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Cramer: What It Takes to Pick Winning Stocks
28 Dec 2011 EST - CNBC.com
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Investors are capable of picking winning stocks, Cramer said Wednesday, but it's going to take work. To start, the "Mad Money" host said homegamers need a little conviction.

It's important investors find stocks that inspire a high level of confidence, Cramer said. With thousands of publicly traded companies to choose from, he doesn't recommend investing in one you don't believe in.

Home gamers need to believe in the underlying company because the market will often test an investor's conviction, Cramer said. The investor should like the story enough to buy more shares if it gets knocked down. Moreover, investors should welcome declines because they provide buying opportunities. A pullback, Cramer said, is the market's way of throwing a sale.

Finding stocks worthy of this kind of trust can be challenging, Cramer admitted. He recommends long-term themes, like the global food shortage or power management.

As millions of people in the developing world migrate from rural to urban areas, they start buying electricity. What's more important than where we get our power, Cramer said, is how we use it. That's where power management comes in. After all, businesses will continue to have a strong desire to lower their electric bills and corporations will always need to protect the bottom line. In doing so, these businesses are going to do anything to save money and Cramer said energy conservation is a great way to do it.

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