GO
Loading...

Cramer's Rally Rules

As exciting as market rallies can be, investors have to approach them with a “grain of pessimism,” Cramer urged viewers during Mad Money. His words of caution came after the Dow lost 167 points Friday, only to reverse direction when CBNC announced that Ambac Financial’s triple-A rating might be saved. The index finished the day up 97 points.

The euphoria’s contagious in situations likes these. As stocks soar, so does your net worth. But those gains are only on paper until you take some profits, Cramer pointed out. So despite a gut instinct to let your money ride, a rally is actually a great time to sell.

And that’s always been the Mad Money maxim: Sell into strength. Even when – especially when – you’re being swept up in a surging market, take some money off the table, Cramer said. You don’t have to unload all your holdings, but definitely take some profits. If the rally holds up, you can do it again.

By following Cramer’s advice you’re adhering to one of investing’s most basic rules: Buy low, sell high. And you’re preparing your portfolio for the next sell-off. There’s no better time than a rally to do that.

Questions for Cramer? madmoney@cnbc.com

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

Contact Mad Money

  • Showtimes

    U.S.
    Monday - Friday 6p ET
    Australia
    Saturday 8a, 1p, 7p SYD
    Sunday 12a, 1a, 8a, 7p SYD
    New Zealand
    Saturday 10a, 3p, 9p NZ
    Sunday 2a, 3a, 10a, 9p NZ
  • Jim Cramer is host of CNBC's "Mad Money" and co-anchor of the 9 a.m. ET hour of CNBC's "Squawk on the Street."

Mad Money Features

  • Grab the latest CNBC gear from the NBCUniversal Store!

  • Get a behind-the-scenes look at how Cramer formulates his investment advice. "Inside the Madness" is a column, which features e-mails and more with Cramer and his researcher Nicole Urken.

  • You’ve always wanted to hit the “Hallelujah!” button. Here’s your chance.

Mad Money Moments

Cramer's New Book