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Counterintuitive maybe, but this strategy works, says Cramer

Tuesday, 18 Feb 2014 | 6:27 PM ET
Cramer: Pick something to buy
Thursday, 26 Dec 2013 | 6:00 PM ET
Mad Money host Jim Cramer doesn't believe panic is a strategy. He provides better strategies for investors who think selling is the only answer.

(Click for video linked to a searchable transcript of this Mad Money segment)

It may seem counter-intuitive, but Jim Cramer says this strategy should serve you well.

That is, when the stock market feels horrible, resist the urge to sell.

The "Mad Money" host believes success in the market involves strategic timing and selling into weakness is anything but strategic.

That's especially true when an unexpected catalyst emerges suddenly and sends the market into a selling tizzy. "Your instincts will be telling you to panic, to run for cover" said Cramer.

However, history shows that most of the time your instincts would be dead wrong.

Looking at some of the worst developments that sent stocks tumbling in recent years, sellers ultimately regretted their decision.

"Whether the Fiscal Cliff, the sequestration scare, the US bond downgrade, the debt ceiling debacle, the Japanese nuclear crisis, or the Flash Crash, in each and every instance selling was wrong," Cramer said.

Image Source | Getty Images

In fact, across his career Cramer added that "at almost every single time of maximum fear, strategic buying was the better move."

Cramer says almost because once, there was a period when panic selling was smart.

"It happened in 2008," Cramer said. "It was the downdraft generated by the collapse of Lehman Brothers and the entire financial crisis," said Cramer.

That was a sell the panic moment because developments were happening so rapidly and they were so complex and confusing it threatened the whole system.

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"The market was truly burning," Cramer said and just as in the case of a real fire, all that mattered was getting out alive. "You deal with the rest later," Cramer explained.

However, anything short of a systemic failure and Cramer says resist.

"Every other time, in every other crash or correction or sell-off, you either could afford to wait, or should have bought," Cramer said. "Remember that the next time we get a horrible pullback."

Call Cramer: 1-800-743-CNBC

Questions for Cramer? madmoney@cnbc.com

Questions, comments, suggestions for the "Mad Money" website? madcap@cnbc.com

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