Mad Money w/ Jim Cramer 6/15/26

Summary

Mad Money w/ Jim Cramer – June 15, 2026
Episode Summary

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Main Theme & Purpose

In this episode, Jim Cramer dedicates an entire show to his “Rally Playbook”, focusing on how investors should handle short-term market rallies. He emphasizes the importance of discipline when the market is soaring, outlining strategies for taking profits, reassessing portfolio risk, and preparing for eventual downturns. Throughout, Cramer uses his trademark humor and directness to debunk common investor psychology traps—like euphoria, complacency, and the peril of chasing stocks higher. Call-in questions cover retirement strategies, asset allocation, and beginner investing, all grounded within the rally-management framework.

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Key Discussion Points & Insights

1. Why a Playbook for Rallies?

• Rallies can make investors complacent: “In a bull market, there is nothing worse than watching the averages roar higher while your portfolio just sits there barely moving... you might be making a few basic mistakes.” (Jim Cramer, 01:20)
• Euphoria is dangerous: Investors typically want advice during sell-offs, but Cramer insists “you need a rally playbook... there are all kinds of mistakes you can make when stocks are going higher.” (12:58)
• The hard-to-follow rule: While everyone knows “buy low, sell high,” in practice, short-term gains can lead investors to irrational behaviors—either doing nothing or chasing further upside.

2. Core Rally Rules & Discipline

A. Sell Into Strength, Don’t Chase Rallies

• Trim positions on big up days: “You don’t actually have a profit until you sell something. You aren’t making money until the register is rung.” (02:35)
• The dangers of ‘buy, buy, buy’: “Just as we can’t give in to despair when the market’s down, you simply don’t want to give in to euphoria and buy, buy, buy when the market’s roaring.” (03:05)
• Sell incrementally: “We never ever buy or sell all at once. That’s not my style. But on big up days, you can sell in larger increments.” (06:27)

B. Get Tough on Your Portfolio

• Harsh evaluation during rallies: “Suspend the benefit now. Assume everything you own is guilty until proven innocent. Focus on the worst qualities of your stocks. Emphasize the downside. Make each and every company you own prove to you that it’s worth holding all over again.” (14:19)
• Don’t fall in love with winners: “You can love your spouse and your kids, but don’t become enamored with your stocks. They’re just silly pieces of paper you bought to make money. They’re not going to love you back.” (15:11)

C. Raise Cash As Markets Spike

• Cash as flexibility: “Cash, my friends, is what makes everything else possible. Back in my old hedge fund, I would never ever have less than 5% of my portfolio in cash. And I try to get it up to 10 if I could, especially after a nice run.” (23:21)
• Never go full cash, but never be fully invested: “Not selling something to raise cash when the market’s making it easy for you is downright reckless.” (24:55)
• Cash prepares you for down days: “You get the most mileage out of preparing for the worst days on the best days.” (22:43)

D. Use Rally Performance as a Diagnostic

• Outperformance is a red flag: “What should get you truly concerned is watching your stocks dramatically outperform the average. Dramatically outperform—that’s the key word in a market wide rally… it means you’re taking on way too much risk with your portfolio.” (32:47)

3. Common Mistakes in Rally Environments

• Chasing stocks after a big rally: “Do not buy stocks after the averages have just spiked. Don’t chase. Be smarter than a dog.” (41:21)
• Risk of poor diversification: “If your portfolio leaves the averages in the dust on a day when the market’s roaring, it means you’re taking on way too much risk... maybe you’re 50% tech.” (33:12)
• Margin amplifies risk: “A big rally gives you the best opportunity to get off margin and start investing like a sane person rather than someone with a financial death wish.” (23:44)

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Notable Quotes & Memorable Moments

• On emotional discipline:
  “Euphoria is fine as long as it doesn’t lead to complacency. Complacency is your nemesis on a big up day.” (05:13)
• On cash:
  “While I’m a citizen of the United States, I always pay my respects to the one true king, which is cash.” (23:21)
• On buy-and-hold dogma:
  “The idea that you should buy and hold through both the best of times and the worst of times has proven to be incredibly foolish. With only very few exceptions, you need to use strength to lighten up.” (03:17)
• On risk in rallies:
  “Making too much money on a given day can be a problem or at least a red flag... those gains are ephemeral. They won’t last.” (33:23)

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Listener Q&A Highlights

Retirement & Asset Allocation

• Michael in Pennsylvania asks where to invest $100k from a home sale:

  • Cramer: “I think that you should be buying dividend stocks... try to pick ones that are 4 or 5% and I think you’ll do very well.” (08:51)

• Steve in Kansas on his 60:40 growth/value split:

  • Cramer: “I like how you’re positioned because you’re betting with your life, not against your life. That’s what I teach people to do.” (10:06)

Beginner Investor Guidance

• Linda in Illinois, retired postal worker, wants to start buying stocks:
  • Cramer: “Start with your first $10,000 in an index fund... try to put in a couple hundred dollars each month, don’t go all at once... If the market drops more than 10%, double up that month.” (30:48)
  • On individual stocks: “I love Nvidia. Not the right method of diversification.” (31:43)

Young Investor Career Advice

• Dylan in Virginia, student looking for advice in finance:
  • “Work harder than everybody else. If you see everyone’s coming at seven, come in at six... Look around, if anyone else is still there, you stay later. That is what the bosses want to see.” (29:42)

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Practical Takeaways and Rules

• Sell some into strength on big up days, don’t go all in or all out (06:27, 24:55)
• After a huge rally, avoid buying more stocks the next day—fight FOMO (41:21)
• Regularly re-rank holdings: 1 = buy now, 2 = buy on pullback, 3 = sell at higher price, 4 = hold/need more info (17:56)
• Keep at least 5–10% of portfolio in cash for flexibility (23:21)
• Check portfolio for over-concentration/risk if you dramatically beat the market on a rally (33:12)
• Always plan your sell strategy before you buy a stock (22:13)

