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Cramer's 'Mad Money' Recap: How to Gain From the Long-Term Game

Stocks in this article: AAPLHAINWFM

Retirement Investing

In the long run we all retire, which is why retirement planning is a big part of long-term investing, said Cramer. But what is retirement investing? Conventional wisdom has always told us that we have to invest in our 401(k)s and have to invest in an IRA. But beyond that, conventional wisdom has always been a little fuzzy.

Cramer said the promise of 401(k)s and IRAs is their tax-free status would allow higher returns over the decades. In reality, most 401(k) plans just stink, said Cramer, thanks to their high fees and severely limited choices.

Ideally, investors should have a portfolio of five to 10 diversified stocks, but most 401(k) plans only offer mutual funds and bond funds. That's why Cramer advocated contributing in 401(k)s only to achieve any company match, then stop.

Beyond a 401(k), Cramer said investors need to contribute to an IRA, up to the maximum of $5,000 for 2012, or $6,000 if you're over age 50. What should you keep in this IRA? Cramer said investors ideally want high-yielding, dividend-paying safety stocks. But here, too, there is a caveat.

Cramer said investors need to steer clear of master limited partnerships, MLPs, or real estate investment trusts, REITs, in their IRAs. Own too many, he said, and you could end up paying higher taxes than if you purchased the stocks in a regular brokerage account.

Look for Secular Growth Stocks

While there's no such thing as a stock you can own forever, some winners do last longer than others, Cramer told viewers. Those winners are called secular growth stocks.

Cramer explained that most companies need a healthy economy to do well -- those are called cyclical stocks. But secular growers do well year after year, regardless of the economy. The key to finding these names is to look for the "big picture" themes.

One such theme has been the recent move towards healthy eating, something that's helped propel stocks including Whole Foods Markets (WFM) and Hain Celestial Group (HAIN) for years.

But even secular stocks can have a shelf life, he cautioned. A few years ago, Cramer was talking up the "mobile Internet tsunami," the transition from feature-phones to smartphones that would rake in billions for all those involved. But as the smartphone revolution took hold, it quickly became an Apple (AAPL) tsunami, disproving the theory that a rising tide lifts all boats.

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