Know Which Phase You're In

While you can't ignore what's happening, you can always find a bull market somewhere, the trader advises.
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Too bearish? Too negative? Too pessimistic? Oh please, our view is the same as always. There are times to press the bet and times to take it off the table. There are times when you can do no wrong and there are times when you can do no right.

Knowing which phase you are in is as important to money management as homework. You have to know that when the tape is tough and people are negative, you can't just act as if nothing is happening.

And you have to understand that there is always a bull market somewhere; it just may not be where you are. We had a field day yesterday with our drug stocks and our cyclicals. We made good money with our airlines. We did poorly with some high-octane

Nasdaq

names, probably because the buying power for those stocks is exhausted by all of these margin calls.

(Buying power stems from cash, which was taken away during the bad old days of last week.)

Don't confuse our pessimism for some parts of the market with optimism for the market as a whole. We are looking at stocks that are out of favor and cheap right now because they are working. We are avoiding companies that are conceptual (read:

MicroStrategy

-like

(MSTR) - Get Report

) in nature because they are dangerous.

Business as usual.

Random musings:

I come to praise fellow writers.

Herb Greenberg's

piece this morning is brilliant and you never see this stuff elsewhere. He went back to a guy who liked momentum stocks and he discovers that the manager sold them. Candor and accountability. I love it!

Gary B. Smith

talks about our exchange on the

TV show in a professional and cool way, and he is right. His method works for him. That's what matters. Remember, I am describing methods that work for me, and Gary is describing methods that work for him. You have to decide what works for you. Neither Gary nor I can do that for you.

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.