Sneak Preview: When to Never Say Never

Editor's note: This is a special sneak preview of Jim Cramer's just-released book, Jim Cramer's Stay Mad for Life: Get Rich, Stay Rich (Make Your Kids Even Richer). Look for more sneak previews every day, and get your free copy with your annual subscription to Action Alerts Plus; click here for details. Catch Cramer in person at his last book signing event: Saturday, Jan. 12, at 1 p.m. in Westbury, Long Island's Costco.

Missed the first sneak previews? Read the book intro and the rules of getting and staying rich: Rule 1, Rule 2, Rule 3, Rule 4 and Rule 5. Know what pros do right and amateurs do wrong: Part 1, Part 2, Part 3, Part 4 and Part 5. Learn the five mini-bull markets that will stampede for years, starting with aerospace and defense, agriculture, oil and oil service, minerals and mining and infrastructure.

3. Never say never when it comes to a takeover. One of the most unnerving parts of investing is missing a takeover that should have been yours after you left the stock because management and everyone else thought that the company couldn't or wouldn't be taken over.

Recently, Dow Jones(DJ), a company with two classes of stock, one that was meant to keep the company independent and family- run, succumbed to a takeover bid from Rupert Murdoch's News Corp.(NWS). Pundits and analysts were adamant that this takeover could never occur, which is why the stock was at $35 before the $60 takeover bid.

It might seem an unusual case, but it isn't. In reviewing all my [Action Alerts PLUS] bulletins for this book, I was dismayed to see that I had purchased Alcan around $52 because I believed there would be an imminent consolidation of the aluminum business as various mineral concerns were buying up independents. The stock rapidly fell to the $40s, where I bought more, and then dropped down to $39, where I bought even more to bring down my average cost. (Unlike when you are trading, it is perfectly fine to buy a stock that's down, because when you are investing you are getting a company you like on the cheap.)