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Can you weather a 25% percent decline in one of your stocks today? Can you handle the pain if one of your stocks turns out to be using fraudulent or wrong accounting? Are you in good enough shape that if the

Fed

takes some drastic action to bring down the

Nasdaq

, it won't affect your lifestyle?

I am asking that now because we just came through a brutal selloff and a terrific upswing. I am asking it now because yesterday was one of the most placid, positive days I can recall. So positive that a longtime friend emailed me to say I seemed out of character in my inability to find fault or call people wrong in one of my pieces yesterday.

This moment in time is a good one to sit down and ask yourself a couple of questions. It is a good time to know yourself and put things in the correct perspective. So, here's a postbattle checklist you should go through to ready yourself for the next skirmish with the bears.

1. Did my portfolio swing too much and did it matter to me? These are two very separate issues. If you didn't panic at the bottom, you clearly have a huge tolerance for pain and I salute you. If the selloff caused heartache or pain to the point where you felt like your heart was going to jump out of your throat, take something off the table now. Or trim down that highflier that caused the most heartache. Or work down your margin debit. You are too leveraged for your own good.

2. Did the talking heads scare you to the point where you sold something at the bottom or could not put more money to work in the decline? Again, two separate issues. Did you have some money on the sidelines you could commit because you had taken something off the table? Or were you riding the bull for everything it was worth and almost got shaken off? Take something off the table now, today, if that is the case. Get in shape for the next decline, whenever that will come.

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3. Did you find yourself playing someone else's game? Did you go to the value well because for three days the TV stations booked value people? If so, don't be lulled into thinking you don't have to do any homework on those stocks because they are cheap. Cheap means nothing in this market; in fact, it's a negative.

4. Was there something in your portfolio that did not snap back with the market in this last week? Make a call, look up some research on it. The good ones do snap back. This is textbook

Investor's Business Daily

, which I read every day to try to spot the next big stock. I have read enough of the excellent columns in that newspaper to know that if a stock didn't spring back after the profit-taking we had, something more than the market may be wrong with it.

5. Did you sell anything out of your long-term IRA or 401(k) during this decline because you felt that it was the end of the world? Remember, that's the money that is meant for your retirement. It has a long-term framework. It would be best to stick with your commitment and ride that money out knowing that over the long term, stocks have been the best investments. Remind yourself next downturn that you want to commit sidelined funds, not withdraw them. That's why you raise cash into the rally, not the selloff.

Use this upswing right now to weed out the dogs that didn't come back. Make sure you are setting up now into strength for the possibilities of another decline. Get whole if you are on margin -- we just had a big rally.

Finally, remember who was right and wrong. Those friends or talking heads who panicked out or told you it was the end of the world?

They were wrong!

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.