(Click for video linked to a searchable transcript of this Mad Money segment)
Sometimes skepticism feeds into itself. When it happens the Street can forget to properly weigh to fundamentals; instead it trades a stock on sentiment.
A shrewd investor can make a lot of money in that kind of environment.
Best Buy
"You remember the rap," Cramer said. "Best Buy was simply the showroom for Amazon. Best Buy was going to go the way of the book stores. Best Buy was a dinosaur akin to video rental stores."
As it turned out that thesis was dead wrong.
The video game cycle combined with a modest improvement in the economy have given sales a boost. But perhaps more important, "Best Buy has closed stores," Cramer added. "They've gotten leaner and meaner by implementing aggressive new cost controls. And they've improved customer service significantly."
These and other catalysts caught skeptics off guard. Shares of Best Buy have rallied well over 200% year to date.
The advance illustrates something Cramer often says, ultimately fundamentals should move a stock and in the case of the negative Street chatter didn't properly factor in the improving fundamentals.
Pioneer Natural Resources
Looking at Pionner Natural Resources, Cramer says skeptics doubted new technology would transform a mature asset back into an oil rich energy field.
"Very few people believed that some old field that was left-for-dead in the Permian basin could be the second biggest oil field in the world," Cramer said.
But during an interview on Mad Money, the company behind cutting edge technology used in oil exploration confirmed that new abilities to recover oil should transform the Spraberry formation in Texas into the second largest oil field in the world. Only Saudi Arabia has a field that's larger.
Again, the Street got it wrong. And investors who trusted the research have substantial gains - shares are up nearly 100% ytd.
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Cramer believes that both developments illustrate how individual investors can do better than pros simply by doing research or homework.
"If you stayed open minded and believed in the fundamentals rather than the Street chatter, you made some money," Cramer explained. "The lesson here is recognize just how wildly inefficient the stock market can be. The Street can and does get it wrong."
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