarly, he compared the 2015 flash crash to its predecessor, emphasizing the recurring theme of algorithmic trading causing temporary market instability.

Jim Cramer [10:00]: "Both flash crashes were triggered by an overload in the futures market, which outpaced the actual stock market trading, leading to rapid sell-offs."

Strategies for Navigating Market Downturns

Cramer provided actionable strategies to help investors manage and even profit from market declines.

Identifying Sell-Off Causes

He stressed the importance of discerning whether a market decline is due to economic fundamentals or mechanical issues.

Jim Cramer [11:20]: "Sometimes crashes have nothing to do with the economy. They're caused by the mechanics of the market. Recognizing this can open up buying opportunities."

Accidental High Yielders

Cramer introduced the concept of "accidental high yielders" – solid companies with temporarily inflated dividend yields due to market-wide declines.

Jim Cramer [14:00]: "Look for companies with solid balance sheets whose dividends have surged because their stock prices have fallen without any underlying business issues."

Using Limit Orders During Crashes

He advised against using market orders during downturns, recommending limit orders to secure favorable purchase prices.

Jim Cramer [16:25]: "Never use market orders during a crash. Use limit orders to buy stocks at your desired prices and avoid terrible entry points."

Focus on Quality Stocks

Cramer emphasized investing in high-quality, recession-proof sectors such as healthcare and mega-cap stocks during sell-offs.

Jim Cramer [18:50]: "Invest in sectors that aren't heavily dependent on economic swings. Healthcare and mega-cap stocks often provide stability during turbulent times."

Caller Interactions and Personalized Advice

Throughout the episode, Cramer engaged with several callers, offering tailored investment advice.

Caller Tony on Roth IRAs [10:31]

Tony inquired about opening non-deductible Roth IRAs for his grandchildren and whether to choose growth or index funds.

Tony [10:32]: "I want to open non-deductible Roth IRAs for my grandchildren. Should I go with a growth fund or an index fund?"

Jim Cramer [10:35]: "Go for growth, especially since they're young. They can switch to index funds in their 30s. It's about taking real risk when they're in their prime investing years."

Caller on Buying Stocks After Earnings Dip [11:14]

A caller sought advice on whether to buy stocks immediately after earnings dips or wait.

Caller [11:14]: "Can we buy a stock the day after it buys down post-earnings, or should we wait three days?"

Jim Cramer [11:35]: "Buy at your prices. Start small and continue buying on the way down. Don't wait; tough days don't last, but you need to act smartly."

Caller on High-Yield Dividend Stocks [30:59]

Joseph asked about investing in high P/E ratio stocks and making them acceptable.

Joseph [30:59]: "Should we buy stocks with high P/E ratios? What makes it acceptable?"

Jim Cramer [31:26]: "Use historical multiples or Rule 40—add your revenue growth rate to your profit margin. If it's over 40, it's a keeper. Ensure the company has good margins and revenue growth."

Caller on Taking Profits and Tax Considerations [31:26]

Tim questioned when to take profits versus holding for capital gains tax benefits.

Tim [31:26]: "When should I sell to break even versus holding for tax benefits?"

Jim Cramer [31:30]: "That's a tax question. Consult your tax advisor, as everyone's situation is different."

Advanced Market Strategies and Insights

Cramer delved into more sophisticated strategies for leveraging market declines to one's advantage.

Margin-Induced Sell-Offs

He explained how excessive leverage and margin calls can trigger widespread selling, leading to severe market drops.

Jim Cramer [35:10]: "Margin calls from over-leveraged positions can spiral into massive sell-offs. Recognize these patterns and act accordingly."

Political and International Risks

Cramer addressed the often-overblown political risks, advising investors to focus on how geopolitical events genuinely impact their holdings.

Jim Cramer [40:20]: "Most political risks don't significantly alter the fundamentals of your investments. Focus on companies' direct earnings risks rather than geopolitical noise."

Circuit Breakers and False Security

He critiqued the reliance on circuit breakers, arguing that they provide a false sense of security without preventing market panic.

Jim Cramer [43:00]: "Don't rely on circuit breakers to protect you from panic. Fear is inherent in the market, and no mechanism can eliminate it."

Key Takeaways and Final Advice

In closing, Cramer emphasized the importance of discipline, recognizing market mechanics, and remaining opportunistic during downturns.

Jim Cramer [47:15]: "Understand what's driving the decline, identify when it's subsiding, and take action to buy, not sell. Never panic. Stick with quality investments."

He reiterated that while systemic risks are rare, most sell-offs present buying opportunities for informed and disciplined investors.

Conclusion

This episode of "Mad Money" provided a comprehensive analysis of past market crashes, dissected the mechanics behind flash crashes, and offered strategic advice for navigating and capitalizing on market downturns. Through historical insights and practical strategies, Jim Cramer empowered investors to make informed decisions during volatile times.

Disclaimer: All opinions expressed by Jim Cramer are his own and do not reflect the views of CNBC, NBCUniversal, or their affiliates. Invest wisely and consult with financial advisors as needed.