The Art of Finding the Best Investments

Appearances can be deceiving, Cramer said on Tuesday.

Just because a stock goes down doesn't mean it's becoming cheaper, just as a stock going up isn’t necessarily becoming expensive, he explained. In this market, even mediocre stocks are going higher. So investors should get comfortable buying higher and selling higher, rather than buying low and selling high. It's still important to buy on weakness, of course. But Cramer said there's a difference between buying a winning stock that's down for the moment and buying a losing stock that's one of the only names that hasn't rallied yet.

Consider the choice between two technology bellwethers: Cisco Systems and Oracle. The former is 50 cents off its 52-week low, while Oracle is flirting with its 52-week high. Regardless of the price, though, Cramer said investors should pick Oracle because it’s the stronger company with better management. He always recommends picking stocks where the fundamentals of the underlying business are improving.

Cramer said there's a psychological roadblock that prevents investors from buying winners—that "I missed it" quotient.

"You can’t always get in on the ground floor. Don’t let that bother you," he said. "It’s fine to get in on the 10th floor as long as the stock elevator’s going up."

To illustrate his point, Cramer examined Oracle's weekly chart, as interpreted by regarded technician Ken Shreve. The stock has rallied hard, but Shreve thinks it has more room to run. Find out why by watching the video.

When this post was published, Cramer's charitable trust owned Oracle.

Call Cramer: 1-800-743-CNBC

Questions for Cramer?

Questions, comments, suggestions for the Mad Money website?