• CNBC's Jim Cramer told investors that often, too many stocks in a portfolio can actually lead to fewer gains.
• "Rule of thumb?  If you're just investing for yourself and you own more than ten stocks, you should probably pare something back," Cramer said.

Maintain a limited number of stocks in your portfolio, CNBC's Jim Cramer advised investors. Too many stocks can often lead to fewer gains, according to his experience.

Cramer learned this lesson while working at his hedge fund years ago. He observed that his portfolio's performance was linked to the number of stocks he held. The fewer stocks he had, the more money he made, Cramer said. Now, Cramer won't buy a new stock without first taking an old one off the table.

"Rule of thumb? If you're just investing for yourself and you own more than ten stocks, you should probably pare something back," Cramer said.

The best money managers have a few stocks they know inside and out, he explained, while managers with too many stocks have trouble monitoring them.

It is possible to have too many stocks, but it's rare to have too much cash, Cramer added.

"The widespread aversion to cash in this business breaks my heart," he said. "At times, cash is such a perfect investment that it drives me crazy how so few people ever recommend it."

Cramer suggested that when investors feel uncomfortable with the market, or don't feel compelled to buy into weakness, raising cash is the best thing they can do. Cash is great, especially if you feel there's disaster ahead, he explained.

"Go sit on the sidelines and wait for the situation to improve," Cramer said. "Believe me, it's never the wrong call when you don't like the tape or you can't find anything that truly makes sense for you."

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