Take something off the table, my mantra for the past two weeks in speeches and articles, sure played out well if you listened. I was only telling you what we did at
, and we successfully redeployed some of that capital in the Old and New Economy stocks this week, courtesy of the downdraft and the rotation shift.
Many of you emailed me -- and I know by now it must seem highly unusual given the size of our membership, but I make a point to read every one of your emails provided they don't ask for specific stock recommendations and, yes, I respond, even if it is only at times in my wildly typed "thnxs" -- that you would have liked to have taken something off the table but you didn't know where to put it. Wrong!
You know where to put it. You have just been so brainwashed by the financial-media complex saying that it has to be put to work at all times that you missed the best place to put it: in cash.
When I set up my IRA with
in 1978 I made a point of doing two things: one, giving the money to
Fidelity Magellan Fund and two, setting up a cash reserves account to place new money that I didn't think was right at the time to give to Lynch.
Why did I do this? Because Lynch was forever and is forever saying that corrections are routine in the market, that they happen all of the time and that you have to expect them.
So I figured, if you have to expect them, why not plan for them? Unlike Lynch, I have no charter that says I have to be in stocks. And unlike some mutual fund managers who worry they will lose their jobs if they are not fully invested, I don't have to be in all of the time.
Whenever the market took a nasty hit, I drew down the cash reserves account a bit and put money to work. I was able to take advantage of the '84-'85 set back, the '87 setback and the '90 setback this way.
I think you should have two accounts at the ready, an account that trades and invests and an account for cash. If you have mutual funds, you should have a cash reserve account for them, too. You keep new money in cash until a break in the market. If you don't get one, it waits. It is not a sin to earn cash returns, especially when the
seems hell-bent to make those rates even better.
As usual I am only telling you how I do it. And as usual if it works for me, I want to tell you about it. This method has worked like a charm for me for more than 22 years. Can't beat that.
James J. Cramer is manager of a hedge fund and co-founder of TheStreet.com. At time of publication, Cramer was long the Fidelity Magellan fund. At the 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