Jim Cramer Reveals How to Invest During U.S.-North Korea Thermonuclear Tensions

Jim Cramer doesn't expect a second Korean War to break out over North Korea's nuclear-weapons program, but says smart investors should take two steps to profitably play today's geopolitical tensions.

"I still don't believe there's going to be a war -- but that doesn't mean that you won't feel like there is one," Cramer said in this latest monthly conference call with members of his Action Alerts PLUS club for investors.
The expert recommends you:

Keep Cash on Hand

Cramer suggests keeping 10% to 15% of your portfolio in cash to serve as both a hedge against risk and the capital you'll need to buy quality stocks that dip on any Korea-related broad-market pullbacks.

"We [must] be as ready as you can possibly be in these instances," he said. "The only way to be ready? Cash -- that's the best hedge."

Snap Up Good Stocks on Any Market Jitters

"We are banking on a peaceful resolution and will stay that way until our country issues a statement saying non-essential U.S. personnel should leave South Korea," Carmer said. "[But] until then, I think the issue will ebb and flow -- and when it ebbs, we'll be a little tempted [to buy] if the market's down."

For example, Cramer said he'll use any significant Korea-related pullback to boost his charitable trust's stake in Pepsico (PEP) , which the stockpicker called "the long-time best-in-breed company in the food-and-beverage industry."

"You need to actually be rooting against some of your stocks ... so you can [get] bigger on a broader market decline, like a North Korean decline that has nothing to do with PepsiCo," Cramer said.

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