Question: If the time to buy is when the blood is running in the streets, when is it time to sell?

Answer: When what you own is being celebrated with ticker-tape parades down Fifth Avenue.

I can’t think of a better illustration of this than the rise and fall of a company called Atkins Nutritionals. The firm, which makes foods for people on the Atkins low-carb diet, filed for bankruptcy this summer.

It wasn’t that long ago when the company was riding high. Low-carb diets such as Atkins’ were all the rage, and lots of companies -- not just Atkins Nutritionals -- grew quickly to cater to that demand.

But, George Putnam, editor of the Turnaround Letter, detected the telltale signs of a bubble. Last October, Putnam predicted that the Atkins name would soon become little more than an answer to trivia questions.

In retrospect, of course, it’s amazing that more of us didn’t see the signs Putnam saw. According to the Washington Post, a survey last year by a market research firm showed that, even though 1 in 10 Americans said they were on a low-carb diet, “even Americans who were eating the fewest carbohydrates ate an average of 128 grams of carbohydrates a day.”

That’s many times more than what is allowable if someone is truly adhering to the Atkins diet. In other words, a large percentage of people were following the diet in name only, all the while continuing to eat a high-carb diet.

Putting his money where his mouth was, Putnam created an anti-Atkins portfolio. It contained companies that were being hurt by the low-carb craze and that presumably would benefit from that fad’s passing.

This took guts, because it’s risky betting against a fad. As we saw in the months and years leading up to the Internet bubble’s bursting in early 2000, manias can persist for a long time, turning grossly overvalued stocks into obscenely overvalued ones in the process.

Many an adviser correctly foresaw the overvaluation of Internet stocks in the late 1990s but nevertheless lost a lot of money selling them short too early.

Putnam’s anti-Atkins portfolio has escaped that fate. To be sure, some companies in the portfolio have performed poorly, such as Krispy Kreme (KKD), which has lost nearly 40% since the day in October when subscribers received the issue of Putnam’s newsletter inaugurating this anti-Atkins portfolio. But, other stocks in the portfolio have performed spectacularly, such as Panera Bread (PNRA), which is up nearly 50%.

Overall, Putnam’s anti-Atkins portfolio is up 5.0%.

To be sure, this 5% is a lot lower than the return of the broad market, which, as measured by the Dow Jones Wilshire 5000 index, is up more than 14% over the same period.

But Putnam did not recommend his anti-Atkins portfolio as a short-term investment, so the jury is still out on its long-term performance.

Even so, however, a 5% return over a 10-month period tastes a lot better than being in bankruptcy.

Mark Hulbert is editor of the Hulbert Financial Digest, a service of Marketwatch that, for nearly 24 years, has tracked the performance of investment advisory newsletters. A section of the Marketwatch website called "Hulbert Interactive" (marketwatch.com/hulbertinteractive) allows users to conduct extensive research on the HFD database.

Mark can be contacted via email at mhulbert@marketwatch.com