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Editor's note: The following is a recap of a "Mad Money" episode that originally aired Dec. 26, 2006.
To make money in the market, people need more than good stock picks and good advice about the state of the market, Jim Cramer told viewers of his "Mad Money" show. "They need discipline."
Regular fans of "Mad Money" should be familiar with
Jim Cramer's Real Money: Sane Investing in an Insane World
, Cramer said, as he's devoted a few shows to explaining some of the rules he's laid out in his book.
But because Cramer wrote that book a long time ago, and though its rules are still valid, he's come up with more rules designed "to help the individual investor beat the big institutional money managers on the Street." Cramer has assembled these rules in another book:
Jim Cramer's Mad Money: Watch TV, Get Rich
Although people might not like "Cramer the disciplinarian," he said his new book, which has 20 brand-new rules, should prevent market players from losing money. And because Cramer's aim is to help make people rich, he went on to explain five of those new rules.
Cramer's first new rule is, "There's a market for everything; pay attention to how it works." Investors need to remember that there are lots of different reasons why stocks are traded in a stock market and that there are submarkets, he said.
Although it makes "total intuitive sense," most people rarely keep in mind when investing that there's a market for oil stocks, a market for newly public stocks and a market for small-cap value stocks, all of which are governed by supply and demand, Cramer said.
"If you ignore the supply and demand for certain kinds of stocks, or stocks in general, you'll be totally perplexed by the market," he said. "This rule is especially true for trendy, hyped-up stocks."