Cramer firmly believes that anyone can effectively manage his or her own money in the stock market, but it’s important investors get the timing right.
One of the first things to know is that it’s almost never a good idea to sell when the market is tanking and everyone is panicking. In his more than 30 years of investing, the only time Cramer recommended giving in to the panic was during the height of the financial crisis in September 2008. The entire financial crisis on the brink of collapse, he said, so selling made sense at that time and investors who heeded his call avoided a near 45 percent decline. But that was the only time—a systemic crisis, not a temporary one. It’s usually a good idea to buy into weakness because you can get stocks at a discount to where they were recently trading.
But every investor is different and some may want to sell in an incredibly bearish moment. When this happens, Cramer said investors have to resist the urge to sell everything. His rule of thumb is that investors buy or sell in increments. That way, if a stock goes down you can buy more at a lower price. If it goes higher after you’ve sold some, you can sell more at a higher price.
Bottom line: Not every decline is the end of the world, but if you are worried and need to sell, just don’t sell everything at once.
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