One of Cramer’s many slogans on CNBC’s Mad Money is, “Bulls make money, bears make money, hogs get slaughtered.” Aside from the fact it sounds like a more violent version of a Confuscian saying or even a Biblical proverb (not that Solomon would slaughter a hog, God forbid) what does it mean?
While many growth stocks are worth riding on the way up, it is important for investors to do their homework and know when a stock has gotten just too expensive. This doesn’t mean getting rid of a position, but it does mean taking a bit off the top. Even for investors who feel certain the stock is going to go higher, it is worth to sell rips and buy dips. Cramer suggests selling the top when there is a rally in the stock down to a level where the individual feels comfortable holding a stock. Sure, it is possible to miss a wild ride up, but this strategy also cuts the downside.
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It also helps to keep a shopping list of stocks you want to buy the next time the market sells off. Of course, it is worth thinking twice before buying a stock that misses on earnings, but if there is a market wide selloff that has nothing to do with the sector or the individual stocks, these stocks should be bought on weakness.
