What are the new rules for this Survivor: Wall Street market? This is an environment where you want to be in capital-preservation mode, not capital-appreciation mode. Over and over we've stressed that now is not the time to take risks – it's the time to protect your money.
That means being in cash. On Friday when Jim created his Survivor Portfolio of Verizon , Wal-Mart, BP, General Mills, and gold, either in the form of the SPDR Goldshares, which tracks the price of gold, or Agnico-Eagle his favorite gold stock. And he emphasized that 25% to 30% of this portfolio should be in cash. That would make cash the single-largest position in the Survivor Portfolio, if you equal weighted all five stocks.
Jim has hammered home the idea of owning a gold stock as a hedge against the chaos, and eventually the inflation that will come from governments around the world printing so much money to deal with the crisis – but inflation is a long way away.
You must have cash, you must have gold, and you must have some safe high-yielders. But the most important thing to recognize is that things aren't going to turn around soon. That's why you shouldn't keep any money in equities if you're going to need it over the next four and a half years.
You can't buy stocks with the expectation that they're going to go higher in the near future. Recently Jim has stressed, over and over, that you are looking for stocks to buy as they go lower. Beating the market is great, and we certainly want relative outperformance, but for the moment, your goal should be withstanding the market.
Cramer's charitable trust owns BP, General Mills and Wal-Mart.
Cliff Mason is the Senior Writer of CNBC's Mad Money w/Jim Cramer, and has been that program's primary writer, in cooperation with and under the supervision of Jim Cramer, since he began at CNBC as an intern during the summer of 2005. Mason was the author of a column at TheStreet.com during 2007, which he describes as "hilarious, if short-lived." He graduated from Harvard College in 2007. It was at Harvard that Mason learned to multi-task, mastering the art of seeming to pay attention to professors while writing scripts for Mad Money. Mason has co-written two books with Jim Cramer: Jim Cramer's Mad Money: Watch TV, Get Richand Stay Mad For Life: Get Rich, Stay Rich (Make Your Kids Even Richer). He is 100% responsible for any parts of either book that you did not like.
Mason has also had a fruitful relationship with Jim Cramer as his nephew for the last 23 years and will hopefully continue to hold that position for many more as long as he doesn't do anything to get himself kicked out of the family.
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