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Timestamps for Important Segments

• [01:20] – Why rallies can feel unfair and what mistakes investors make
• [03:05] – The importance of selling into strength
• [06:27] – Incremental selling and the value of discipline
• [08:18] – Q&A: Michael’s $100k investment and dividend stock strategy
• [10:06] – Q&A: Steve on growth vs. value in retirement
• [12:58] – Why rally playbook might be more important than selloff playbook
• [14:19] – How to get tough on your portfolio during rallies
• [23:21] – Why cash is the king of your portfolio
• [30:48] – Q&A: Linda’s index fund starter guide
• [32:47] – Outperformance as a risk warning, diagnostic use of rallies
• [41:21] – Do not buy after a big rally; control your FOMO
• [43:33] – Lightning Round: IPO investing, GAAP vs. non-GAAP, Buying on basis, RSI as decision tool

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Conclusion & Final Playbook Rules (46:33 - End)

• Rallies are your turn to become a seller, not a buyer.
• Emotion is your enemy; discipline is your protection.
• Raise cash when it’s easy—when markets are higher, not when they’re bottoming.
• Assess your risk when you’re winning, not just when you’re losing.
• Don’t chase—if you missed a rally, wait for a better pitch.

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This summary provides all major advice and rules from the episode, and is ideal for first-time and seasoned investors looking to manage wins in strong bull markets with clear-eyed discipline, as only Jim Cramer would prescribe.

Transcript

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[Jim Cramer]

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 Kramer. Welcome to Mad Money.

[Caller/Listener]

Welcome.

[Jim Cramer]

Welcome to Crame America. Other people want to make friends. I'm just trying to make a little money. My job's not just entertain, but to teach you. So call me at 1-800-743-CBC or tweet me Jim Cramer. In a bull market, there is nothing worse than watching the averages roar higher while your portfolio just sits there barely moving. It makes you feel like a complete dope, doesn't it? Like the stock market must be some sort of total shell game. But really it just means you might be making a few basic mistakes. That's why tonight I'm devoting the whole show to my playbook for taking advantage of a short term rally. Not to be confused with a so called bear market rally, which is a bogus term people throw around whenever stocks go up at a time when the intelligentsia thinks they should be going down. Yep. I want to give you my game plan for handling short term gains. Now I know what a lot of you are thinking. What kind of incompetent doofus needs a guide to make money rally? What's next? Is Kramer going to draw us a diagram explaining how to pick your nose? I mean, mad potty training. Should I just start reading picture books to children? Hey, we've already got the animal status. Reading rainbows. Been off the air for more than a decade. Maybe you feel like that that's the same level of difficulty as making money when the stock market's on fire. Who needs help when the Dow's up hundreds of points in a day? Or even better, during a multi day rally, a real run of a buy fest. Do you really need my advice to help you deal with what? Huge profits? No, I'm not buying in that biggie small theory of investing more money, more problems. But knowing how to approach a quick run the right way can make you a better investor. And tonight I want to teach you some of the discipline that we demonstrate for the CBC Investing Club all the time. Sure, everybody makes money in a big rally. Can even feel like you're running your portfolios run itself, that it doesn't feel like that. But I'm not here to talk about how to make the most money possible when the market's up big. Honestly, not that crucial. No. The most important lesson for dealing with a major short term move higher is that you always have to work hard to prepare yourself for the future. Otherwise you'll end up letting some great opportunities to sell, sell, sell, sell as you buy, sell, sell, sell. That's right. Just as we can't give in to despair when the market's down, you simply don't want to give in to euphoria and buy, buy, buy when the market's roaring. That's not when you should buy, it is when you should be taking some chips off the table. Remember, you don't actually have a profit until you sell something. You aren't making money until the register is rough. And the idea that you should buy and hold through both the best of times and the worst of times has proven to be incredibly foolish. With only very few exceptions, you need to use strength to lighten up, particularly on stocks of companies with deteriorating fundamentals. That's why I always insist you do your stock homework. Because how else will you know what to unload? And if you don't want to do it yourself, you know what? You can join our club, the CNBC Investing Club. And we do a lot of homework for you and with you. Why is it so hard to sell to strength? Good question. Let me put it this way. Nobody wants to miss a rally. If you sold every stock you own right before a huge update, you feel like a stooge. Not even Larry, Curly or Mo. I mean, maybe the dreaded Shemp. Let's look at it another way. Say you're in stocks for the rally and you have massive gains. But you don't do anything. You let them ride, so to speak, and then gradually, or maybe not so gradually, your stocks come back down. And if you hang on for too long, if you let your gains ride until they evaporate, how is that any different from missing the entire rally? It isn't. Making lots of money on a great day or a great month or great year is wonderful. But you can't view a rally as just a day or a few days where your portfolio went up in value and nothing more. You need to see it as a time to take action, even if you don't fancy yourself a trader. And try not to time the market. Even if you're like that, and I encourage you to be like that, you have to make an exception for some very good but sharp up rallies. That's what I'm talking about. Just you need to remember the good days during the sell offs to keep yourself in the game. You remember the down days when the market's roaring to keep yourself tethered to reality. Don't pass up an opportunity. Trim your positions just because you're in stocks for the long haul. As an investor, not a trader, I'm not telling you to blow out of the positions. That's not what I'm saying. I'm talking about doing so. Being an investor does not absolve you of the need to have judgment. In other words, you should approach every rally with a grain of pessimism about what's coming next. That shouldn't be that hard. Think about this like the post Covid meltdown in 2022. Not many wanted to sell in late 2021. It looked too great, right? Because we had an unbelievable bull market. We're buying. The dips made you a fortune. But then the Fed declared war on inflation and those gains disappear. If you had sold stocks gradually on the way up, as I told you to do, you were much better shape as the market spent the next 11 months. You just getting obliterated. There's nothing wrong with feeling good about a rally. Someone with some violent mood swings that happen to reach for that cheap scotch line on a dirty linoleum floor. When you get that really bad tape can tell you I recognize the value of celebrating your stocks when times are good. Euphoria is fine as long as it doesn't lead to complacency. Complacency is your nemesis on a big update. You can be thrilled. You just don't. Don't forget that you're getting a terrific opportunity to lighten up on some of the Stocks. That's what short term rallies for. But it's very easy to be swept away by the positivity. When the market's up and everybody's optimistic, the last thing people want to do is sell. Once you believe in the market again, when everything seems wonderful, how could you ever want to sell a stock? In theory, we all know we're supposed to buy low and sell high. But in practice, that could be a lot harder than it sounds. This is why we constantly teach you the discipline of selling in a strength when you join the club. Because we do it all the time with the Travel Trust. We peel some off. Look, I know the feeling. You're sitting there watching the gains roll in and you feel like selling some stock would be the most insane thing in the world. Because what happens if the rally keeps going? Doesn't matter. We sell into strength, but we also never sell all at once. That way timing is less of an issue. Take some off and if the rally holds up well, you can sell more later. The name of the game is preparation. While there's no real way to prepare for a rally other than by owning stocks, you can use a rally to prepare yourself for potential down days in the future. It's a little counterintuitive, but. But it works. The best time to adjust your portfolio like that is is when stocks are going higher, not when they're going lower. Think about what you'll need if the market goes south and consider what you can do for your portfolio today, the day of the rally that you couldn't do yesterday. The simple answer is that you can sell part of position to take advantage of higher prices. Remember, we never ever buy or sell all at once. That's not my style. But on big up days, you can sell in larger increments. In the rest of the show, I'm going to go through the whole mad money rally playbook and and explain what to sell, how to sell it, and why you're selling. But right now, here's the bottom line. When the stock markets had a big short term run, short term, don't get carried away by the optimism. Instead, keep your head on straight, check your emotions, focus on the long term and think about ringing the register, especially on stocks that might be getting too high. More on that later. Let's go to Michael in Pennsylvania, please. Michael.

