Cramer's 'Mad Money' Recap: Trade Without Fear

Click here for an archive of Cramer's "Mad Money" recaps.

---

"Most people don't even know the difference between a trade and an investment," Jim Cramer told viewers of his "Mad Money" TV show Monday. "So much for conventional wisdom -- let's take a look at reality," he said.

The way of thinking that casts trading as a "risky" undertaking is a legacy left over from when there was "more friction" in the system due to higher commissions and taxes, Cramer said. Buying and selling often was costly, and that's what gave trading a "bad name."

"We're in a brave new world now with much lower commissions, and ... capital gains taxes are as low as I've ever seen them," Cramer said. "Buy and hold just does not cut it anymore."

Cramer recommended that viewers get "active to be responsible." He said, "You have to do your homework, and you have to take those profits while you've still got them."

The stocks he recommends on "Mad Money" aren't meant to be held for "eternity," he said. Rather, viewers "should try to buy as low as possible and sell high."

"That doesn't make you a trader," he said. "It makes you an intelligent manager of your own money."

A Marvell Idea in Semis

According to Cramer, the message from Wall Street is: "Trading is bad. Investing is good." But, Cramer said, "Stocks aren't trades or investments," calling the distinction, based on the amount of time you own a stock, "meaningless."

On Friday, J.P. Morgan and Deutsche Bank both upgraded semiconductor stocks to buy status, but Cramer said "they don't think these stocks will actually turn until later this year."

Those reports, he said, are written for big institutional investors -- not for the viewers of Cramer's show. "You've got more flexibility," he said. "What you really want to do," he continued, is "wait for the stocks to come down."

He said he believes the semis have another bad quarter left. His recommendation is for Marvell(MRVL Quote), "the one that will probably have the single worst quarter of the semis that I follow." Cramer owns Marvell for his Action Alerts PLUS charitable trust.