Taking just one look at the recent economic data, Jim Cramer says the Federal Reserve is looking "dumb and dumber."
First employment looked lackluster, then the services PMI came in weaker than expected for August. Cramer wondered why Fed Chair Janet Yellen offered any forecast at all about raising interest rates, and what Vice Chair Stanley Fischer was thinking when he talked about the possibility of two rate hikes this year.
Cramer's research indicated that approximately only 20 percent of the S&P 500 would benefit from a rate hike, and 80 percent would not.
"I say prepare for the worst — weak data going into a rate hike — by having an elevated cash position, selling into strength, while accepting that you are going to miss a couple percentage points of upside if Janet Yellen does the right thing and leaves rates unchanged. Believe me, you will be able to get back in if they do nothing," the "Mad Money" host said.
Having extra cash ready going into the September meeting seemed to Cramer like a better risk-reward scenario.