Know When to Take Stock Market Gains

Remember the old wall street adage goes:

Bulls make money. Bears make money. Pigs get slaughtered.

Avoid association with the latter group in this statement. To put this adage in perspective, always know when to sell your stocks.

Housing Market Decline Effect

There is a huge divide on the market outlook for 2007. Naturally, the bulls believe the market will continue to rise as commodities sink and profit margins increase. There is truth in both these statements, but we have yet to mention the ailing housing market. Historically it can take up to six months to a year for falling markets to take effect on the stock market.

Why do you ask? Simply because lots of investors are pigs. They don’t believe the housing market can effect the stock market because the bulls are in control right now, thus silencing the negative bearish claims.

These are the same investors who treated their homes as ATM’s that made thousands of dollars accessible to home owners through home equity loans. If the housing market cools, won’t home equity loan rates cool as well? Of course, and when this happens, dollars will flow out of the market and into lower risk accounts because the homeowners simply cannot afford to lose their primary incomes.

Maybe the housing market falls softly onto its bottom and does not cause a mad dash out of the stocks. But why even take a chance on such an uncertain event?

Bottom Line: Take some shares off the table and cash in some stock market winnings. Don’t act like a hog, act like an investor.

[tags]stock market gains, stock gains, sell shares, sell stock, bearish signal, bullish signal[/tags]

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