Jim Cramer told the club members of the Action Alerts PLUS charitable trust on Thursday that its 12% cash pile positioned the trust well for situations like that day's sudden and sharp drop in the stock market.
The Dow Jones Industrial Average dropped nearly 7% on Thursday, a move brought about by worries the economy could take longer to recover if the U.S. sees a resurgence in coronavirus infections. The S&P 500 fell 5.9% and the Nasdaq Composite, which had roared to records, gave back 5.3%.
"Why do we have cash?," Cramer asked. "Let's say that this conversation was occurring on Monday. Well, I'd say I think the market is going to go down ... and you can say, well, that was wrong. But here we are with the Nasdaq down 234 points, and I'm feeling darn good. ... [You] can never have enough cash,” Cramer told listeners to his monthly members conference call.
A cash position, Cramer says, enables investors to buy into a rebound.
"[We] can do an overweight defensives and the secular growers because we are still in a recession," he said.
"We had 13% unemployment. I spoke with the treasury secretary today [and he] was telling me to emphasize that he thinks we're going to have a 17% snapback in Q3. But he called in because he feels badly, as I do, that there are many businesses that are trying to stay alive and stay afloat. And he was just trying to emphasize that there's still money left and there's more money coming. I like that."
And he said the trust has "a smaller barbell among the cyclicals and we're inclined to get a finger in them."
Catch Jim Cramer's full monthly investing call on ActionAlertsPlus.com.