Trading Around Positions

Some people ask how and why I trade around positions. I do it, in part, to generate good trading gains and, in part, to be sure I am in position for the next up move.

Right now, for example, I have been buying and bidding for

Anheuser-Busch

(BUD) - Get Report

. (Oh please, don't buy BUD because of this. Heck, I am just tired of National Gift Wrap & BUD company for the moment, and BUD is hardly small-cap.)

When BUD ran up to 79 after it had a rah-rah meeting in St. Louis, I let some of my BUD go. I sold it not because I no longer liked it or because it had turned down fundamentally. I sold it because I thought the stock had run up too much and would be due for a short-term fall.

The stock today tells me I was right.

So, I kept some BUD on my sheets as a core position, and I waited for it to fall 4% or 5% and then, today, started rebuilding the position. Oddly -- and this is why I say don't buy it -- I hope it comes down even more because that's how you should feel when you like a stock and you want to buy more of it. I regard it as if it were a sale, say, of BUD, the beer. As it goes down, it gets cheaper in my eyes, not more expensive. (Momentum traders might disagree with that statement.)

What do I do with the capital gains that I took for me and for my partners? We pay taxes. Was it worth it to sell it and buy it back? It may not have been if you are not trying to generate capital gains and you hate the tax man. But if your goal is to make money, it surely is. To me, had I ridden BUD down from 79 to 73 where it was trading when I wrote this, I would

not

have done my job well. As a professional trader, that is how I think.

I have rebuilt about a third of my BUD position that I expect to bring in. If the stock goes right back to 76, plus or minus a quarter (to get in the Favors spirit on Friday) because of a buy program or a sloppy, impatient buyer, I will boot this additional trading stock and get started again -- as long as the fundamentals stay strong.

James J. Cramer is manager of a hedge fund and co-founder of TheStreet.com. At time of publication, his fund was long Anheuser-Busch, although positions can 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

letters@thestreet.com.