Mad Money is a cable television show aired on CNBC, hosted by Jim Cramer. Mad Money first began in 2005, and the show's mission statement and Cramer's job is "to help regular people – shareholders at home watching the show – to better understand the market." Mad Money is about education and entertainment, and Cramer has mentioned that, "[T]his show isn’t about stock picking, as many critics think it is." The show features eight segments: The Lightning Round, Am I Diversified, Sell Block, Game Plan (also known as Speculation Friday), Executive Decision , Off the Charts, Sudden Death, and Mad Mail.
Guidelines and rules
Jim Cramer's primary goal on the show is to help regular, every day investors "make Mad Money." However, due to some critics believing viewers just buy up whatever stocks he recommended, Cramer provided the tools needed to get the most from each episode. Therefore, Cramer mentioned, "The responsibility is on [viewers] to do [their] homework and make informed decisions before [they] buy." One of Mad Money's biggest mantras is "do your homework." Cramer also provided suggestions for how-to do homework correctly, because not all information is created equal. It's important that viewers know what a stocks key metrics are and who the competition is. Moreover, as Cramer pointed out, simply buying and holding a position for the long term doesn't work as an investment strategy. Instead, Cramer recommended "buy and homework." Because Mad Money is about education, Cramer also created a list of "Road Rules" that all viewers should abide by, including five key rules that every professional knows. These rules are to help reinforce the notion that amateur investors can earn just as much money as professionals.
The Lightning Round
The Lightning Round segment of the show is supposed to be entertaining. The segment is also about interactivity and the viewers and the stocks they think are important. Due to the nature of the Lightning Round, it isn’t as well developed as the rest of the show, and it isn't about recommending individual stocks. By definition, according to Jim Cramer, the Lightning Round is recommended as sector analysis; what sectors Cramer likes, which he doesn’t, and the stocks he considers best in show from any given sector.
Am I Diversified, Sell Block and Speculation Friday
Each week Cramer reminds all investors of what they should be asking themselves, "Am I Diversified?" Viewers call in and give Cramer their top five stocks; he then reviews the portfolio and suggests how they might consider enhancing their diversification, and lets them know whether or not they're diversified. Diversification is a cardinal rule on Mad Money.
Once a week Cramer tells viewers when to sell a stock during the Sell Block segment during Mad Money. The Sell Block is devoted to two separate but related things: holding Cramer accountable, and focusing on when to sell. Just like any other Mad Money segment, Cramer said a stock that gets his sell call, it doesn’t mean viewers should empty out their holdings immediately. Most of the time, his recommendation is to slowly sell off your position in a stock.
The Game Plan is something Cramer does every Friday in anticipation of the week ahead, and it's entirely about short-term trades. Cramer lays out where viewers should focus their "homework" efforts during the weekend to be fully prepared for when the bell rings Monday morning. This is the only segment on Mad Money where Cramer goes into the business of short-term, catalyst-based trading. Everything else on Mad Money belongs squarely in the investing column.
Jim Cramer quote on the three segments on Mad Money:
|“||Use Am I Diversified? to get a better sense of what makes a strong portfolio. Speculation Friday is there to encourage you to do homework on speculative picks, and the Sell Block is for guidance on selling, for the thought process and for caution – it’s not the Ten Commandments. If you want short-term trades, then the Game Plan is the one part of Mad Money that belongs to you.||”|
- Jim Cramer. Mad Money Manifesto. CNBC.
- This Show Is About Education, CNBC, September 3, 2009.
- Moving With the Market
- 3 Must-Haves Before Building Wealth
- Jim Cramer. About Mad Money. CNBC.
- The Right Way to Watch Mad Money, CNBC's Mad Money, September 3, 2009.
- Do Your Homework, June 30, 2009.
- Do Your Homework: Part 2, June 30, 2009.
- Do Your Homework: Part 3, June 30, 2009.
- Why 'Buy and Homework' Is a Better Strategy, September 1, 2009.
- Mad Money Road Rules
- Staying Mad for Life, July 31, 2009.
- Think Sectors, Not Stocks, For Lightning Round, CNBC, September 3, 2009.
- Are You Diversified?
- How to Springboard Off Other Segments