[Caller/Listener]

Hey Jim. Booyah. This is Michael and Philly Burbs. Hey, I'm looking to sell my house for about 500,000 and I'm buying a new place for about 350.

[Jim Cramer]

Okay.

[Caller/Listener]

And by the time I'm all done, I'm probably going to have $100,000 to invest for my retirement.

[Jim Cramer]

That's terrific looking.

[Caller/Listener]

I'm looking to do what do I do short term high growth and what do I do long term dividends like

[Jim Cramer]

okay, okay, now I know my I tell you I am in a different camp from most everybody else. I want to bet on my long term life. I want to be able to say, look, I think I'm going to live long. The all the longevity statistics. Very good. I think Larry Fink agrees me on this. He's the great CEO of BlackRock. I think that you should be buying dividend stocks. I'm trying to urge you to not move into cash. Dividend stocks are a great way to protect yourself. Try to pick ones that are 4 or 5% and I think you'll do very well. And you can do it yourself. I know you can build this. Steve in Kansas, please. Steve.

[Caller/Listener]

Booyah. Jim, how you doing?

[Jim Cramer]

I am doing well, Steve. How about you?

[Caller/Listener]

I'm great and thanks for taking my call.

[Jeff Marks]

Sure.

[Caller/Listener]

So Jim, I'm heading into retirement at the end of this year and I have been investing all my life. I'm 100% equities, no bonds. At the beginning of 2022, I moved about 40% of my portfolio into value. So I'm a 60:40 growth value. I've been big growth all of my life for the most part. What is your opinion about staying with that type of split? 60 40.

[Jim Cramer]

Steve, it is right in my wheelhouse. I would not do a thing. I think you're doing it right. I was so afraid that then you're going to say I'm thinking about switching 20, 20% bonds, 30% bonds. Look, the short term rates are high, I get that. But I like how you're positioned because you're betting with your life, not against your life. And that's what I teach people to do. All right. When the stock market's had a big short term run, please don't get carried away by your optimism. Instead, keep your head on straight. Focus the long term, but also think about ringing the register, especially on stocks that might be getting too high. And I know you own some that will be on Mad Money tonight. I'm giving you everything you need to know about market rallies with my Mad Money Rally playbook. I' how you can tell whether you're taking on too much risk, when you should use rallies to raise cash and the things you should never do in a green tape. So stay with Kramer.

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[Jim Cramer]

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[Jim Cramer]

