Sell the Rally!!!...

I am sitting here because I got the chance to get home early and watch my main man, crazy Jim Cramer. And he is attempting to go after the infamous question of when you sell stocks. His main points are to sell into the rally for big winners, and also for losers that have gone up due to the momentum of the market. During his show, Cramer talks about taking on unnecessary risks (due to things such as your stock going up too much) and your portfolio not being diversified. I do agree that it becomes a tough situation when you have the following scenarios:

1. A great stock does very well for you and now consumes a large amount of your portfolio
2. You made great choices on an industry or sector like oil and own a number of stocks in that industry/sector
3. You have a loser or dog of a stock and it begins to rally when the market rallies

URBANOMICS ANALYSIS

Cramer responds to these situations by saying that you need to take a little bit of the table and stay diversified, have cash on the sidelines, and sell a dog into a momentum rally.

I am torn between this stance because you know I am an avid follower of Warren Buffet, who believes buying a stock at a discounted price and paying attention to the fundamentals, not the stock price. My position is that you should never be afraid to sell a portion of a big win and definitely sell a dog that begins to rally. However I will lean toward Buffet and his position on owning, holding, and selling stock. I will give my interpretation of his opinion:

Owning a few really good stocks, is similar to being an agent and signing some very good college hoop stars. Some of these athletes will go on to be professional basketball superstars and if you are the agent then your agent fees will grow and one of your major superstars will become a big portion of your income.

Here comes the kicker --> For me to tell you that you should sell your really good investments is like me telling you, as an agent, to get rid of negotiating Michael Jordan's contract because he's so good that his bigger and bigger contracts are bringing you in so much money that its dwarfing your other clients.

No! Holding on to superstars, and investments:
- Reduces your transaction costs
- And it increases your after-tax returns

You would never let go of Jordan and therefore you should not sell an investment just because you've gotten huge returns. Keep the superstar investments until the fundamentals change.

Recent picks I hope you like:
~ OIL HOLDRS ETF (OIL)
~ AK Steel (AKS)
~ Medcath (MDTH)
~ Burlington Northern Santa Fe (BNI)

On the URB Radar for acquisition at the right price:
~ Ricks Cabaret (RICK)
~ NY Times (NYT)
~ Move Inc (MOVE)
~ Asset Acceptance Corp (AACC)
~ China Digital Holdings (STV)
~ Coinstar (CSTR)
~ H&R Block (HRB)