Cramer's 'Mad Money' Recap for Aug. 5

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"Making lots of money on a great day is fabulous," Jim Cramer told viewers of his "Mad Money" TV show, "but rallies are times for action."

Cramer said too many investors don't trade during rallies and thus watch their gains disappear.

Taking a page from his rally playbook, Cramer told investors they can save themselves a lot of grief by checking "their emotions at the door."

He said investors shouldn't let their emotions prevent them from doing what is needed during big rallies. He said investors often let emotions sway them to hold on to their stocks -- the exact opposite of what they should be doing.

"The goal is to buy low and sell high," he reminded viewers, "so when the market's up big, it's time to lock in some profits."

Cramer: These Consumer Goods Are Priced to Win

Cramer also reminded viewers that gains in the market are not really gains until the stocks are sold. He said the way to play big market rallies is to sell in increments during the rally. "Get the great prices while they last," he said.

A Strategy for Selling

Cramer's first rule for playing a rally is to "be really tough on your portfolio." He said investors should not get swept up in the market euphoria, but rather scrutinize each and every stock in their portfolios to determine if it has earned the right to stay there at its new higher price. "Assume that everything is guilty until proven innocent," he said.