People always want help when the market sells off. They want me to tell them what to do to validate their fears. When stocks get hammered, investors freak out. They panic. Or at least they want to panic. I think that's right. I mean, I obviously don't want you to panic, but that's what people are doing. Many don't know what's going wrong, few can easily handle the trauma of big losses, and even the smartest operators want some expert advice. But after more than four decades in this industry, I can't recall a single time when someone's come up to me and plaintively asked jim, the market's rallying like crazy. What the heck do we do? Hey, that's unfortunate, because just as you need a playbook to deal with Declines. Like I just mentioned, you also need a rally playbook. A guide that tells you what to do when the market's having a big short term run. Not sell off, but run. I know the received wisdom is that nobody wants to help with a rally, but you need to reject that idea that people only need help when the market's lousy. There are all kinds of mistakes you can make when the stocks are going higher. In fact, the rally playbook might be more important than the sell off playbook, if only because so few people think they need one. So here's my first rule for handling a rally. Always be really, really, really tough on your portfolio. Not just on the down days, but on the big up days. The only time you should be harder on the stocks you own is when you're in the midst of a brutal decline with no end in sight and the need to circle the wagons. Meaning dump everything you aren't thrilled to own and use the cash to shore up your positions in the stocks where you have the most conviction. Obviously, that's a worst case scenario. How exactly do you get tough on your portfolio when you need to give every one of your stocks the harshest possible evaluation? Suspend the benefit now. Assume everything you own is guilty until proven innocent. Focus on the worst qualities of your stocks. Emphasize the downside. Make each and every company you own proof to you that it's worth holding all over again. If this strikes you as silly or even unfair to your fabulous stocks, allow me to explain. Please. On a good day or a good week, you're ready to fall in love with your positions because they made you so much money. That's typical. But it's also a mistake. You can love your spouse. You can love your kids. You can love your pets. I like one of them. You can love your country. You can even love your car. Just as long as you don't become enamored with your stocks. Silly pieces of paper that you bought for the sole purpose of making money. They're not going to love you back. In fact, when we're in the midst of a big rally, you really shouldn't give your stocks too much credit for making you money. Unless they dramatically outperform the rest of the market. Yet even then, you need to give your stocks a hard time. When a stock makes you a fortune, the normal reaction is to like that stock or like it more. However, think about this. Most of the time you should like it less for the simple reason the stocks get more expensive when they go higher during a major market wide rally. Unless there's some serious value enhancing good news. Your stocks become pricier and therefore less desirable if you didn't own them. You know this right? When you look at it, oh, that stock's up too much. For example, no matter how much you like Microsoft company And I do Microsoft, the stock is a lot more attractive, say at 250, than is 350. Correct. In other words, in the wake of a big up move, your entire portfolio just got less attractive. Like I constantly explained to members of the CNBC investing club, price matters. And when a stock price goes up, the risk reward becomes worse. Okay? Valuation makes it more volatile. You made money, which is what we're after. But you can't let that prejudice you in favor of any particular stock. Just like blackjack, the cards have no memory, people. While your stock may have gone up when the market was roaring, that doesn't have much bearing on where it goes tomorrow, does it? The second reason to get tough on your portfolio during a rally is that you can figure out which ones to sell and sell hard. I tell you to sell in the strength all the time, but I recognize this idea is totally contrary to human nature. In a rally, everyone else is buying like crazy. You feel great about your stocks and you certainly don't want to sell. But you have to because there's no better time to sell than during a major short term move higher. Oh, and by the way, this selling doctrine applies to everything, even mutual funds. If you have gigantic short term gains, it's okay to ring the register on some of them. I like that. Again, we all know this is true on some level. We know buy low, sell high, but that's hard to execute in the moment. You have to, though, because the facts have borne it out for years. Even as nobody likes being told to sell a winning stock into a smoking hot rally. So how do you fight your instincts? How do you get to a place where you can sell in spite of your emotions? Simple. Just like I said before, you get tough in your portfolio, reevaluate stocks, and demand a lot more from them than you normally would. Especially since they're more expensive than they were the day before because they went up. Now, I've got a very specific way of grading my stocks that I've used since my hedge fund days. Every week I rank the stocks in my charitable trust, which you can follow along with by joining the CNBC investor club, which I urge you to do. I rank them from 1 to 4. Ones are stocks you would buy at their current price. Twos are stocks you'd buy if they pulled back. Threes are stocks you'd sell at a higher price and fours are stocks. Well, let's say you don't want to take any action without more information, period. And when it comes to this ranking system, a rally has a way of simplifying things. Prices are up, so the former ones, stocks that were worth buying at their current price suddenly become twos stocks only worth buying on a pullback because most things will have gotten too expensive. Get this better to keep your powder dry. Wait for a sell off down the road before you do any more buying. Meanwhile, a lot of your three stocks that you wanted to sell in this rank become four stocks. You don't want to take any action without more information. Now this is just a preliminary approach to what you should sell in a short term rally. I'm going to give you more details later in the show. The reason we rank our stocks like this is to keep our emotions in check. We accept, we understand that we're frail, okay, so we buy low and we sell high instead of buying high just because it feels good at that moment. Most people, for reasons we don't have time to go into out now, at least really enjoy buying stocks but see selling them as a defeat. But reading the register is not a defeat when you're getting top dollar prices during a juicy rally. First though, you have to put yourself in the sell mode. And you start doing that by getting tough on your portfolio bottom line during a big update. And after, don't get swept away by euphoria, okay? Don't listen to the buy and hold doctrine that says it's not worth it if you actually want to buy. You know, book a little profit on some merchandise. Because the whole point of owning stocks is that you're supposed to sell them when they go higher to make money if the fundamentals aren't changed, if the company hasn't improved and it might have gotten too expensive as the stock because of the rout. So when the market's roaring, give your stocks a hard time. Please hold them to a higher standard and ring the darn register on some of the stuff, both on the names you like the least and of course even the ones that are up the most may have Money's back here for the break.

[Mad Money Announcer]

Coming up, want to preserve those profits after a big rally. Kramer's revealing the next chapter of his playbook and how to build build the most important part of every investor's portfolio. Next.

[Caller/Listener]

Hey, Jim, your mission has been very successful in our family. I listen to your show multiple times a week for investing knowledge. I just want to say thanks. I love your show.

[Jim Cramer]

Thanks for always looking out for the world guy. A huge thank you for all you've

[Caller/Listener]

done to make me a better investor.

[Jim Cramer]

I gotta call Kramer because I can't make a move without this guy. I want to make people better investors and if they make money. Fantastic. Let's go to work.

