Let’s be clear – what exactly is a top? It’s when a stock or the whole market reaches some price and then comes tumbling down. If you try to ride out a top, you could lose all your gains and then some.
Sooner or later every stock, every market, reaches a point where it can go no higher, and, in fact, starts going a whole lot lower, maybe for years. This is historical fact. If you own a stock and that stock keeps chugging along, going higher and higher, at a certain point you know you should get out. No one wants to give up on a moneymaker, but you have to be honest with yourself – the stock’s going to hit a peak at some point, and it’s best to be prepared for it.
Don’t approach this like the Street. When Cramer was working for Goldman Sachs, the graybeards on staff would tell him not to sell until a stock had been downgraded. But what’s the point of that? Wait until the stock has already come down? Forget it.