Cash In Some Chips, Play Poker

Pigs Get Slaughtered

I think now is a good time to take some chips off the table. That's correct, sell stocks, "ring the register," to quote Cramer. We have experienced a wonderful bull market from three short years ago. For many stocks, especially small-cap shares, it has been a one-way ticket to Profitsville.

However, most of the factors that generated the bull stampede are maturing. Prudence dictates harvesting share gains into market rallies, especially into such an aged bull. Why sell now, into such good conditions? Stocks are up a lot. Valuations are fair to high. Rates are rising. Profit margins are peaking. Currency gains are vanishing. And virtually everyone is bullish. If you can't sell some now, when can you?

Could this call be wrong? Absolutely. Could the rally continue? Certainly. The market has a fair degree of momentum and goodwill. When investors want to believe that no revenue growth quarters from Broadcom (BRCM) or Texas Instruments (TXN) represent "blowouts," it's extremely difficult to call a short-term top. When 50 P/E Internet retailers spike on 2-cent earnings surprises, watch out above! When a formerly leading market strategist turns bullish after a decade-long affair with the bear, investors' glasses are a much deeper shade of red than rose.

Usually, my column contains at least a few deep value stocks I like, even when cautious on the market. And it's fair to say that I have not been a snorting bull over the past four quarters. But this time, my new-buy candidate list is unusually skimpy. Down, cheap, with good fundamentals is not easy to find. And if you review my record from prior columns, my long ideas tend to have high success rates. That's what happens when you buy stocks too cheap to be true. I just don't have many to offer here and now.

So, take some chips off the table. Blow them in Vegas in the poker bubble if you want. The odds might be better there for the next few months. Just leave some room to buy stocks if the fall correction comes back around this year. Remember, if you can't sell now...

>To order reprints of this article, click here: Reprints