Jim Cramer says that sometimes it pays to go against the grain. When Wall Street analysts are all headed in a bullish direction on a stock that you own, it's wise to go the other way and sell part of your position to lock in some profits -- one of Cramer's "5 Rules for Trimming Your Winning Stock Positions."
"When you get an upgrade cluster of a number of analysts all going 'Hold' to 'Buy' at once, you have to sell something even if you love the stock. Cluster upgrades are made to be sold, not bought," Cramer said in unveiling his rules during an exclusive video-conference call with members of his Action Alerts PLUS club for investors.
For example, Cramer's charitable trust sold some of its stake in Walt Disney Co. (DIS - Get Report) for $131 a share last month after several analysts upgraded the stock in the wake of CEO Bob Iger's upbeat comments at Disney's annual investors' day. The trust had been adding Disney shares in the weeks leading up to the session for as little as $108 in what he called "somewhat of a leap of faith, but it was made easier by the fact that so many analysts wanted to wait and see what he would say and do. I thought that approach would just be too late.
"Sure enough, we got [to the] meeting and Iger was in rare form," Cramer said. "We got a cluster of cowardly lion analysts going from 'Hold' to 'Buy' all at once, and it sent the stock to the mid $130s in a straight line. We told you to sell because of all of these johnny-come-lately analysts recommending it all at once. ... We [took] advantage of the cluster of buy recommendations and booked a nice profit on some of our holdings."
Check Out All of Cramer's '5 Rules for Trimming Your Winning Stock Positions'
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- A complete rundown of all of stocks that Jim himself holds in a trust that he runs for charity;
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