Editor's note: This is a special excerpt from Jim Cramer's book, Jim Cramer's Mad Money: Watch TV, Get Rich. To order your copy and read all the rules, click here.
Sneak Preview: Don't Turn Your Nose Up
4. Don't be a snob. Some of the best trends are completely hidden from Wall Street. Remember, analysts and especially money managers belong to a tiny group of incredibly rich people, mostly clustered around Manhattan. They're far from omniscient. Lots of things pass completely under their radar because they live in a bubble. This fact has created many opportunities for me and may make you a lot of money.
Because all the people who run money tend to be rich, or at the very least tend to spend money as if they were rich, they often miss trends in mid-grade or low-end products, companies and stocks. They don't shop at these places. They're not aware of what's going on because they all buy their clothes at Saks and eat dinner at The Palm.
By the same token, retailers, banks and restaurants without a presence in the New York metro area also often pass under the radar of money managers. If these companies are good, they'll eventually come to the attention of the Street, but for a brief period you can buy them while they're unnoticed.
J.C. Penney (JCP - Cramer's Take - Stockpickr) is a classic example of a stock that made you money from Wall Street snobbery. I recommended J.C. Penney on Dec. 20, 2005, when the stock traded at $54.51. In March 2006, the stock broke through $60, and it hasn't looked back since. If you'd sold at any point while the stock was over $65, where it was for most of June, then you would have had a better-than 20% return.
Go to NEXT PAGE
At the time of publication, Cramer had no positions in any of the stocks mentioned in this column.
Jim Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. Outside contributing columnists for TheStreet.com and RealMoney.com, including Cramer, may, from time to time, write about stocks in which they have a position. In such cases, appropriate disclosure is made. To see his personal portfolio and find out what trades Cramer will make before he makes them, sign up for Action Alerts PLUS. Watch Cramer on Mad Money at 6 p.m. & 11p.m. ET weeknights on CNBC. Click here to order any of Jim Cramer’s books including his latest endeavor Stay Mad For Life: Get Rich, Stay Rich (Make Your Kids Even Richer). While he cannot provide personalized investment advice or recommendations, he invites you to send comments on his column by clicking here.
TheStreet.com has a revenue-sharing relationship with Traders' Library under which it receives a portion of the revenue from Traders' Library purchases by customers directed there from TheStreet.com.