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A rally can make you a lot of money, but take heed if you make too much, Cramer said. You could be overexposed to the wrong stocks.
Cramer likes to think of rallies as diagnostic tests for overexposure to the wrong stocks or sectors. If oil led the market, and half your portfolio is black gold, you might enjoy a day of strong profits. But a move in the opposite direction could sink your portfolio. The solution: Diversify.
Maybe you borrowed, or used margin, to get some extra leverage. Again, you could crush the averages in a rally, but a sell-off would crush you.
The bottom line: The best time to know if you're making too much money, which means you're doing something dangerous, is during a rally. Use it as a test to see if your portfolio has too much risk.
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