In a strong bull market, stocks can go much higher than many investors and analysts expect.
“In a normal market, the disciplined thing to do is sell when you have a decent gain. But now that the economy’s healthier — synchronized global expansion — and the market’s roaring, there’s a new discipline,” Cramer said. “You need to learn how to hold onto terrific stocks of terrific companies, because there’s a good chance that the upside will be greater than you imagine.”
Cramer pointed to the stock of Adobe Systems as an example. His charitable trust sold its position in Adobe after a 40-basis-point run in the stock and an announcement from Adobe that said growth could slow in the coming quarters. Initially, it seemed like the disciplined thing to do.
“The whole equation’s changed. In a bull market, you need to put more emphasis on not missing gains rather than simply trying to sidestep possible losses. In short, you have to be able to stay the course, even when it flies in the face of your instincts,” he said.
Since Cramer’s charitable trust sold Adobe, shares have run up another 30 basis points and, according to technician Bob Lang, could continue running higher.