Sneak Preview: Home Lightning Round

Step two: you'll want to form opinions about each sector and its subsectors so that when someone asks you about a stock, and you know which sector it falls into, you will instantly know how you feel about the sector, and thus how you feel about the stock. That's the biggest time-saver.

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Once you have an opinion about each sector, you're ready for step three: Rank the stocks in each subsector. ... At minimum, you should form an opinion about which stocks are best of breed in each subsector. If you know what's best of breed, then anytime someone asks you about a stock in that industry or subsector, you can just tell them, with confidence, to swap out of their stock and into best of breed. ... At the very least, you should know what you like best in each industry, so that if someone asks you about something in that industry, you can use your favorite stock as a reference point. ... But the best use of your time might be to break down each subsector into different categories of stocks. Know what's best of breed in the industry, then also find a stock in the sector that you think represents the best takeover target, then find another one that might be the best speculative stock in the subsector. That way, if someone asks you about a pharmacy, for example, you could have a stable of different suggestions.

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It'll take you more than an hour of homework a week to be able to have an opinion about every sector and to know what's best of breed in all those sectors, but the payoff is tremendous. You won't just be able to do your own Lightning Round. You will be totally on top of every single sector.

Editor's note: This is Part 1 of a special excerpt from Jim Cramer's newest book, Jim Cramer's Mad Money: Watch TV, Get Rich, due in stores Dec. 5. Be sure to read Part 2. To preorder your copy on Amazon, click here. Can't wait? Attend the special book signing, 7:30 p.m. Monday, Dec. 4, at the Barnes & Noble in Clifton, N.J. (395 Route 3 East). Or get your copy signed at Borders Books and Music (290 Commons Way) of Bridgewater, N.J., on Wednesday, Dec. 6, at 7 p.m.

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