It hit me on the way home. The reason why so many fledgling daytraders must find my column so mind-boggling is that I buy weakness and sell strength. That's an anathema to many people who are technically inclined, but it comes naturally to fundamentalists.
Today when I wrote that
I liked the market, I meant that as it came down, I would buy it. We do virtually no buying when the market is rallying or when stocks are rallying. When we do, we know we are forcing trades or making a mistake. We as a rule sell breakouts and buy breakdowns. We do that because we are seeking to buy things at a discount and hoping to sell them later at a premium.
This discipline comes to mind because, when I left the office today -- as I will again tomorrow -- to see companies and to do some speaking, my advice will be to buy the weakness, to put the cash to work. I think that over the near-term, such buys will be rewarded because there are some good things happening in the macro environment that makes selloffs buy-able here. We have plenty of cash -- seems like we have had that all year -- and when the market gets hit, we buy.
Let me be more clear: If I hated the market, I would be selling stocks. I don't. The market is giving us an opportunity to buy our stocks at better prices.
To some of you it seems that, if the market goes down at all, it is the end of the world. Maybe some of you are daytrading or swing trading and if you make a bet today and it doesn't pay off, you are dead. If that's the case, you are on your own. I just don't think that's a great way to make big money.
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