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TheStreet Open House

Jim Cramer's 'Mad Money' Recap: How You Can Profit From My Mistakes

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NEW YORK (TheStreet) -- Always remember, don't let your skepticism get the best of you, Jim Cramer told his Mad Money viewers Wednesday in a special episode dedicated to getting rich carefully by avoiding some of Cramer's biggest mistakes.

Being too much of a naysayer can hurt you, Cramer continued, especially with companies that have fabulous CEOs. That was certainly the case with Walgreen (WAG) back in 2012, Cramer recalled. He said Walgreen, once a Cramer fave, seemed to lose its way, causing its share price to plummet from $40 to the low $30s by June of that year. The company had picked a fight with pharmacy benefit manager Express Scripts (ESRX) , he explained, and customers were fleeing to rival chains in droves.

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Then Walgreen got even worse, buying the European drugstore chain Alliance Boots, sending shares down another quick 6%.

Cramer said he thought for sure Walgreen's CEO, Greg Wasson, had bitten off more than he could chew and recommended selling the stock. The only problem was that Cramer told viewers to sell at the exact bottom for Walgreen's shares. The stock has been heading higher ever since.

Cramer said he knew Wasson was a great CEO and should've given him the benefit of the doubt. He let skepticism get the best of him, an error that individuals make all the time. Not every bad thing is the end of the world, Cramer concluded. Currently, Walgreen is a holding in Cramer's charitable trust, Action Alerts PLUS.

Trust Your Homework

Cramer's next lesson for investors: Never sell a stock just because it's going down. If you've done the homework, and nothing's changed, trust your homework and have conviction.

This was the exact opposite of what Cramer did in 2012 with Bed Bath & Beyond (BBBY) . Cramer said he liked this regional to national home goods retailer but thought shares were too expensive, so he waited for a pullback. When shares fell from $75 to $59 on lackluster earnings, he hesitated and missed the rebound back to $71.

Cramer was ready for the next quarter, however, and bought in on the after-earnings weakness. When shares fell from $63 to $59, he stuck with it, buying more. But by November, when shares had fallen to $55 and analysts were rumbling the company was getting beat by Amazon.com (AMZN) , Cramer lost faith and sold.

On Bed Bath's next quarter, which was also weak, shares didn't go down -- a classic sign of a bottom. They later rallied to $80 a share.

Cramer said his mistake was not trusting his homework and getting rattled after a decline of just a few points.

Big Picture Themes

When the market sees its next big selloff, that's the time to buy into "big picture themes," Cramer told viewers. What are big picture themes? Solid, long-term trends like America's oil and gas renaissance, he explained, but also a trend he calls "stealth technology," or non-technology companies that are innovating as though they are technology companies.

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Innovation allows companies to dominate markets and enjoy higher gross margins, Cramer continued. That's why when Colgate-Palmolive (CL) introduced its Optic White toothpaste, which includes the same ingredients as tooth-whitening strips, the company was able to garner 69% of the Brazilian toothpaste market almost overnight.

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