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Take Something Off the Table

The trader gives his last word on this controversial piece of advice.
Author:

No wonder brokerage houses never recommend selling anything. The clients hate it! I have been beating this "take something off the table" drum for three weeks now and all I do is repeatedly field the question "Why bother?"

People think nothing could be more stupid. Taxes, lack of return in a cash account, the poor performance of municipal bonds vs. equity, the need to have as much money in a great market as possible -- they all add up to a resounding "no" to any selling.

They think that my advice is tantamount to market timing, which is a sin. They think that taking some money and putting it in a safe place away from the market is like quitting work; it can't be done safely. It is too dangerous and flies in the face of the conventional wisdom that gets dispensed every day in this country.

To which I say, "wrong, wrong and wrong again."

It is common sense. The logic is unassailable. If you have had a big run, as many of our readers have, you should take some off and play with the house's money. (There's that gambling analogy again, but why not emphasize it? Would you leave a big pile of chips out after you have repeatedly won in Black Jack, or would you take some of it and put it in the bank?)

I can only tell you what I have done. I have taken money out and put some of it in a New Jersey municipal-bond account that

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has. It allows me to sleep. It allows me to trade better. It allows me to feel that the down days are not going to change my lifestyle one whit. It gives me the freedom to be bigger and bolder with the money that remains in.

No, you won't get this kind of advice elsewhere because, long-term, stocks are the best investments so it makes no "theoretical sense" to put some assets into a tax-free AAA-rated municipal fund.

I don't care. I do what makes sense away from the realm of the stock market. That way if the unexpectedly bad does occur, it is an opportunity, not a catastrophe.

With this piece, I will now drop this theme. I am getting too much email blasting me for this stance and I am just going to direct everybody to this piece. It is my last word on what to do with this market.

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.