Editor's note: Market euphoria is here... and everybody wants a piece of the "Melt Up."

It doesn't matter that the trend we're seeing now is built on false premises – or that amateur traders are speculating in a way they haven't in decades.

You can still "be a pig" and profit as stocks soar. But you also need to prepare for the inevitable "Melt Down"...

You must make a commitment to sell when the market turns. And you need to realize that it won't be as easy as it sounds...

In today's Masters Series – adapted from the February 25 issue of DailyWealth and the December 2020 issue of True Wealth – our colleague Dr. Steve Sjuggerud reveals an important tool that can help you decide when to sell... tells a cautionary tale from the late 1990s... and explains why it's so important to never "second guess" your exit strategy...

When You're Playing With Fire, You Must Be Ready to Do This

By Steve Sjuggerud, editor, True Wealth

The stock market hit a peak in March 2000.

The tech bubble had made everyone feel like a genius. Times were great. They had been for years... And then they weren't.

Over the next few months, most of the recommendations in the newsletter I wrote at the time hit their stops.

It felt terrible.

I told readers that we had to sell so we could live to fight another day. I knew it was the right thing to do. It was the only thing we could do.

I knew the market mania that had been playing out for years couldn't and wouldn't last forever. And I was sure it would get ugly if the situation had finally turned.

So when we began hitting stops – and then kept hitting stops – I told my readers to sell. And while it was the right thing to do, I still felt like a failure.

My job was – and is – to find the best investment ideas each month. So even if those ideas had worked for years and led to big gains, selling was tough. It never feels good to hit a stop loss.

That's what's funny about doing the right thing at a hard time... Even if you know it's right, it usually doesn't feel like it.

Today, with the "Melt Up" in place, the idea of selling seems foolish. But someday soon, it will be the right thing to do. And if you don't act then, it will be the biggest mistake you could make.

You see, the late-1990s Melt Up had been firing on all cylinders for over a year before the bottom fell out. There were several quick drops along the way. And to be honest, I didn't know for sure if the drop that kicked me out of most of my positions was the big one or not.

Either way, I knew we couldn't stick around to find out.

I tell you this today because you need to be ready. As I explained yesterday, euphoria is gripping the market. And while that's not a reason to sell, it is something we need to understand.

What you don't want to have happen to you is what I know happened to a lot of my readers in 2000...

"The stock had treated me so well, Steve. I know you told me to sell, but I never did."

I heard those lines for years at conferences after the tech bubble burst. Dozens, if not hundreds, of my readers echoed the same sentiment. They knew they should sell, but they were attached to the big winners. So they rode them all the way down.

The worst case came in what should have been one of the biggest winners for those folks, JDS Uniphase...

This was a true high-flyer of the tech bubble. The stock was up as much as 1,200% after my recommendation. And I closed it for around a 900% gain after hitting a stop loss. But here's the thing...

I had several readers tell me they were still holding the stock years later... All those gains had disappeared, and they were actually sitting on a loss.

This might seem silly to read two decades later. Who would actually make such a foolish mistake, right?

It's easy to point fingers at someone else's blunder. But believe me, there will be lots and lots of folks who will do the exact same thing this time around. You do NOT want to be one of them.

Of all the lessons I learned from the tech bubble, this one might be the most valuable... If you want to play with fire, you've got to be willing to walk away.

That's why you need stop losses in place today. And you need to listen to them.

It's the most important thing you can do for your money in the months ahead. And it's the only sure way you can avoid the biggest mistake you can make in this Melt Up.

It's too easy to fall in love with your stocks in times like these. And that can lead to crucial mistakes at the worst possible time. But remember, this isn't my first Melt Up... Far from it.

I witnessed my first in 1993 in Hong Kong stocks. The "Melt Down" that followed was brutal. As a broker, I watched clients dig in and refuse to sell, often racking up incredible losses in the process.

Because I follow markets around the world, I've seen plenty of Melt Ups and Melt Downs since then. Holding and hoping as the bull market unravels has been a common thread in all cases.

That's why you need to prepare yourself for what's coming now. I'll use my experience to help you along. But at the end of the day, you must act for yourself.

The moment of truth will be when you hit your stops. That's when you've got to decide to act or not. But here's the thing...

There isn't a choice to make. You must follow your stop and sell at that moment.

You'll tell yourself you don't have to. You'll have fallen in love with that stock by then. But trust me, the stock doesn't love you. The market doesn't love you. It doesn't care.

When you hit a stop, there isn't a choice to make. You sell. That's it. No matter how hard it is, or how terrible it feels.

So yes, today's message is a bit tongue-in-cheek. What do you do when you hit a stop?

You sell!

I wouldn't be writing to you if it were easy, though. It's not. Especially in times like these.

You need to mentally plan for the Melt Down now. Get in tune with what's to come. Think about how it might feel when prices come tumbling down... how painful it'll be to sell when you hit your stops.

And finally, make the commitment to sell anyway... at the point you've decided.

If you do that now, then you've got a chance. You'll be able to act when you need to, instead of freezing in the fear of the moment. And you'll be in the best possible position to lock in your Melt Up gains.

Good investing,

Steve Sjuggerud

Editor's note: The Melt Down is coming... And when it does, selling will go against every instinct you have.

But how you handle the next downturn could be the most important decision of your financial life...

That's why Steve recently put together his own plan for when he'll personally exit stocks. He's using a special strategy that offers more flexibility than a traditional stop loss.

It's the best way he knows to navigate the end of the Melt Up... keep making great gains... and avoid leaving money on the table. Check it out right here.