Be concerned if your stocks dramatically outperform in a market-wide rally, says Jim Cramer

You're watching the Mad Money Rally Playbook, where I'm teaching you the best ways to take advantage of a market that's up big over a short period of time. Remember, that's crucial. Just a spike, all right? If you're just tuning in, I'm deeply wounded by the cold shoulder you gave me when you will hopefully chose not to watch me, or at least watch most of the show. I know you did it as a callous and sadistic attempt to hurt my feelings. Congratulations, it worked. I hope you're happy. Back to business. Most of my rally playbook has been about what you can benefit due to benefit from higher stock prices, how you can use the rally to set up for the inevitable rough patches that the market runs into sooner or later by raising cash, and which stocks you should sell in order to do it. The last part of my rally playbook is a little different. It's not about what you can do during or right after rally, which we've already covered. Instead, I want to highlight what a major move higher can teach you about your portfolio, because rallies are incredibly illuminating. I'm not too worried about anyone seriously underperforming the averages on a big up day, because that's something you can easily study and fix by getting more exposure to the sectors that we're up the most. No, what should get you truly concerned is watching your stocks dramatically outperform the average. Dramatically out. That's the keyword in Market Wide Valley. You heard me right. Making too much money on a given day can be a problem, or at least a red flag. A situation where your gains are trying to warn you about something. This very counterintuitive, but bear with me. The warning's very simple. When your portfolio leaves the averages in the dust on a day when the market's worry, it means you're taking your own way too much risk with your portfolio. I know I don't strike many of you as as most conservative investor round. I get that. And the fact that I do this show every day, even though it probably double S my odds of a heart condition doesn't help my case. But taking an unnecessary risk in your portfolio makes absolutely no sense. And watching how your stocks move in a market wide rally is a terrific way to figure out if perhaps you're taking on needless risk. Say the rally comes and you make much more than the averages. The question is why were you using margin? Borrowing money from your broker to get that extra bit of leverage That will help you crush the average in a rally, but we'll also get you crushed by your losses in the sell off. That's just not worth the people. Don't miss a second of mad money. Follow at Jim Cramer on X Have a question? Tweet Kramer hashtag mad mentions. Send Jim an e-mail to [email protected] or give us a call at one 807 four three CNBC Miss something? Head to madmoney.cnbc.com.

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