Sneak Preview: Know What You Don't Know

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. Pros try not to invest in things they don't know. They are not anxious to risk their hard-earned capital on something that sounds cool. Taking passes is the best thing I do. So many people ask me about different stocks, but many stocks are beyond my ken. I just recognize they are not my strength. I am a generalist who takes pride in knowing more stocks than anyone in the universe.

Hardly a day goes by when someone doesn't ask me about some stock that has a miniaturization method, a nanotech derivative. I know better. I recommended one, Tessera Technologies(TSRA Quote), and the week after my recommendation it lost 20 percent of its value on something that, frankly, I simply did not understand, some piece of technology that was just too hard to know unless you were using it as a client.

Same thing goes for a lot of the wide-area network stocks -- stocks that help remote workers tie in with headquarters. These are jargon-filled black holes that you need an information technology expert to walk you through.

Cramer: Pay for Your Kids' College -- All of It

Lots of the biotech stocks leave me cold; I don't understand how the medicines they make are special or different and how the companies themselves can be sure that they work.