"Still, Cramer used the one-day S&P 500 drawdown to remind investors that it's sensible to lock in your profits on high-flying stocks. "You haven't made a profit unless you ring the register on some of your gains," Cramer explained. Those unrealized profits are just "paper gains. That doesn't count," he added. Cramer's advice applies to all stocks and not only the S&P 500."
"The S&P 500, which is often traded via exchange traded funds (ETFs) like the SPDR S&P 500 ETF ( NYSEARCA:SPY) or the Vanguard S&P 500 ETF ( NYSEARCA:VOO), fell rapidly on January 20. However, prior to that event, the S&P 500 had rallied strongly for eight months. Moreover, large-cap stocks easily recovered their losses in the days following January 20."
Stocks wavered on January 20 as traders weighed President Trump's threats to impose tariffs on nations impeding a proposed takeover of Greenland. The S&P 500 fell rapidly that day after an eight-month rally but large-cap stocks recovered losses in the days following. Investors are advised to realize some gains after sharp rallies because unrealized gains remain paper until sold. Booking partial profits on high-flying names can protect returns. Checking company fundamentals before holding high flyers is recommended. It may be premature to call a top in the current bull market.
Read at 24/7 Wall St.
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