What to do if you missed the market rally

What should I buy?

Have I missed the rally?

Those are the two questions on investor's mind that missed the rally, and questions that can only be answered personally. However there are two principles that Jim Cramer has learned from his long tenure on Wall Street that are necessary when you miss the rally boat: Consistency and discipline.

"I learned this the hard way. Many a time when I ran a hedge fund I would miss a 4 percent rally like we just had. The tendency though is never to say 'I missed it' and instead is to just say 'what should we buy?'"

Investors either need create personal discipline, or have a disciplinarian to tell you the truth no matter how upsetting it can be.

Traders work on the floor of the New York Stock Exchange.
Getty Images
Traders work on the floor of the New York Stock Exchange.

Cramer was lucky enough to have a tough as nails trader named Karen Cramer teach him this lesson when he first started in the business. They would review their portfolios for hours on end back then.

Karen Cramer was not afraid to tell the "Mad Money" host when he missed the rally boat. She taught him how important it was to be patient and wait for something to come in. But what if nothing came in?

"Nothing, because we missed it, and we have to own up to that and pay the price," Jim recalls Karen Cramer as saying.

Eventually Jim Cramer learned to stop asking that question and instead buy stocks that would come in with the everyday nature of equities. His secret was to look for stocks that were damaged, not the company.

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"So you pick your spots. What would have been acceptable to buy today? How about some Nike, betting that expectations are just too high? That's okay, it acts badly so that it may mean someone's going to downgrade it on Monday—remember you have to be cynical," Cramer added.

The "Mad Money" host recommended making peace with the fact that you missed the rally. In the end, when you miss the rally that makes you a beggar—and beggars cannot be choosers.

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