How to Trade a Broken Market

How do you play a market that does not work? How do you play a fast-motion crash instead of the 18% decline we had in a week back in October 2008?
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This column by Jim Cramer originally appeared on RealMoney.com

Was it real? Was it what we call a "whoosh" where the market just crashed and everyone who wanted to sell had to sell? Or was it just a key-punch error, where someone was trying to sell $15 million worth of stock and the order came out as $15 billion? Was it an order feed that broke down?

We aren't sure, but we know the system was overwhelmed and the market didn't work.

How do you play a market that does not work? How do you play a fast-motion crash instead of the 18% decline we had in a week back in October 2008?

We don't know yet, but the only real protection besides diversification is a yield-based philosophy where you are ready with buy orders at prices that make too much sense.

Like take

Procter & Gamble

(PG) - Get Report

. I have no idea what happened here, but someone who watched my hit on

CNBC

was able to buy 1,000 shares and made $3,000 in five seconds. I know the stock never traded there on the

New York Stock Exchange

-- apparently it traded on the

Nasdaq

there.

That's opportunism.

But how about if you were to have an order for P&G for when it yielded 5%? You got hit and made good money.

We have to go back to the old rules regardless of what happened today. Yields can be trusted. Dividends can be trusted.

Nothing else works on a day like today and a market like this.

At the time of publication, Cramer was long PG.

Random musings:

For our coverage of the market's massive drop and recovery, see our

flagship site

.

Jim Cramer, co-founder and chairman of TheStreet.com, writes daily market commentary for TheStreet.com's RealMoney and runs the charitable trust portfolio,

Action Alerts PLUS

. He also participates in video segments on TheStreet.com TV and serves as host of CNBC's "Mad Money" television program.

Mr. Cramer graduated magna cum laude from Harvard College, where he was president of The Harvard Crimson. He worked as a journalist at the Tallahassee Democrat and the Los Angeles Herald Examiner, covering everything from sports to homicide before moving to New York to help start American Lawyer magazine. After a three-year stint, Mr. Cramer entered Harvard Law School and received his J.D. in 1984. Instead of practicing law, however, he joined Goldman Sachs, where he worked in sales and trading. In 1987, he left Goldman to start his own hedge fund. While he worked at his fund, Mr. Cramer helped start Smart Money for Dow Jones and then, in 1996, he co-founded TheStreet.com, of which he is chairman and where he has served as a columnist and contributor since. In 2000, Mr. Cramer retired from active money management to embrace media full time, including radio and television.

Mr. Cramer is the author of "

Confessions of a Street Addict

," "You Got Screwed," "Jim Cramer's Real Money," "Jim Cramer's Mad Money," "Jim Cramer's Stay Mad for Life" and, most recently, "Jim Cramer's Getting Back to Even." He has written for Time magazine and New York magazine and has been featured on CBS' 60 Minutes, NBC's Nightly News with Brian Williams, Meet the Press, Today, The Tonight Show, Late Night and MSNBC's Morning Joe.