Good Portfolio Management Helps You Ride the Waves

I got a great question from a Chairman's Club subscriber today during my quarterly conference call: What happens if you put that first quarter of a position on, being disciplined and buying on the way down, and now the market's taken off and you didn't get any more in?

Heaven knows that has been the case for a bunch of stocks, including most of the big techs, and the rails and industrials.

I gave a controversial answer. I don't want you to buy more up here. I am not negative, unlike many on this site; I just always think that you will get a better time than buying right here and right now, unless the stock is not running. (The converse is usually true when the market's plummeting and people want to sell.)

I think there will be a down day or days where you will regret that you reached. The real problem: What happens if a stock goes up $10 and then goes down only $5. You missed $5.

My solution -- that's why you own the quarter position to begin with. You are still making money.

So let's say you only got a quarter of a position on in Union Pacific (UNP - commentary - Trade Now) before it took off, say at $50. Here it is, down a tad, but if the market reverses it will be down more than a tad.

That's when you would pounce. I would put it on the radar screen now, though, because even though the quarter was terrific, as with Qualcomm (QCOMM - commentary - Trade Now), the stock is exhausted.

I just hate to chase.

Period.

Random musings: We made a tape of the Chairman's Club call if you want a trial. Please call [phone] to speak to an actual human about the Chairman's Club. ... I have liked Hershey (HSY - commentary - Trade Now) for some time. I know it is rich, but this is one that is a changed company with no more paternalistic interests. It remains a good one. I think there will be second-day moves in Amazon (AMZN - commentary - Trade Now) and 3M (MMM - commentary - Trade Now). I also think that Apple's (AAPL - commentary - Trade Now) about to have another day move. Don't forget that Potash (POT - commentary - Trade Now) could be back, and there I would do it with deep-in-the-money calls.

At the time of publication, Cramer was long Qualcomm.

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Jim Cramer is co-founder and chairman of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. Outside contributing columnists for TheStreet.com and RealMoney.com, including Cramer, may, from time to time, write about stocks in which they have a position. In such cases, appropriate disclosure is made. To see his personal portfolio and find out what trades Cramer will make before he makes them, sign up for Action Alerts PLUS. Watch Cramer on "Mad Money" weeknights on CNBC. To order Cramer's newest book -- "Jim Cramer's Stay Mad for Life: Get Rich, Stay Rich (Make Your Kids Even Richer)," click here. Click here to order "Mad Money: Watch TV, Get Rich," click here to order "Real Money: Sane Investing in an Insane World," click here to get "You Got Screwed!" and click here for Cramer's autobiography, "Confessions of a Street Addict." While he cannot provide personalized investment advice or recommendations, he appreciates your feedback and invites you to send comments by clicking here.

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