What to do? Well, as mentioned, your circumstances permitting, take the money and run.
At the very least, review your portfolio. Your security holdings should be of quality, size and have revenue growth. Avoid areas where revenue growth is tepid or even declining.
Let's take a look at financial shares as the ultimate example.
Financials have led the markets so far this year, with the SPDR Financial ETF (XLF) gaining more than 20% this year. Investors have been focusing on the fact that financials had the highest earnings growth rate of the 10 Standard & Poor's sectors, increasing EPS by 62% in the past year. But revenue have only grown by 2.2% of the same period.Moreover, if you exclude Bank of America (BAC), the EPS growth rate for financials drops to +11.7%, and brings the overall EPS growth rate to the S&P 500 to a meager 1.5% from its current trailing growth rate of 6.5%. Investors need to focus on names that have strong balance sheets, pay a "healthy" dividend and have a fundamentally strong business that will continue to grow revenue. My list of companies that fit these criteria is below.
This article was written by an independent contributor, separate from TheStreet's regular news coverage.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV