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How to Time Your Sells
17 Feb 2012 EST - CNBC.com
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There are many stocks where, when you buy them, you need to understand that someday you will have to sell, “Mad Money” host Jim Cramer said.

High-flying tech stocks, for example, can‘t be owned forever. The same goes for the smokestack industrial companies, the so-called cyclicals, which are hostage to the business cycle.

“A lot of this comes down to simply understanding what you own and being willing to change your mind,” Cramer said.

Tech stocks like Skyworks Solutions or Micron Technology , are trading vehicles, as opposed to staples like Pepsico and Altria , which “plod along slowly.” These trading vehicles are winners when a product cycle is strong, but are losers when the cycle is weak.

Often the high-flying tech stocks will get hammered after the first sign that anything is deteriorating. When that happens, don’t tell yourself it’s too late to sell. Use any intra-day weakness to lighten up, Cramer said.

Discipline also makes a huge difference, he said. Don’t be “greedy” when owning these stocks—take something off the table and play with the house’s money.

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