Mad Money

Cramer: Homework leads to profits

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Most people have all heard their mother say, "Well, if so-and-so jumped off a bridge, would you do it too?"

Jim Cramer thinks that saying also applies to the stock market.

Sometimes, the cool kids forget about the earnings they thought were so weak last week when the market was down, and they actually turn out to be quite good .

Remember Alcoa? It reported a stellar quarter, but its earnings coincided with a market slide. Now that the market recovered on Friday, the stock rallied 6.6 percent. Cramer thinks there is a terrific buying opportunity here.

"If you did your own homework this week, you made a heck of a lot more money than if you were simply swayed by a market that wanted to go down despite the stellar fundamentals of some of the great companies that had the misfortune to announce their earnings during a miserable week of trading," said the "Mad Money" host.

Cramer was also amazed at the incredible earnings reported by American Express when it reported. Why? Because he did his homework and knew the credit-card firm was on track. That stock went down like a ship with the market and then climbed back up on Friday when the market came back.

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"We realized how strong American Express was versus the competition, and now the stock won't quit. I think it goes much higher," Cramer added.

In Cramer's view, only the personal perspective matters. If the research has been done, then investors can determine their own views, regardless of what the negative analysts say.

Ultimately, knowledge is power. That way, when the market drops, you can relax knowing that fundamentals are intact and ignore the big bad market bully in the hallway.

Call Cramer: 1-800-743-CNBC

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