Jim Cramer’s guide to investing: How to handle a short-term rally

CNBC's Jim Cramer said it's crucial to stay focused, practice restraint and take some profits during a rally.
"When the stock market's had a big short-term run—short term—don't get carried away by the optimism," he said. "Instead, keep your head on straight, check your emotions, focus on the long-term, and think about ringing the register, especially on the stocks that might be getting too high."

CNBC's Jim Cramer said investors shouldn't lose their heads when the market starts to rally. According to him, it's crucial to stay focused, practice restraint and take some profits.

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"When the stock market's had a big short-term run—short term—don't get carried away by the optimism," he said. "Instead, keep your head on straight, check your emotions, focus on the long-term, and think about ringing the register, especially on the stocks that might be getting too high."

Cramer said he knows it can be hard to sell into strength and no investor wants to miss out on one of their stocks soaring even higher. But that's why he advised never to sell — or buy, for that matter — all at once. Instead, he said, it's wise to sell part of one's position when a rally starts and leave the door open to sell more if the rally continues.

He also reminded investors that they haven't made any profits until the register is rung. It's foolish to buy and hold during the best of times and the worst of times, he added. He said if you hang on to winning stocks for too long, your gains may evaporate and then you've completely missed the rally anyway.

"Just as you need to remember the good days during sell-offs to keep yourself in the game, you need to remember the down days when the market's roaring to keep yourself tethered to reality," he said. "Don't pass up an opportunity to trim your positions just because you're in stocks for the long haul as an investor, not a trader...Being an investor does not absolve you of the need to have judgment."