Unease is sweeping through Wall Street.
The Dow Jones Industrial Average tanked more than 354 points on Monday as the Trump administration fanned the trade war flames with China. Treasury Secretary Mnuchin tweeted that new investment restrictions, which had earlier been reported to target Chinese investors in the U.S., would instead apply to “all countries that are trying to steal out technology.”
The S&P 500 Index and Nasdaq Composite also came under pressure. FANG stocks (Facebook (FB) , Amazon (AMZN) , Netflix (NFLX) and Alphabet (GOOGL) ) and high-profile industrial namessuch as Harley-Davidson (HOG) were hardest hit.
With investors searching for guidance at this critical moment in the markets, who better to look to for help than TheStreet’s founder Jim Cramer. Here are several helpful investing lessons from Cramer sourced from his 25 Rules of Investing.
Watch each video below for greater insight. And get more in-depth guidance on the markets via Cramer’s Action Alerts PLUS member club.
Tip 1: Expect, and Prepare For, Corrections
If you haven’t prepared for a market correction, ask yourself why not. Corrections are fairly common, especially when market sentiment is shifting for the worse as it is now.
“To me, they [corrections] are like the rain. I expect it to rain. I prepare for it…When it comes, I am ready. I have an umbrella and a coat or I stay indoors,” says Cramer.
Tip 2: Cash Is OK
Part of preparing for a correction is to raise some cash. More cash on hand helps to protect gains and also allows for quickly jumping into opportunities when selling subsides.
Stresses Cramer, “Cash is for winners, the aversion to cash in this business breaks my heart. Sometimes cash is such a perfect investment that it drives me crazy when too few people recommend it.”
Tip 3: Don’t Bank on Hope
If the market is telling you something, as it is currently with almost two weeks of declines, don’t sit there and hope your stocks will rally. Respect the market and act accordingly.
“Don’t hope for anything,” Cramer says. “Hope is emotion, pure and simple….And this is not a game of emotion.”