With the market toiling through volatility, now is a good time for investors to have cash on hand, be patient and wait for attractive buying levels, CNBC's Jim Cramer said Thursday.
The major averages all slid more than 1% during the trading session, a negative for stocks as an asset class but terrific for investors who have some powder in the keg, he said on "Mad Money."
"Given that September tends to be a nightmarish month, it's good to have some cash," said the former hedge fund manager, who is urging investors who have yet to trim their holdings and some gains to sell on the next market bounce.
"These sell-offs go down a whole lot easier when you've got a sizeable cash position. So, please, if you haven't already," he added, "get your head clear, do a little selling and let stocks go down to the levels that we said are actually attractive."
After a three-day losing streak was snapped the day prior, investors continued to sell off shares on Thursday. The Dow Jones Industrial Average shed about 406 points, much of its Wednesday gains, to 27,534.58 for a loss of 1.45%. The S&P 500 fell 1.8% to 3,339.19 and the Nasdaq Composite declined almost 2% to 10,919.59.
After turning in just six negative sessions in the month of August, the Nasdaq has dropped in four of the first seven trading days of the month of September. The tech-heavy index is down 7% this month.
The S&P 500 dating back to the 1940s has declined on average 0.5% in the month of September, according to CFRA Research, and the presidential election may bring more uncertainty to the market.
Buy, hold and invest for the long-term is the old adage, yet Cramer said that his Action Alerts Plus charitable trust has a high portion, about 15%, of its portfolio in cash at the moment. Discipline trumps conviction, he said.
"That's the most important concept in the business," the host said. "No matter how much you might love a stock, discipline says you need to start ringing the register when you've got a gigantic gain."
Cramer offered five reasons to sell stocks and wait for greener pastures:
"If we hadn't sold so much stock for the charitable trust, today would've been a horror show. We'd be sitting there, looking at the prices and beating ourselves up for not taking profits when we had the chance," he said.
"It allows you to sit back and look for discounts in the stocks you most like," he added. "Without a lot of cash, you'd be forced to sell something into weakness if you wanted to do any buying. If you borrowed money, your broker might be forcing you to sell at a loss."