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Riding the winners can be very dangerous. A stock will reverse direction instantly, whenever more people want to sell than want to buy. There is no way to predict when that will happen, and no way to recognize when it happens except after the fact when it is too late.

However, you can protect yourself from the reversal by placing stop loss orders at a chosen percentage (7% is common) below the price. The disadvantage of this is that you may get 'stopped out' on normal volatility. You can also buy a protective PUT. The advantage of the PUT is that you can wait for the price to come back up after a period of high volatility. Then, if it doesn't come back, you exercise the PUT right before it expires.

I don't believe in momentum, so when I think a stock is too high for market conditions, I start asking myself questions. If I had new money, would I invest it in this stock? If I sold, would I have a better place for the money?

Personally, I like to sell when I start feeing uncomfortable, lock in the gains, and reinvest in a better opportunity and never look back. That's what I did with my REITs last year, and I reinvested in DVY. I sleep a lot better at night now.

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