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[Jim Cramer]

Tonight, we're diving into the Mad Money Rally playbook, teaching you the discipline disciplines that will let you take maximum advantage of a big update. Over and over again, I've been telling you that short term rallies are opportunities to sell, sell, sell. Not by extolling the virtues of something that may sound really obvious but can be hard to put into practice because it runs counter to what our emotions say we should be doing when Stocks are roaring. Of course, most people don't like to hear about selling stocks except when they're panicked and they think the whole world's falling apart. Then they want to be given permission to sell as they want to sell everything. Even though that's almost always a mistake. Generally, most investors want to know about buying, especially what to buy. But you know what? You should have a plan for selling every single one of your stocks, even the best ones. And you should make that plan before you ever purchase Them simply as part of the process. Being good investor means knowing when to get out. And it's better to make those decisions beforehand rather than waiting until the heat of the moment. Of course we always want things to stay and never have to sell. But you know what, listen to me on this. Stocks of good companies can get too expensive. It happens all the time in a big rally. Stocks of bad companies also get too expensive. But it's easy to sell something when you know it's bad, isn't it? Much harder to unload something you genuinely like for legitimate reasons. For example, in 2021 we had a spectacular rally in fast growing cloud based software stocks. The whole group got too expensive. But the low quality speculative names with no earnings and the higher quality established companies with great numbers, well, they all went up. And that includes many Kramer faves like Salesforce and ServiceNow. They got too hot and you had to sell them into strength because after the Fed declared war on inflation, the cloud software cohort spent the next 11 months getting more. Oh, the proper ones held up a lot better, but their stocks still got eviscerated. And you could have sidestepped much of that pain if you simply rang the register on the way up. Now let me make this clear. Selling into a rally is not solely about turning a profit then and there. Obviously we're looking to buy low and sell high. So big up day or two gives you a great chance to sell. But the best reason to take some profits or cut your losses during a rally all boils down to what I talked about at the beginning of the show. Preparation. Let me explain. I believe you should be prepared for the bad days down the road. Maybe because I'm a glass heavy, half empty kind of guy. Except of course when being a glass half full kind of guy. But mostly because the bad days are just as inevitable as the good ones. And what's the best time to get ready for these inevitable down days? How about during or right after a big update? That's the perfect moment to take something off the table. Raise cash. In other words, a short term rally is your best opportunity. Protect yourself from potential downside. Trust me, you get the most mileage out of preparing for the worst days on the best days. Don't get me wrong, that doesn't mean you should sell everything into any kind of strength. That would be self defeating. It doesn't mean you should believe that all rallies are ephemeral and not to be trusted. There's an army of strategists and billionaire money managers and commentators who are constantly eager to convince you that every up move is temporary or even illusory alchemy. They want to scare you. I am not one of those. I know that plenty of rallies have staying power and can take you higher and higher. You in true Jackie Wilson style. Perhaps without that Latin casino event, you can believe in a rally and still use a big update to take some profits. Though that's how you get ready for days in the future that likely won't be good. There's no cognitive dissonance here. We're just trying to balance the concept of capital preservation, the need to keep money secure with capital appreciation, the need to grow your money. Both of these are pure necessities and they're not always mutually exclusive. You use a rally to take a profit so that when the market comes back down, you'll have cash on the sidelines. Cash you can put to work buying stocks that have been suddenly put on sale. So in a way, the rally playbook is really an extension rally, more of a prologue to the sell off playbook. We use the rally to stockpile everything that we'll need in case things get bad. And one of those things is cash. Glorious cash. Yet while I'm a citizen of the United States, I always pay my respects to the one true king, which is cash. Plato, cash is probably the single most important part of your portfolio. Most of the home gamers I talk to do not know this. I hear from people all the time who tell me they're fully invested, meaning every dime of their money that's earmarked for investing is parked in stocks. And whenever someone tells me that, they always think it's a good thing. Cash, my friends, is what makes everything else possible. Back in my old hedge fund, I would never ever have less than 5% of my portfolio in cash. And I try to get it up 10 if I could, especially after a nice run. Cash is flexibility. When the market pulls back, give you an opening to start a position in a stock you like, or to buy more of one, say you already own. You need to have some cash on the sidelines in order to do your buying. Otherwise you have to sell something you already own on the fly or use margin, meaning borrow from your broker. And that's something I never recommend doing. It's too risky. Hey, speaking of margin, a big rally gives you the best opportunity to get off margin and start investing like a sane person rather than someone with a financial death wish. What's this got to do with responding to a rally? While we'd like to be Heavily invested with a little cash before the rally. Trying to call one in advance is too difficult. But the best time to raise cash, which many of you absolutely must do if you're fully invested and the rest of you should want to do, is right after a giant move up. This is why we always have some cash on the sidelines. Chapel Trust. Here's how I think of it. Your portfolio's cash position is like your course gas tank. We don't have at least 5% cash. Then you're running on empty. And you better fill her up the next time you get a chance to. Whenever you sell to raise cash, and we'll talk about that after the break, you'll get a much better deal after a rally. But listen, I'm not saying that rallies are a great time to go into all cash. Not at all. I'm saying I believe it's essential to raise some cash during or after rally. Emphasis on some. Really, That's. That's the goal. I don't care how much you like stocks. Not selling something to raise cash when the market's making it easy for you is downright reckless. With the Channel Trust, I've taken my cash position at times up to around 20% when I sense too much euphoria when the market eventually pulled back, put that swing cash back to work. In stocks we liked a lot more than the ones we previously sold. Even so, the quality of companies you own isn't enough. Part of the equation here it is part of it, actually. It's the price of the stocks that matter. And some will get very extended in every rally. So trim them. You can buy them back later. Lower with the cash you raised from selling. That's the entire point. Next time things go sour, you'll have that terrific pile of cash you've hoarded up during the rally. You'll feel great. You'll be able to buy into weakness. You won't feel hampered like so many who don't do this. This isn't about getting a great deal, people. It's about protecting yourself. Bottom line, the next time we get a big update or two, please, I'm begging you, use the strength to raise some cash. You might not know it, but without cash, your portfolio is zero flexibility. And the best time to raise cash is when the market is on fire. Let's go to Dylan in Virginia. Dylan. Well, Mr. Kramer, thank you for your time today. As of course, I'd be grateful for any guidance you could offer students like myself as I prepare to enter the extremely competitive field of high Finance. Thanks so much for your advice. All right. Work hard. Work harder than everybody else. If you see everyone's coming at seven, come in at six. Working at six, come in at five. Be the last person to leave, okay? I don't care what. Be the last person. Look around if ever, if anyone else is still there, you stay later. That is what the bosses want to see. By the way, do some work while you're there. I mean, like, you know, I don't want you playing solitaire, but work harder than everybody else. That's the secret of the work from home, people. Let's go to Linda in Illinois.

