On Oct. 6, 2008, a comment from Cramer sent shockwaves through the market. He stood on the Today show set and urged investors to take profits – all the cash they’d need for the next five years – because the market was on the verge of collapse. Sure enough, the Dow, then at 10,300, plummeted 36% over the next five months.
- 15 Rules for Playing Defense
But stocks have clawed their way back, the bellwether index climbing from its low of 6,500 in early March to just over 10,000 again on Thursday. Over these seven months, the Nasdaq has jumped 60%, the Dow Jones US Financial Index soared 99% and the DJ US Oil and Gas Index climbed 41%. And these are just the sector averages, not the individual stocks that Cramer’s endorsed, such as Eaton , Nucor , Caterpillar , Freeport-McMoRan and Ingersoll-Rand .
Anyone who followed Cramer’s lead “sidestepped a horrible decline,” he said, and then cashed in on “one of the greatest bull-market rallies in history.”
What’s the takeaway? Stay flexible, and never be afraid to manage your own money. (Read Cramer’s newest book, Getting Back to Even, to learn how.) You never would have seen these kinds of gains – or had a chance to recoup your losses – if you dumped your nest egg in a passive index fund, crossed your fingers and hoped for the best.
With the market seemingly back on its feet, investors need an updated playbook. Here are the strategies that Cramer laid out during Thursday’s show:
If you took part in the ride up from Dow 6,500, Cramer recommended taking some profits. Better to lock in the gains while you have them. That doesn’t mean cashing out entirely, though. Compared to Treasurys, corporate bonds, private equity, commercial real estate or gold, he said, “Stocks are still the best game in town.”
For those of you who sat out the market’s return to 10K, don’t worry. There are still plenty of big investing themes in which to make money. Cramer won’t stop talking about the “mobile Internet tsunami” and natural gas, and this week he’s been highlighting the strength in homeland security. Buy these stocks, he said, because he’s expecting “major, long-term moves” in all of them.
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