Cramer: How to Profit from Market Volatility
Market volatility has become the new norm, Cramer said Wednesday. So he’s devised a way to profit from it.
He calls it “Cramer’s four percent rule,” courtesy of the last two days of trading that saw the market go up four percent.
The “Mad Money” host wants homegamers to find a stock a stock they deeply believe in and use it as a proxy for the market.
“I want you to find something that will work even if Greece goes kerflooey, something you'll want to buy more of if big French banks teeter and the leaning tower of Pisa actually falls over,” he said.
Then, when the S&P 500 goes up four percent, take something off the table. When it is down four percent, buy shares.
Take a stock like Walt Disney , for example. It’s down so much, it’s ridiculous, Cramer said. So when the market’s down four percent, buy 200 shares. When it rallies four percent, sell 200 shares. Since commissions are cheap, he said, you can “flit in and out and in and out.”
“From now on, I am not going to make a value judgment about the craziness. It's time to embrace it,” Cramer said. “Find a stock … and get involved. Enough complaining already. Now go make some money off it.”
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