[Caller/Listener]

Linda, hello. Booyah, Jim.

[Jim Cramer]

Booyah. Linda. What's going on?

[Caller/Listener]

Hey, it's so wonderful to talk to you. Listen, I affectionately call you Mr. Magic Money Maker.

[Jim Cramer]

Well, that's high praise.

[Caller/Listener]

Listen, thank you for your wisdom. And this is my question. I'm a retired postal employee who worked for 45 years. I have no financial investment knowledge. I wanted to know how do I buy stocks? And I wanted to ask you, should I try to invest my drift savings plan money in S and P index funds or Magnificent seven or Nvidia or all in video?

[Jim Cramer]

First of all, you're sweet to to. To trust me. I do want you to start with your first $10,000 in an index fund. You'll buy it this following way. You will put if you can. If you can put a couple hundred dollars to work each month. I don't want it in all at once. Okay? If the market market drops extensively big more than 10%, I want you to take the month that you would have bought two months from now and put it to work with that current month. That's how you're going to get the best basis. Stick by that discipline and don't go any faster. And then I'm confident you'll get good prices and not feel like somehow you got hurt. I love Nvidia. Not the right method of diversification. When you're facing a big update, here's what I want you to do. I want you to to use the strength to raise a little cash. You might not know, but without cash, your portfolio has zero flexibility. And the best time to raise cash is when the market is on fire, not when it's going lower. There's much more. Mad money head. You probably think it's good when your portfolio outperforms even on a big rally day. Well, guess what? You'd be wrong. Don't worry, I'm explaining why. Plus I'm taking all your burning market questions with my Investing Club colleague Jeff Marks. So see Stay with Kramer

[Caller/Listener]

Jim Cramer,

[Jim Cramer]

the die hard of the dollar.

[Caller/Listener]

Hey Jimmy.

[Jim Cramer]

Love the show.

[Caller/Listener]

My five year old grandson loves to watch your show.

I have to thank you for making us money when it's there to be made.

[Jim Cramer]

Our world is a better place with you in. You're watching the Mad Money Rally playbook where I'm teaching you the best ways to take advantage of a market that's up big over a short period of time. Remember, that's crucial. Just a spike. Alright? If you're just tuning in. I'm deeply wounded by the cold shoulder you gave me when you will look, we chose not to watch me or at least watch most of the show. I know you did it as a callous and sadistic attempt to hurt hurt my feelings. Graduations. It worked. I hope you're happy. Back to business. Most of my rally playbook has been about what you can benefit do to benefit from higher stock prices. How you can use the rally to set up for the inevitable rough patches that the market runs into sooner or later by raising cash and which stocks you should sell in order to do it. The last part of my rally playbook is a little different. It's not about what you can do during or right after rally, which we've already covered. Instead, I want to highlight what a major move higher can teach you about your portfolio because rallies are incredibly illuminating. I'm not too worried about anyone seriously underperforming the averages on a big up day because that's something you can easily study and fix by getting more exposure to the sectors that were up the most. No, what should get you truly concerned is watching your stocks dramatically outperform the average. Dramatically up for that's the key word in market Wide Valley. You heard me right. Making too much money on a given day can be a problem or at least a red flag. A situation where your gains are trying to warn you about something is very counterintuitive. But bear with me, the warning is very simple. When your portfolio leaves the averages in the dust on a day when the market's worrying, it means you're taking on way too much risk with your portfolio. I know I don't strike many of you as as most conservative investor round. I get that. And the fact that I do this show every day even though it probably doubles my odds of a heart condition doesn't help my case. But taking an unnecessary risk in your portfolio makes absolutely no sense. And watching how your stocks move in a market wide rally is a terrific way to figure out. If perhaps you're taking on needless risk, say the rally comes and you make much more than the averages. The question is why were you using margin borrowing money from your broker to get that extra bit of leverage that will help you crush the average in rally but will also get you crushed by your losses in the sell off. That's just not worth the people. What else could cause your portfolio dramatically out for the benchmarks in a powerful market wide rally? Well, it could be because you're not diversified enough. That's a way to make boatloads of money in a short frame time frame. Let's say the rally led by is led by tech. Okay. And your portfolio is 50% tech. You'd be a big winner, right? For a day or two. But those gains are ephemeral. They won't last. Not only that, but the outsized profits are a huge warning screaming at you to sell your darn tech positions. Maybe trim it back at least and maybe call me up and play. I might have versified if you're not diversified. If you're keeping all of your stock eggs in one basket, then you could get wiped out in a heartbeat. Just ask all the investors who loaded up on cloud software stocks or electric vehicle plays before they peaked in November of 2021 1. Those people then got blown out the whole business. They just got out with massive losses. They couldn't take it. They were all beating the stuffies out of the benchmarks in late 2020. In the bulk of 2021. They were making too much money. That's right, too much money. Just like tech investors for the dot com bubble burst in 2000. If they pay attention to this rule, something we remind you of constantly, if you happen to be a member of the CBC investing club, then they might have been able to avoid the damage from the hideous tech loss losses in 2022. They could have adjusted their holdings and lightened up on their biggest winners so that no single sector made up more than 20% of the portfolio. So let me give you the bottom line here. The best time to figure out if you're making too much money, meaning you're taking on a dangerous amount of risk, is during a big market wide rally. Use these runs as diagnostic tests to see if your portfolio has too little diversification and too much risk or if it's a okay, Mad money. Be right back.

