If you have been uncomfortable with your stock holdings on big down days like we've had recently, use Friday's strength to trim, said Jim Cramer on his "RealMoney" radio show . Many mutual funds' fiscal years end in October, said Cramer, and many of those funds have been selling to lock in gains. But that selling is over as of Friday, he said, which is why the market lifted. Cramer isn't looking to sell stocks here, but he knows many listeners "can't take the pain." For those who can't, use Friday's strength as an opportunity to sell, he said.
Recent stock market scandals such as Refco ( RFXCQ), Bayou Management and the late-day trading mutual fund scandal all have one thing in common, said Cramer: People don't like to 'fess up when they mess up. It's really hard to make money in the market longer term, said Cramer. People mess up all the time. Sometimes they lie when they do. So, be suspicious of routinely great performance with no turns, and make sure all the checks of that performance are in place. In each case of chicanery Cramer has seen, one or two, if not all, of the normal checks and balances were corroded, he said. An investment manager should trade with a major brokerage that can't be bribed and should have a major law firm and an independent, outside accountant, he said. Don't be had, Cramer added. Not accepting that people sometimes lie when they mess up and not looking for checks and balances in the system will cost you. RealMoney.com contributor and "Stocks Under $10" co-author Will Gabrielski joined Cramer to talk about three stocks that tripped up Cramer in Thursday's "Stump Cramer" segment, during which callers ask about obscure stocks. Gabrielski said Home Solutions of America ( HOM) had rallied about 250% this year as a play on the cleanup from the hurricanes. However, the company became public by means of a reverse merger, which means it bought a shell company to gain listing on an exchange rather than by going through the public offering process. Additionally, the company has sold stock to private investors at discounted prices, he said. Cramer said that kind of stock is "not my cup of tea," adding that he also doesn't like the brokerage companies that cover the stock. And, with the stock up 250% this year, most of the move has probably been made, he said.