Take profit on overheated market ?

With record highs yesterday, should we sell our stocks, wait until they drop 10% and then buy more of them back for the same money ?

Taking profit is not a bad idea. In fact, the old adage "Buy Low, Sell High" says exactly that. So why not sell ? If you have set goals for your stock performance, and you have reached those targets, by all means sell. In my case, I tend to hold on to stocks until they no longer meet my portfolio criteria. For instance, if a company keeps increasing dividend and otherwise performs well, I keep it. I may not add to the position if it is overpriced (and likely has a poor P/E ratio, and yield).

One reason I may sell a stock that is at a (temporary) peak, is when I can move the money into another stock, that is not rising with the rest of the tide. In that case I sell my position, and buy the other stock. Or if a stock is already falling out of favor and is on the watch-to-sell list. I held SCCO for a while, and it paid good dividends. After a structural change the yield dropped and the stock yielded under 2%. I sold it and the money is going towards a stock on the top of my screening score.

Disclosure: I no longer have a position in SCCO.