Cramer said investors should start by picking a stock they have an opinion on. They should believe the stock could go higher over the long term. It should be a great underlying company with a stock that could get tossed around by market volatility, but nevertheless has potential to push higher in the long haul.
(RELATED: Cramer’s Stock Picking Secrets Revealed)
To illustrate his point, Cramer gave the example of an investor who owns 300 shares of a stock that’s trading at $100 a share. When the stock jumps 3 points, or 3 percent, the investor sells 50 shares to make some profits. Once the stock reaches $109 a share, then, the investor would own 160 shares. At that point, the investor would wait for the stock to be knocked down, so they can buy more shares.