[Mad Money Announcer]

Coming up, have a fear of missing out? Kramer's giving you his guidebook on how to keep those emotions in check after a big run for the market.

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Next.

[Caller/Listener]

Oh yeah, Jim Cramer. I'm a first time caller, a happy club member.

[Jim Cramer]

I want to thank you for being the people's champion of.

[Caller/Listener]

Of investing. Thank you for helping me become a millionaire.

[Jim Cramer]

If you've ever dabbled in the stock market, chances are you know who Jim Cramer is. One of the greatest, most spectacular performers on television. We turn now to a Wall street veteran, a financial heavy hitter, and he's the man hundreds of thousands of hopeful investors turn to every day. Makes his living throwing chairs, hitting buzzers and screaming at the top of his lungs, the mad prophet of profit, Jim Cramer. Jim Cramer. Please welcome Jim Cramer. Mad Money's Jim Cramer. My first question is. We've never discussed this. What's wrong with you? Booyah.

[Venture Global Advertiser]

Booyah.

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Booyah.

[Jim Cramer]

Ski daddy. Ski daddy. We have no idea what that means. Stock guru, Mad Money. Best selling author and fantasy football fanatic. Market's crazy, so you gotta have a madman. You gotta stay focus. We were talking about making money. Jim Cramer is here tonight. This is the great Jim Cramer from Mad Money on cnbc, a really terrific show. Mad Money's Jim Cramer. Jim Cramer. I think this thing could even go as high as a. Don't buy. Don't buy. Jim Cramer hosts Mad Money on this network.

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What is cnbc?

[Jim Cramer]

Hello, fellow Facebookers. I'm here to do one thing, get you more friends. Stark Industries. Let me show you the new Stark Industries business plan.

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I'm grounded and spend all day listening to my dad yell at Mad Money with Jim Cramer.

[Jim Cramer]

Are you okay?

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Oh, yeah, it's nothing. I was a guest on Mad Money last night.

[Jim Cramer]

What's happening? It's one of you, Jim Cramer.

[Caller/Listener]

Okay, stop it.

Stop it.

[Jim Cramer]

Jim Cramer had this to say about the. He's a prophet. Listen. And he's nuts.

[Caller/Listener]

They're nuts. Nuts.

[Jim Cramer]

They know nothing. You said it was going to be the end of the world. Nobody knows anything. You know nothing. They know nothing. In retrospect, don't you think you were too calm? Whatever money you may need for the next five years, please take it out of the stock market right now. That was a call that should have wrecked my career. And it would have if the market gone up, stuck my neck out and saved a lot of people that. He was right. At that point, we were at the beginning of this great panic. Don't say that. It's very hard. They're stupid.

[Lifelock Advertiser]

Is it?

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Yes.

[Jim Cramer]

I have a gift to turn people on to this stuff, to get them involved.

[Caller/Listener]

And I.

[Jim Cramer]

And I. I love doing it. I love to teach and educate this stuff. This stuff is for me. This stuff is really for me. It is the right thing. I cannot believe how lucky I am at this age to have come across an unbelievable thing, which is a show that I run and I love. Like I've been saying all night, you may not think you need your need help at all when the market seems to be levitating, but in reality you probably do. When stocks go up, especially when they're a big people get emotional and emotions make us bad investors. Period. Always does. And that's why the Mad Money Rally playbook is all about helping you combat your intuitive emotional reactions so you can make sound, rational decisions. By the way, we teach this discipline, same discipline in more detail to members of the CBC Investing Club every single day as we manage the charitable trust. Remember, when you catch a big update, that's a selling opportunity, all right? What you want to use it to unload some of your best performers along with your laggers and the stocks you wanted to get rid of anyway. Also, you can raise some cash for a rainy day. That's the most important thing to keep in mind after a major move higher. Which brings me to my final rally rule. At a moment when raising cash is essential, spending cash is absolutely prohibited after big one day move. I know you're going to be tempted to buy some stocks the next day. I know this big up days make us more bullish. Investors love to chase rallies the same way dogs like to chase cars. When your last experience in the market was having practically all your stocks produce huge gains, of course you're going to feel like buying. But that's another case where your feelings are leading you astray from good investing. Do not buy stocks after the averages have just spiked. Don't chase. Be smarter than a dog. I want you to take advantage of rallies. But when you buy stocks the day after, the ones after they just got marked up big, you are letting the rally take advantage of the you. I know you're doing this too. I read it on Axe fully Twitter at Jim Cramer all day after every big rally. And that's when people are just most excited. That's when they want to open their walls and start chasing stocks. Don't do it. I know this sounds like common sense, something any clown could figure out. Say nothing of Kramer Faye Bozo, but I don't waste your time on the show. Of course you know it's silly to buy the day after a rally or after stocks just had a huge range run. You know it right up until the moment when you get swept away by your euphoria, which is a mistake we all make, including yours truly. That's why you need a playbook. You need rules to prevent yourself from getting swept away and making mistakes that you think you're obviously going to regret later on. So please, if you want to buy a stock and the markets just had a remarkable run, do me a favor and tell yourself you missed it. Just say, darn it, I missed it and take a pass. Or at least, very least, very least, keep your bat on your shoulder and wait for a better pitch at a cheaper price. It's the smartest thing you can do in that situation and it could save you a lot of pain down the road. Here's the bottom line. I always tell you to buy into weakness and sell into strength, but that really means you need to sell some of your winners the moment when they're at their hottest. And you probably shouldn't buy anything when the market feels like it's on fire. If you do, your news stock picks will likely be consumed in the aftermath of that fire. And you wanted much to show for all that hard won money that went up in spring. Throughout this entire show tonight, you've heard me explain to you how to protect and play your portfolio in a bull market. I love to teach my viewers, but I also love learning from them, which is why I always say my favorite part of the show is taking questions directly from you. Tonight I'm joined by Jeff Marks, my portfolio analyst and port and yes, partner in crime, the CNBC Investing club. And we're going to answer some of your burning questions. We'll also give you a little inside look at what we do in the club. If you're not a member of the club, you can just scan the code or go to cnbc.com investingclub to sign up. I hope you do. Let's take our first question, Jeff. All right, first up we've got. Oh, when do you recommend investing in an ipo? Now this one Jeff, I'm going to let you handle because there's nothing harder.

