Good Advice

[dan_s]

I get a newsletter from Elliott Gue and I read it carefully every month. Here is some good advice from Elliott:

The best advice I can give in such an environment is to focus on money management. That means all investors should consider taking profits off the table in stocks that have run-up a large amount in recent months. You don't have to bail out of all of your positions, but selling 25 percent to 50 percent of your stake can help you to lock in gains. [What I like to do is sell covered calls on stocks that have made a nice run.]

I've repeatedly warned in this e-zine, as well as in Personal Finance, MLP Profits and Energy Strategist, that some of the Master Limited Partnerships (MLPs) and US Royalty trusts I recommend including Kinder Morgan Energy Partners (NYSE: KMP), SandRidge Mississippian Trust I (NYSE: SDT) and Chesapeake Granite Wash Trust (NSDQ: CHKR) rallied too much, too quickly early in the first quarter and were well overdue a pullback. [I still like a lot of the Midstream companies on our MLP Watch List. - Dan]

All three of these names were, at one point over the past quarter, trading well above their respective buy target advice in the newsletters. I advised taking some profits off the table and waiting for a pullback to re-enter. All three have since pulled back dramatically, a good reminder of why it's important to pare back on big winners from time to time.