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(This program last aired Aug. 31, 2012.)
NEW YORK ( TheStreet) -- There's nothing worse than watching the averages soar while your portfolio barely moves, Jim Cramer told "Mad Money" viewers Friday. He dedicated the show to the rules for taking advantage of a short-term market rally.
Cramer said that knowing how to approach a rally will definitely make you a better investor because, while it may seem like your portfolio can run itself during a rally, in fact, rallies are the perfect opportunity to lighten up on your positions and take profits."You don't have a profit until you sell something," Cramer reminded viewers, which is why he always encourages investors to sell into strength, then use market weakness as an opportunity to buy back in at a lower price. Hang on too long, cautioned Cramer, and risk watching your profits evaporate before your eyes. The key to approaching any rally, said Cramer, is to look at it with some pessimism, something that shouldn't be hard after years of being held hostage by the financial woes of Europe. Never let "rally euphoria" lead to complacency, he said, because profits can disappear just as fast as they appear.