[Jeff Marks]

Yeah, look, I think if you can get in on the deal, that's always preferred. Right. But if you are trying to invest in a new ipo, just make sure that the valuation is in convenience, completely out of whack with some other companies in its peer group. One more consideration, lockups. Always something to be mindful of when a company becomes public. Oftentimes the the employees of the company, the major shareholders, they are restricted from selling stock once they become unrestricted. Sometimes they'll unload their shares right away that could create pressure on the stock. So just be mindful of lockups because if you're a little bit patient it may lead to a a better price.

[Jim Cramer]

I want you to but you have to understand that I get very enthusiastic and Jeff is to check on me with all the time. What happens is so many of these IPOs are so exciting but that should never dictate why you buy something. Excitement doesn't count. Next up, Andy in California. Hi Jim. You please explain how investors should view GAAP or non GAAP earnings. Thank you. This very complicated but let's suffice it to say that I like what are known as traditionally I generally accepted accounting principle numbers. In other words, I don't want to hear fancy ways to make earnings when there is a traditional way that I learned in accounting and you learned to sure. Let's not fool around.

[Jeff Marks]

Gap is gold standard. I mean at times it is helpful to look at non GAAP because they'll exclude some one time items that maybe doesn't give you a great apples to apples comparison of earnings. But sometimes we know management teams, they like to take a very liberal view of those non GAAP earnings. So you have to be careful right sometimes around that.

[Jim Cramer]

And we don't share the notion of liberal view. There are so many companies out there that have straightforward accounting. Why reach to someone that doesn't? And why don't we go to Todd Minnesota who asks concerning when to buy. Doesn't only buying adding to a stock when it's below basis dogmatically ensure we miss all momentum runs and only participate in downturns? I missed out on news runs in the fall because I hesitated to add the partial position. This is a an art, not a science, sir. And what happens Todd is that we end up yes, we're going to miss some. That's absolutely true. But we care more about the downside. If we stop the downside if we protect against the downside the upside is going to take care of itself. It is painful for me sometimes. We've talked many times about about how we refuse to violate basis. Yeah, this is something we fight every day to tooth and nail. But the fact is we have proven evidence that we've saved more money than we would.

[Jeff Marks]

Yeah, look I like to apply a strict interpretation when you're just putting on position on over those first couple of weeks, maybe months only because you never know what curveball the market may throw at you. In that case just being a little bit patient saves you. But in terms of when to violate well, if you, if you've been owning the stock for a while and you've had a lot of good news come, well, then it's just a better company than from where you first started buying it. So that could, that could violate.

[Jim Cramer]

Look at it a great way. I know that there'll be situations that are missed, but you just heard why we have to stick to our discipline. Next up, we have a question from Karen in New York who asks how do we find the RSI and is a reliable indicator for making investment decisions? You know, this is great, this relative strength index. I do like to look at it, but I'm not wedded to it. And we can find it in various different places. I don't know. I tend to just look at the chart myself.

[Jeff Marks]

Yeah, look, you can find it on your trading platform. Keep in mind rsi. It could signal when a stock may be overbought or oversold. But overbought doesn't necessarily mean sell, and oversold doesn't necessarily always mean. Mean by. At the end of the day, the fundamentals are what matter most. And if a stock is oversold for a long time, it could signal that something is fundamentally wrong.

[Jim Cramer]

Very true. And we're looking for Entry Point. It's. It's a tool. Again, what I find most important about Entry Point is whether I'm buying it expensively or less expensively. And as far as I'm concerned, rsi, it's just another arrow in the quiver. But not the most important one. I like to say there's always a bull market somewhere. I promise you I'd find it just for you right here on Mad Money. I'm Jim Cramer. See you next time.

[Podcast Disclaimer]

All opinions expressed by Jim Cramer on this podcast are solely Kramer's opinions and do not reflect the opinions of CNBC or its parent company or affiliates and may have been previously disseminated by Kramer on television, radio, Internet or another medium. You should not treat any opinion expressed by Kramer as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his opinion. Kramer's opinions are based upon information he considers reliable, but neither CNBC nor its affiliates and or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. To view the full Mad Money disclaimer, please visit cnbc.com madmoneydisclaimer this is a

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