Cramer's 'Mad Money

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NEW YORK ( TheStreet) -- Check your emotions at the door and don't fall in love with your stocks, Jim Cramer proclaimed to his "Mad Money" viewers Wednesday.

He was responding to ferocious criticism regarding Tuesday's recommendation to take profits in Arena Pharmaceuticals ( ARNA).

Cramer said emotions are ruling the day in today's markets and that goes against everything he's taught on "Mad Money." Stocks are only pieces of paper linked to companies, he reminded viewers, and are not worthy of any affection. Good investors are always skeptical and must always challenge their reasons for owning a stock.

Just as Cramer always says that "no one ever made a dime panicking," he also preaches the opposite, that "no one ever got hurt taking a profit." Stocks are still part of the overall market, which means even if they're terrific they can still go down. The holy grail of investing, said Cramer, is taking profits and playing with the house's money, a proposition where you simply can't lose.

"Diversification and dividends are your only friends," Cramer concluded, as gains in a market like this one are getting harder and harder to come by.

Executive Decision

In the "Executive Decision" segment, Cramer once again spoke with Vivek Ranadive, chairman and CEO of Tibco Software ( TIBX), the data analysis company that's helping retailers and enterprise make real-time sense of their "big data."

Ranadive said that while it may be a slow slog for most of technology it's "the best of times" at Tibco. He said that even in ailing Europe business is up 20% and the company is making big inroads into banks, sports retailers and drug companies across the continent. According to Ranadive, Tibco software is a "must have" for business.

Ranadive explained that Tibco helps companies manage their social network, their customers. The company's real-time analysis software allows customers to capture, expand, engage and monetize their customers in ways never seen before. Loyalty programs are one hot area for Tibco where it manages the purchase history for 260 million customers, allowing companies to up-sell and cross-sell while customers are still shopping. In short, Tibco helps make customers happy, said Ranadive.

Cramer said Tibco continues to do well and is at the top of its game.

Know Your IPO

In the "Know Your IPO" segment, Cramer said the initial public offering drought may be coming to an end after the disaster that was Facebook ( FB). The IPOs of travel website Kayak and network security purveyor Palo Alto Networks go public next week.

Cramer said the underwriter in both deals is the beleaguered Morgan Stanley ( MS), a firm that has no choice but to price these IPOs low enough to ensure a first day spike in price. Morgan Stanley can't afford another miss.

Kayak is a beloved travel website that offers the usual array of deals on airfare and hotels, but has an ad-supported model. Revenue at the company are up 30% year-over-year. Kayak plans to offer 3.5 million shares between $22 and $25 a share. That puts its valuation between 20 and 23 times earnings, inline with its peers.

Palo Alto Networks is a next-generation network security company that plans to come public between $34 and $37 a share, placing its valuation at five times sales.

In both cases, Cramer recommended investors get in on the IPO deal itself and sell those shares on the initial pop. "This is not a tech-friendly environment," Cramer reminded viewers, which is why flipping the shares on the first day of trading is the only move that makes sense.

Lightening Round

Here's what Cramer had to say about callers' stocks during the "Lightning Round":

Teva Pharmaceutical ( TEVA): "I like the new CEO but they still only have one really good drug. I don't want to buy it."

Peabody Energy ( BTU): "Stay on the sidelines. Coal is in secular decline."

Enterprise Products Partners ( EPD): "This is one of the best MLPs out there and I say buy, buy, buy."

Best Buy ( BBY): "No, too much money has been lost. I don't think a takeover is going to happen. I remain a seller."

Armour Residential ( ARR): "I think they're a safe play and I like them."

Ascena Retail Group ( ASNA): "I like this stock very much. I say buy, buy, buy."

Chesapeake Energy ( CHK): "I like the preferred shares a lot more than the common. I say buy the preferred and sell the common."

PolyOne ( POL): "This is a tough group but they buy a lot of natural gas and that's good. I also like PPG Industries ( PPG), which is a better company."

Am I Diversified?

