Sneak Preview: Home Lightning Round

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.

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The "Lightning Round" is a distillation of what I would do in my investment meetings with analysts at my old hedge fund. It's a way to order and make sense of the market. That's why trying to play along with me on the show, or playing your own private Lightning Round, is a great way to turn yourself into a professional-level investor. That's why I think learning how to play your own Lightning Round isn't just about having fun, it's one of the best ways to become truly great at making money in the market.

There are two ways to play the Lightning Round at home. There's the regular Lightning Round Home Game, and then there's the advanced version. These two Lightning Rounds are virtually identical, but the rules are a little different. So first I'll explain the rules of each Lightning Round, and then I'll tell you how I think you should approach them if you want to make friends and impress people.

In the regular version, you get fifteen seconds to come up with a buy, sell, or hold for each stock. You can play along with the show or with a crowd, or just a couple of friends--that doesn't matter. After you come out with your judgment, you can spend as much time as you want talking about why you like or dislike the stock, but you can't stop. As soon as you stop, you have to go to the next stock.

When I do the "Lightning Round," as I mentioned before, the legal department at CNBC prevents me from taking questions on stocks smaller than $250 million in market capitalization. If you want to do your own Lightning Round, you should probably follow my legal department's example and avoid these small-cap names too, because anybody can stump you with some little $20 million company no one's ever heard of. That said, it's perfectly OK to speculate on companies that are worth less than $250 million, but remember, you're only allowed to put 20 percent of your portfolio in speculative stocks, and only if you're a big risk taker.