Cramer: Are you making too much money?

(Click for video linked to a searchable transcript of this Mad Money segment)

If you're making too much money, you may be doing something dangerous, Jim Cramer said. It may sound hard to believe, but generating returns that dramatically outperform the averages can be a problem.

"It's a red flag, a warning sign, that you could be exposed to some serious downside once the rally is over," Cramer said.

A big jump in your portfolio could also mean you're not diversified, which, Jim Cramer said, is never good.


For example, if a rally was led by the oil stocks and your holdings were heavily weighted with Exxon Mobil, Chevron, BP and others in the group, then you'll be a big winner for the day. "But those gains may not last," Cramer said.

"And if you're not diversified, you're essentially keeping all of your eggs in one basket," Cramer said. And you know the moral of that story.

Just ask anyone who was heavy on tech during the dot-com bubble, ignoring what they thought were other "underperforming" sectors.

"Well, they may have been underperforming in relation to sky-high tech stocks, but investors who also owned, say, banks, food and drug names and dividend-paying companies certainly weathered the ensuing collapse better than those who were all in on the one hot group," said the Mad Money host.

A rally provides the perfect opportunity to determine if you're vulnerable; that is, a rally provides an opportunity to see if your portfolio is carrying too much risk. If you are, then outperforming the averages and making too much money isn't good.

Read More from Mad Money with Jim Cramer
Global growth on the way?
Cramer's next master of mobile
Never bet against this trend, says Cramer

What's the bottom line?

Making a lot of money may feel fantastic but it can have a downside. If your holdings are outperforming the market, it may be a sign that you're not well diversified.

Call Cramer: 1-800-743-CNBC

Questions for Cramer?

Questions, comments, suggestions for the Mad Money website?