Growth stock investment or trading has to be combined with a trailing stop loss or with a "trailing lock in profits" to ride a stock trend up. Valuation and future growth is hard to gauge and the higher the trend climbs the more the optimism boils. Needless to say that it eventually boils over. That point is normally reached sooner than later. The trend is your friend - true, but this is amazingly true too:

Most trends are over the moment you enter them. That is, because there are many more short trends than longer trends. For each long running trend there are statiscally many more short lived trends. So, hopping onto a trend and just waiting, hoping or believing is not enough.

"Unfortunately, the pattern of bubbles is strikingly similar throughout history. Bubbles seem to begin with some new technology that is predicted to revolutionize the way we do things. This time it was the Internet, but in years past it has been biotechnology, or computers, television and radio, electricity, cars, railroads, etc., etc. Each time the new technology did have a significant impact on the way we live or do business, and each time investors' urge to participate led to significant losses. Traditional business valuation models are deemed irrelevant because we are in uncharted waters...."

"True, sustained long-term growth is difficult to achieve, as the success of so few companies will attest. Buying shares in start-up companies, companies with business plans or products that can be rendered obsolete before they even reach profitability, is not, in our opinion, growth stock investing. It is speculating. Ignoring this lesson, which has been taught many times over the years, can be expensive...."

"High price/earnings ratios are usually reserved for companies with above-average growth rates that are highly predictable. For a variety of reasons, technology companies historically have not had highly predictable earnings. Of the 500 companies in the original Standard & Poor's 500 Index in 1957, only 74 remained on the list in 1998, and only 12 outperformed the Index over that period. The conclusion we draw... is that predicting corporate performance well into the future may be a task beyond the abilities of the average stock analyst."