Cramer's 'Mad Money' Recap: Breaking the Rules (Final)

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NEW YORK (TheStreet) -- "If you want to make money in this market, you have to break the rules," Jim Cramer told the viewers of his "Mad Money" TV show Wednesday.

He said viewers need to ignore the traditional wisdom of "buy and forget" and the notion of only investing in index funds. It's not too hard to pick your own stocks, he said, if you do it correctly.

Cramer said the truth is simple, if investors do their homework, they'll have the edge on Wall Street. But since homework can often be time consuming, he said investors also need something to keep their interest, and that's speculating.

Cramer said he encourages investors to use up to 20% of their non-IRA portfolios for speculating. He said speculating can not only but fun, but also immensely profitable.

Case in point, Cramer's June 5 declaration that student loan purveyor Sallie Mae (SLM Quote) was his speculative stock of the year.

Cramer said back then, Sallie was trading at $6.61 a share, which was just 3 times its earnings. Cramer said people then were simply betting that Sallie Mae, along with the entire student loan industry, would file for bankruptcy. But that was clearly not the case, which the company demonstrated today with a 24-cent-a- share earnings beat. The upside surprise took shares up 20.67% for the day, and 62% from Cramer's initial buy recommendation.

And Cramer said he still thinks Sallie is cheap at $10.71 a share, given the company said it's likely to double its earnings in the fourth quarter and increase substantially more in 2010 and 2011.

Cramer said investors who bought in at the lows should take some profits, but everyone else should buy in as Sallie crawls back from the dead.