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Jim Cramer says to trim winning stocks after 20% gains
He also recommends selling an additional 5% to 10% after the first 20% move and trimming again if the stock rises another 20%.
Wall Street’s rally has made timing profit-taking harder, with the S&P 500 up about 3% since July 31, the Nasdaq Composite up 4.1%, the Dow Jones Industrial Average up 2.0%, and the Russell 2000 up 1.4%, according to Yahoo Finance data.
Citing market momentum around an earnings-driven tech surge, Yahoo Finance reported Jim Cramer’s view that investors need a rules based approach to managing big winners rather than simply holding through volatility.
In Cramer’s “Mad Money” framework, he urges investors to trim after a stock rises 20% or more, starting by “ringing the register” on part of a position, rather than exiting entirely.
Cramer said investors can continue trimming after that first 20% bump by reducing 5% to 10% of the holding, and if the stock jumps another 20%, they could make a similar trim, emphasizing that discipline should outweigh conviction.
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