Cramer's 'Mad Money' Recap: Surviving a Tough Market

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Editor's note: This recap was last published on Dec. 29, 2008.

"It's OK to sell stocks in a down market," Jim Cramer told viewers of his "Mad Money" TV show Friday.

"Just don't sell everything," he said, as he outlined his rules for surviving a tough market.

Cramer told viewers that they should never be afraid to sell stocks when the market turns sour, but they need to exercise discipline, and never panic into selling everything. Over the last few months, he's been advocating that investors secure what money they may need in the next five years.

Cramer said if investors are buying a house, paying for tuition, or even buying a car over the next five years, it may be prudent to secure that money now. Take the money out of stocks, he said, and keep it in cash or equivalents so you can sleep comfortably at night.

But there's another reason to sell stocks, said Cramer, and that's to have money to buy them back cheaper. "The worst markets make the best buying opportunities," he said.

The chance to buy stocks at Dow 8,000 is a great opportunity that investors may never see again. Only by selling stocks into strength will investors have the money they need when the bargains reveal themselves.

For retirement savings, however, Cramer advised against selling. Retirement, he said, is for the long term, and that money should stay in stocks. "We go through bad spells," said Cramer, "it's happened before and it will happen again."