In the "Am I Diversified" segment, Cramer spoke with callers and responded to tweets sent via Twitter to @JimCramer to see if investors' portfolios have what it takes for today's markets.

The first portfolio included:

Apple ( AAPL), Verizon ( VZ), Costco ( COST), McDonald's ( MCD) and Chevron ( CVX).

Cramer said this portfolio was perfectly diversified.

The second portfolio's top holdings included:

Apple, Bank of America ( BAC), Coca-Cola ( KO),Facebook and NYSE Euronext ( NYX).

Cramer said NYSE Euronext is too similar to Bank of America and this portfolio should drop NYSE and add a drug company like Abbott Laboratories ( ABT) in order to be fully diversified.

The third portfolio had:

Smith & Wesson ( SWHC), Akorn ( AKRX), J.P. Morgan Chase ( JPM), CF Industries ( CF) and Under Armour ( UA) as its top five stocks.

Cramer said "bingo" as this portfolio was also properly diversified.

No Huddle Offense

In his "No Huddle Offense" segment, Cramer said that investors need to ask "What's expensive?". Not which stocks are too expensive, but which companies sell products that simply too expensive for this market.

With stocks like Tiffany ( TIF) and Coach ( COH) rolling over, Cramer said high-end retail has become more than just a Chinese problem, it's a global problem.

That's why Cramer still likes companies like Wal-Mart ( WMT), Ross Stores ( ROST) and Dollar General ( DG).

But Cramer went even further to warn investors to be cautious of companies such as Ralph Lauren ( RL), PVH ( PVH) and VF Corp ( VFC) as they, too, will likely be brought down by the weakness in the high-end segment, even though there's nothing wrong with their businesses.

--Written by Scott Rutt in Washington, D.C.

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At the time of publication, Cramer's Action Alerts PLUS had a position in AAPL, ABT, JPM and MCD.

Jim Cramer, host of the CNBC television program "Mad Money," is a Markets Commentator for, Inc., and CNBC, and a director and co-founder of All opinions expressed by Mr. Cramer on "Mad Money" are his own and do not reflect the opinions of or its affiliates, or CNBC, NBC Universal or their parent company or affiliates. Mr. Cramer's opinions are based upon information he considers to be reliable, but neither, nor CNBC, nor either of their affiliates and/or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. Mr. Cramer's statements are based on his opinions at the time statements are made, and are subject to change without notice. No part of Mr. Cramer's compensation from CNBC or is related to the specific opinions expressed by him on "Mad Money."

None of the information contained in "Mad Money" constitutes a recommendation by Mr. Cramer, or CNBC that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. You must make your own independent decisions regarding any security, portfolio of securities, transaction, or investment strategy mentioned on the program. Mr. Cramer's past results are not necessarily indicative of future performance. Neither Mr. Cramer, nor, nor CNBC guarantees any specific outcome or profit, and you should be aware of the real risk of loss in following any strategy or investments discussed on the program. The strategy or investments discussed may fluctuate in price or value and you may get back less than you invested. Before acting on any information contained in the program, you should consider whether it is suitable for your particular circumstances and strongly consider seeking advice from your own financial or investment adviser.

Some of the stocks mentioned by Mr. Cramer on "Mad Money" are held in Mr. Cramer's Action Alerts PLUS Portfolio. When that is the case, appropriate disclosure is made on the program and in the "Mad Money" recap available on The Action Alerts PLUS Portfolio contains all of Mr. Cramer's personal investments in publicly-traded equity securities only, and does not include any mutual fund holdings or other institutionally managed assets, private equity investments, or his holdings in, Inc. Since March 2005, the Action Alerts PLUS Portfolio has been held by a Trust, the realized profits from which have been pledged to charity. Mr. Cramer retains full investment discretion with respect to all securities contained in the Trust. Mr. Cramer is subject to certain trading restrictions, and must hold all securities in the Action Alerts PLUS Portfolio for at least one month, and is not permitted to buy or sell any security he has spoken about on television or on his radio program for five days following the broadcast.

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