Editor's note: This is Part 2 of a two-part article. Please be sure to check out Part 1.

Staying in the game means knowing what kind of market you are in and making a judgment. On the

New York Stock Exchange

, right now we are in a benign market where good news moves stocks up and bad news gets glossed over. On the

Nasdaq

, any news is bad. Can that change? Yes, on a dime. Do we know when it will change? No, but we know that when it does it will be so swift that, unless we enter in gradually with our cash, we will miss it.

The trick is to balance the near-term losses that come from committing new capital with the potential gains that come from a possible snapback. It is very hard -- a grueling balancing act.

If I didn't have to make it (that is, if I didn't run money professionally), I wouldn't make it.

But I am a professional and it is what I do.

In the last few years many of you have taken on the attributes of professionals. You monitor the market, you watch it on TV and you read about it. You have become players in it. Being a player has its advantages when things are rocking.

But it has a huge downside when we are in markets like the one the Nasdaq just morphed into. Accept the downside and the periodic power of the bear, and respect the possibilities of losses, healthy or unhealthy.

Don't look to anybody to turn around this market. Don't make silly bets like "

Cramer's bearish; I gotta be bullish," or, "It can't go down anymore," or "When it touches 283,938 on the

intraday wobistics charts, I have to act." If it turns out that the declines and the losses -- and the swiftness of both -- are too much for you, that's fine, too.

A a few months ago we believed that this market was for everybody. We believed that the young managers who just studied charts and had big marketing departments could make us fortunes. We believed that, when we bought something, it made us a fortune.

Now we know otherwise. That does not mean that the process is corrupt or evil or biased or phony. It just means that things got too great. Now they are getting really ugly. If you are cool about it and don't lose your head, if you can reach back and summon how good it felt to be making big money and accept that this is one of those down times, you will do fine. If you can't, there is a lot more to life than the stock market, believe me.

I write these words because my email has become a barometer of desperation and despair so fast that it saddens me. For almost 15 years the market's mood has been my mood. But I have worked hard to make my mood less dependent upon the swings, because sometimes I am going to be positioned wrongly during a swing. We have worked hard as a team to limit the possibilities of a dramatic downside, even as it cuts off the upside, because we don't want to be held hostage to the bear.

Go with me on this. Understand that we are in a fragile time. It could turn on a dime. It might not. Don't make it so it has to turn in order for you to stay in the game.

It just doesn't work that way.

James J. Cramer is manager of a hedge fund and co-founder of TheStreet.com. At time of publication, his fund had no positions in any stocks mentioned. His fund often buys and sells securities that are the subject of his columns, both before and after the columns are published, and the positions that his fund takes may change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Cramer's writings provide insights into the dynamics of money management and are not a solicitation for transactions. While he cannot provide investment advice or recommendations, he invites you to comment on his column at

jjcletters@thestreet.com.