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Jim Cramer's guide to investing: Don't buy during a rally

Scott Mlyn | CNBC
  • CNBC's Jim Cramer vehemently advised against buying stock during a market rally, even if it feels tempting to do so.
  • "I always tell you to buy into weakness and sell into strength, but that really means you need to sell some of your winners at the moment when they're at their hottest, and you probably shouldn't buy anything when the market feels like it's on fire," he said. "If you do, your new stock picks will likely be consumed in the aftermath of that fire and you won't have much to show for all that hard-won money that went up into smoke."

CNBC's Jim Cramer vehemently advised against buying stock during a market rally, even though it may be tempting to do so.

"I always tell you to buy into weakness and sell into strength, but that really means you need to sell some of your winners at the moment when they're at their hottest, and you probably shouldn't buy anything when the market feels like it's on fire," he said. "If you do, your new stock picks will likely be consumed in the aftermath of that fire and you won't have much to show for all that hard-won money that went up into smoke."

Cramer said he wants investors to take advantage of rallies, but buying when the market is hot means they're letting the rally take advantage of them. Rallies are a moment when raising cash is essential, but spending it is prohibited, he said.

He stressed that it's important not to let feelings and excitement during a big winning streak lead you astray. Instead, Cramer said investors should keep a cool head and come to terms with possibly missing out on buying a stock that's up big.

"If you want to buy a stock and the market's just had a remarkable run, do me a favor and tell yourself you missed it. Just say, 'darn it, I missed it," and take a pass, or at the very least — the very least — keep your bat on your shoulder and wait for a better pitch at a cheaper price," he said. "It's the smartest thing you can do in that situation and it could save you a lot of pain down the road."

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