Mad Money w/ Jim Cramer – August 22, 2025

"The Mad Money Rally Playbook: How to Maximize Gains and Avoid Mistakes in a Bull Market"

Episode Overview

In this episode, Jim Cramer dedicates the entire show to what he calls his “Mad Money Rally Playbook”—a complete, no-nonsense guide for investors on how to handle short-term market rallies. Rather than focusing on how to ride the exuberance of rising markets, Cramer urges listeners to develop discipline: to sell into strength, prevent euphoria from clouding judgment, and use rallies as an opportunity to strengthen portfolios for inevitable market downturns. With his trademark candor and humor, he explores practical tips, emotional pitfalls, and hard data, all designed to help regular investors make rational moves during times of bullish euphoria. The episode also features several interactive Q&A segments with listeners and insights from portfolio analyst Jeff Marks.

Key Discussion Points & Insights

1. Why You Need a Rally Playbook

• Common Mistake: Investors often neglect seeking advice during rallies but clamor for help during downturns.
  • “People always want help when the market sells off... But after more than four decades, I can’t recall a single time when someone’s come up to me and asked, ‘Jim, the market’s rallying like crazy. What do we do?’” [12:32]
• Danger of Complacency: Complacency and euphoria during rallies lead to poor decisions.
  • “Euphoria is fine, as long as it doesn’t lead to complacency. Complacency is your nemesis on a big update.” [06:34]
• Purpose: Develop rules for selling, not just riding the wave.

2. Core Rally Playbook Rules

A. Treat Rallies as Opportunities to Sell, Not 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. That’s not when you should buy. It is when you should be taking some chips off the table.” [05:49]
• Remember: You only make money when you actually sell and the register “rings.”

B. Gradual Profit-Taking and Preparation

• “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.” [07:26]
• Use rallies to raise cash for flexibility during future downturns:
  “Cash, my friends, is what makes everything else possible... 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.” [22:43]

C. Tough Portfolio Evaluation

• On up days, scrutinize every holding ruthlessly:
  • “Always be really, really, really tough on your portfolio. Not just on the down days, but on the big up days.” [12:54]
  • “Suspend the benefit of the doubt. Assume everything you own is guilty until proven innocent. Focus on the worst qualities of your stocks.” [13:21]
  • Don’t fall in love with your winners: “You can love your spouse, kids... but don’t become enamored with your stocks. Silly pieces of paper... They’re not going to love you back.” [13:54]

D. Diversification & Risk Assessment

• Outsized gains compared to benchmarks may indicate too much risk or 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…” [32:24]
  • Overexposure to a winning sector can turn very ugly when the tide turns—as seen with tech in 2021-2022.

E. Avoid Chasing Rallies

• “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’re letting the rally take advantage of you.” [39:08]
• If you missed a big run, “tell yourself you missed it and take a pass.” [40:46]

3. Listener Q&A Highlights

Practical, Investor-Focused Advice

A. Selling a Home & Investing a Windfall

• Caller Michael: Asks whether to focus on short-term high-growth or long-term dividends with $100k.
  • Cramer: “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.” [08:41]

B. Portfolio Split Approaching Retirement

• Caller Steve: Is a 60:40 growth to value split good in retirement?
  • Cramer: “60, 40, Steve, it is right in my wheelhouse. I would not do a thing... You’re betting with your life, not against your life.” [09:55]

C. Young Investor Entering Finance

• Caller Dylan: How to prepare for a career in high finance.
  • Cramer: “Work hard. Work harder than everyone else.... Be the last person to leave.” [28:25]

D. Beginner Investor & Index Funds

• Caller Linda: Should she use savings in an S&P index, Nvidia, or “Magnificent Seven”?
  • Cramer: “I do want you to start with your first $10,000 in an index fund… put a couple hundred dollars to work each month… Stick by that discipline and don’t go any faster.” [29:47]

4. Portfolio Management Systems

• Cramer’s 1-4 Stock Ranking System:
  • 1 = Buy now
  • 2 = Buy on pullback
  • 3 = Sell at a higher price
  • 4 = Hold until more information
  • “A rally has a way of simplifying things… former ‘ones’ become ‘twos’, and ‘threes’ become ‘fours’.” [15:18]

5. Common Emotional Traps

• “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.” [21:13]
• “Most people, for reasons we don’t have time to go into, really enjoy buying stocks, but see selling them as a defeat. But ringing the register is not a defeat when you’re getting top dollar prices during a juicy rally.” [17:33]

6. Memorable Quotes & Moments

• “You aren’t making money until the register is rung.” [06:14]
• “The best time to raise cash is when the market is on fire, not when it’s going lower.” [29:55]
• “Stocks of good companies can get too expensive. It happens all the time in a big rally… It’s easy to sell something when you know it’s bad. Isn’t it much harder to unload something you genuinely like?” [21:23]
• “If you’re not diversified, if you’re keeping all your stock eggs in one basket, then you could get wiped out in a heartbeat.” [33:50]
• On risk: “Making too much money on a given day can be a problem or at least a red flag… the warning is very simple. You’re taking on way too much risk.” [32:24]
• On IPOs (with Jeff Marks): “Make sure that the valuation isn’t completely out of whack with some other companies… Be mindful of lockups.” [42:33]
• Technical tools (RSI): “It’s just another arrow in the quiver, but not the most important one. At the end of the day, the fundamentals are what matter most.” [45:57]

Timestamps for Key Segments

• Main rally discipline/intro: [00:40] – [07:58]
• Listener Q&A (investing windfall): [08:08] – [09:13]
• Rally Playbook & Portfolio Grading: [12:32] – [19:22]
• Cash as King, Raising Cash: [21:05] – [29:47]
• Diversification, Outperforming Risks: [29:47] – [35:09]
• Avoid Chasing Rally/Emotional Awareness: [35:53] – [42:33]
• Q&A with Jeff Marks (IPOs, GAAP, adding to positions, RSI): [42:33] – [46:44]

Final Takeaways

• Focus on Selling into Strength: Use rallies as your main chance to trim, rebalance, and prepare for downturns.
• Emotions Are the Enemy: Recognize when euphoria is affecting your judgment—discipline trumps instinct.
• Diversification is Protection: Big outperformance can be a warning sign, not a badge of honor.
• Cash is Essential: Always keep a minimum cash position for flexibility and opportunity.
• Don’t Chase the Market: If you’ve missed a rally, wait for the next opportunity—don’t get burned by buying after a spike.
• Stay Disciplined: Develop and follow a plan—both for buying and for selling.

For more daily tactics and deep dives with Cramer, join the CNBC Investing Club or tune in nightly to Mad Money.