Sneak Preview: When to Hold On

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.

4. Don't let the market shake you out of a good long-term thesis. In the spring of 2005 it became amply clear to anyone reading the newspapers or watching TV that we were going to be in a shooting war in Iraq for a very long time. The United States has only one company capable of making all the ammunition needed for a long war: Alliant Techsystems(ATK).

After reading about the company, listening to the conference calls, reading analysts' reports, and noticing that the company had one of the most aggressive buybacks, retiring millions of shares a year off a very small base, I decided to buy some around $67.

It proved to be a prescient buy. The stock vaulted to $75 over the next couple of months. A few months later there was a downturn in the market because of worries of consistent and unrelenting Federal Reserve rate increases. These increases were wholly unrelated to the Iraq War, but I got shaken out and decided to take the quick gain.

Meanwhile the war raged on and so did the need for bullets. Within two years' time the stock rallied to more than $112 a share. I had let the market shake me out of a perfectly good position with a long-term thesis that, unfortunately for the U.S. soldiers in Iraq, played out. I made 7 easy points; I left 40 just-as-easy points on the table.